christianity, Christians Gone Wild!

Prosperity Flakiness

If you’ve read my stuff for any length of time, you’ve no doubt caught me defending the message of prosperity being taught in some Christian circles today (and on TV), and encouraging you not to throw the baby out with the bathwater, so to speak.  However, after a recent event at Books-A-Million, I’ve come to realize that maybe my exposure to certain teachings in this doctrine have been limited.  I don’t watch Christian TV (TBN, etc), and my views on God’s plans for prospering his people have largely come from my own study, and from my pastor.  Because my Pastor is so Biblically sound, and makes so much sense, I assumed everyone else did as well, and were being unfairly criticized due to the loud, but few, flakes out there.

Maybe I was wrong . . . I overheard an apparently lonely, middle-aged, obese man acosting a Books a Million Employee in between the Christian Section and the Comic Books (I was in the Comic Books, thank you very much).

Fat Christian:  “Churches have really gotten away from reaching out to people and from being mission-oriented, and instead have built large mega-churches”

Employee:  “That’s right.”  (While putting books up on the shelf)

At this point, I thought the Fat Christian might be a good Christian, and was making a point about Charitability.

Fat Christian:  “But God doesn’t want to make us rich just for Mega-Churches, he wants to make us rich so we can use our mega-churches to reach out to people… tell them how to become rich also.”

Employee:  “Uh…Yeah, God wants us to help people.”  He was clearly uncomfortable, and left a sitting area and walked to my aisle in the comic books…Fat Christian followed

Fat Christian:   “People think that we’re preaching that we’re all supposed to be like super-rich billionaires, but I don’t think that’s really the case.  I think God just wants us to be well off.  God may not give me millions, but I could sure use 100,000 or so!  God wants to give his people money, so that while everyone around us is losing their jobs, and getting their homes repossessed, we can come right in and buy them up for really cheap.”

The Employee the left and the Fat Christian followed close behind, clearly ambivalent to the fact that the guy just wanted away from him.  I finished making my comic book selections and went to other side of the store, with a new understanding of why Christendom, at large, hates the prosperity preachers.  Jesus wants us to teach people to be rich, so we can really screw the people who are already victims of the predatory bank lending.  YAY JESUS!

Sheesh.

News and politics

Election Day!!!

Well, today is the day all the hullabaloo comes to an end and we find out who our next antichrist President is.  I recently predicted a win for Obama, and I’m standing by that.  Bush has been pretty bad, and McCain won’t be any better, let’s face it.  Not that Obama will…he’ll probably be worse than McCain, but most Americans don’t have the two brain cells to rub together that it would take to arrive at that conclusion.  They’ve been so lobotomized by the media that they think any change is good change, and Obama is the Messiah.  Ho-hum.  I’m glad I trust in God as my provider, and not our nation, or economy…otherwise, I’d be royally screwed…like the rest of America.

Uncategorized

Welcome to the U.S.S.A.

October 3rd, 2008 will be a day that lives in infamy, for the last few free-minded people in the world, and a day lauded by the liberal socialist wannabes, the rich, and the powerful.  Today the house passed an even WORSE version of the bill they turned down on Monday.  Looks like we all should’ve saved our angry phone calls for today, because at least we would’ve had less pork-barrel spending, and government insurance scams (read FDIC insurance hike), on Monday.  Today marks a turning point in our history, as a free-market, capitalistic republic, to a socialist, appeasing, government run, welfare state.  America, welcome to global economic irrelevance.  Welcome to the United Socialist States of America.

Oh.  And “SALE ON TOY WOODEN ARROWS!  AISLE 5!”

News and politics, Pontifications

Financial Crises for Dummies, Part 2: Where does Money Come From?

I had considered making part 2 of this series about the Fed, and its (unconstitutional) control of interest rates, and the monetary system. However, to truly understand our economic and monetary problems, one must first understand what money is, where it comes from, and how it’s created. I’m not talking about the giant printing presses owned by the Federal Reserve, I’m talking about the intrinsic value that your paper dollar conveys when used to purchase goods and services.

In US history, we’ve had two different types of currency: the gold standard (which we departed from in 1971), and our current fiat currency.  Fiat Currency works sort of like your parents’ rules when you were a kid . . . it works because “They said so.”  With a currency that is backed by some tangible good with intrinsic value (gold, silver, etc), the dollar is set at a fixed exchange rate with the unit of the good.  For instance, when we were on the gold standard, one ounce of gold was worth $35.  What happened if the value of Gold went up like it has over the last few years?  The value of our dollar went up.  Which meant that we could buy more with the same amount of money.  If the value of gold went down . . . the same thing happened.  We could buy less with our money.

Then our world changed in 1971, and we went to a fiat currency.  The dollar had value because the government ordered that it be used in monetary transactions.  But with nothing of any real value backing it, it could fluctuate up and down, based on what the market said its value was.  Basically, if a Briton looked at America, and saw our financial systems, corporate power, and strength of our economy, and decided that it didn’t compare favorably to the past, he could say, “Yesterday, I was willing to trade 1 pound for 1 dollar.  But today, if I give you a pound, I want 1.25 dollars instead.”  So, in that way, the international money market determined the value of the currency.

