Twilight’s Last Gleaming?

In only a matter of months, tens of millions of Americans have seen their investments, retirements, life savings, home values, and employment decimated, or even evaporate completely before their eyes. Some are expecting that the worst is yet to come. All over the world, dramatic rates of decline in economic activity are being reported. A Delayed Confession The National Bureau of Economic Research officially announced, albeit almost a year after the fact, that the U.S. has been in recession since the 4th quarter of 2007. Is Q4 2007 was the start of the recession, then Q4 of 2008 was the start of a depression! Over the past several decades America has shifted from a producing economy to a consumer economy. Consumption has been aggressively promoted as the key to economic health, and Americans have become a very materialistic people. What family does not have multiple cars, computers, televisions, sound systems, electronic gadgets of all kinds (many seldom used), closet overfilled with clothes (many never worn), and every form of entertainment and amusement imaginable. The pursuit of “the good life” has become an entitlement rather than a reward for achievement. Our activities and commitments are determined by our borrowing ability rather than our savings: our tether has only been limited by our capacity to mortgage the future to serve the present. Most Americans have never known “hard times”—having to go without food, shelter, medical care, a job, or even prospects of finding one. Today, millions of Americans are living from credit card to credit card, let alone paycheck to paycheck. Crime is on the rise—especially in the major cities—as people are stealing to live and eat. Both riches and poverty are hazards: “Two things have I required of thee; deny me them not before I die: Remove far from me vanity and lies: give me neither poverty nor riches; feed me with food convenient for me: Lest I be full, and deny thee, and say, Who is the LORD? or lest I be poor, and steal, and take the name of my God in vain.”1 Proverbs 30:7-9 Our aggressive promotion of the Consumer Society has led to unbridled materialism funded by debt. The result: excessive debts at all levels: personal, corporate, and government. This has finally caught up with us. There is, after all, a limit to our collective ability to borrow and we now have an enormous collapse of excessive debt—at all levels. And what is the remedy to this crisis? More debt? The problem is so large that even the policy makers have yet to grasp the magnitude of the debacle we face. How Much Is a “Trillion”? It’s easy to throw words around without a grasp of their significance. Each day we find increasing taxpayer liabilities being added by various “bailout” programs and other spending sprees. How much is a trillion? It is the sum of all the government borrowing in the history of 42 administrations: from 1776 to 2000, the first 224 years of U.S. history, a total of $1.01 trillion was borrowed. Another example: If you were paid $1.00 per minute, 24 hours per day, 365 days per year, it would take 2 million years to collect $1,000,000,000,000. Government Meddling with Free Markets Some say this has been a failure of free market economics. Quite the contrary. It can be traced to at least four major failures of government intervention: 1) Central bank attempts to keep interest rates far lower than what free markets would have warranted (especially post-9/11), supported by the lie that inflation was non-existent; 2) The existence of government-sponsored enterprises such as Fannie Mae and Freddie Mac, fuelling ridiculous (forced) excesses in mortgage finance and credit availability from ever-rising housing prices; 3) The moral hazard that ran amok as it became obvious that financial institutions can take egregious risks partly because they became “too big to fail”; and, 4) The existence of an unprecedented current account deficit in the world’s reserve currency, financed by government-run foreign institutions (central banks and sovereign wealth funds). The Travesty Continues Governments the world over are taking an increasing role in the functioning of the economy and the financial markets. But are they trying to solve the main problem: namely, too much debt? Quite the contrary: every single solution they’ve adopted has been trying to get the good old days back—cutting interest rates to zero; throwing money at the banking system so it can lend again. All these solutions have one goal: to bring in more debt. They are ignoring, at least for the time being, the paradigm shift. But the markets aren’t buying it… literally. Debts continue to implode. Every bailout is being followed by an even more massive bailout down the road. The government’s solution has been to shift debt from the financial markets to the taxpayer. Is there a difference? Instead of individuals living beyond their means, we now have governments living beyond their means. Substitute taxpayers for governments and you will quickly realize how the whole thing is a farce. The Law of Unintended Consequences The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple. It operates with limited information (rational ignorance), short time horizons (to get re-elected), low feedback, and poor and misaligned incentives (17,000 lobbyists bidding at auction for their patronage!). Society, in contrast, is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system, you often get unintended consequences. Our Personal Action Plan Obviously, we all need to get back to basics, and lower our cost of living and get out of debt as aggressively as possible.2 We also need to reprioritize ourselves to lead resourceful, productive lives, and extricate ourselves from our own materialism and self-indulgences. We need to refocus ourselves toward self-reliance, virtuous lives, focusing on real values, and, above all, to regain an active reverence for the Living God. And, all our prayers should include the petition that the lessons not be wasted. We can’t change the coming tide. But we can warn others. And now the good news: It is going to be the biggest opportunity of a lifetime to serve our Coming King! People who were previously apathetic or complacent will soon be desperately looking for answers! We need to be prepared to provide them! Ah, there’s the rub: we need to be prepared! Are you ready? How can we help? Some relevant sources of comfort include Philippians 4:19; Deuteronomy 31:6; Psalm 119 (cf. v.50, 76, et al.); and, Romans 8:28-39. Notes: 1. This confirms our view that the “taking the name of the Lord” refers to ambassadorship rather than vocabulary. Cf. Ex. 20:7. 2. See our briefing, “The Vortex Strategy” for more information (