But that’s only part of the equation.  In addition to market forces determining our dollar’s buying power, inflation was also at work.  Inflation is the economic force that causes things to be more expensive tomorrow, than they are today.  That’s why you used to be able to buy a candy bar for 5 cents, now it costs 69 cents.  It’s a by-product of economic growth.  Prices are based off of supply and demand.  If the supply for something is low, and the demand is high (Imagine if there was very little water), you will pay more for that good.  If the demand is low (no one wants it), and the supply is high, companies will basically give it away, just to get it off their shelves.  If you’re making more money, you have more to spend.  If everyone has more to spend, demand for goods rises.  If demand is high, as we just learned, prices go up.  So, there’s more money in the economy today, than last year, and year before . . . etc.  But where does this money come from?  What underlying value is increasing, to allow us to have more real money in our monetary system?  The answer may surprise you.

It turns out that the very thing we despise the most, debt, is what makes the world go ’round.  Money, in our economy, is created by debt.  I just want you to take a minute and let that sink in.  Ben Bernanke will tell you, somewhat obfuscating the point, that the Great Depression was caused by a lack of credit.  This was certainly a contributing factor, and was the primary cause of the length and severity of the depression.  Our monetary system was collapsing.  The banks simply didn’t have the money to give their customers when they asked for it (sound similar to Part 1’s situation?), and with no credit, there was no way to create money.  When the U.S. abandoned gold in 1933, (not to be confused with our abondonment of gold in 1971), we were able to begin recovering more rapidly, by issuing loans, and allowing the amount of money in the economy to rise.

I’m sure right now, if you’ve stuck around to this point, you’re scratching your head and saying, “huh?”  Let me invite back Jim Bob to help us demonstrate how this works.  Jim Bob needs a loan.  He’s been feeling lonely lately, and wants a nice hot new car to get himself a woman (We already know Jim Bob makes bad financial decisions).  So he goes to his local bank, and takes out a loan for $25,000.  As we discussed yesterday, that $25,000 belongs to you, the person depositing money at the bank.  Now, Jim Bob buys a convertible sports car with his money, gets himself a little hot blonde, and rides off in to the sunset.  But take a look at what happened.  Jim Bob had $25,000.  But YOU still have $25,000.  If you went to the bank to take your $25,000 out, it would be there, and you could do that.  When Jim Bob pays back his loan, he still has a car worth $25,000, the automobile company, still has his $25,000.  Let’s follow the money:

You have $25,000 —> You put $25,000 in the bank —> The bank gives $25,000 to JIm Bob —> Jim Bob gives Chevrolet $25,000.

At this point, the bank is owed $25,000, which Jim Bob repays.  At the end of this scenario, you have $25,000, and Chevrolet has $25,000.  $25,000 was created by Jim Bob’s debt.  Good boy, Jim Bob.

And that’s where money comes from.  That’s what our economy is based on.  It’s a very large and complex system, that balances debt, risk, inflation, market pricing, supply, and demand.  Manipulating one or more of those factors, impacts the money flowing freely in the economy, and the value of that money.  If confidence in the bank industry erodes to the point where people don’t put in their money, or the banks have no more money to lend out, the system freezes up, and collapses.

Remember the $700 Billion (read $2 trillion) bailout?  Where will that money come from?  That is the wrench in this system:  The Federal Reserve.  If you manipulate any of those factors, you manipulate the value and amount of money in the economy.  If the Fed floods our system with $2 trillion dollars that it just printed up from no where, what happens?  Remember our supply and demand scenario?  If the supply of something goes up, people will pay less for it.  If the supply of Money goes up, it’s worth less.  This makes inflation sky-rocket, and screws up the balance of our economy.  But what happens if we do nothing?

Part 3 will be coming up soon, on the Fed, interest rates, and what I think will happen if we convince congress to pass on this bailout.

News and politics, Pontifications

Financial Crises for Dummies, Part 1: Wu-wu-What just happened?

Lately, one of my favorite topics to rant and rave about while at family or friendly gatherings (so much so that I typically make everyone else uncomfortable) has been the Financial Crisis.  And with Washington and policy makers playing this giant smoke and mirrors act with the facts, most people don’t really understand what has happened that has led us to this point.  Just a couple of weeks ago, people were on the news saying, “Our economy is strong!  We’re not really in a recession!”  And now we’re on the brink of total economic collapse.  “What happened?!” is a very fair question.  So…here is a laymen’s explanation:

In the Beginning

To truly understand what’s happening here…we need to look at the precipitating causes of the Great Depression.  Now Ben Bernanke will tell you all kinds of things, but what he knows as a basic truth is this: people made really really really stupid decisions with their money.  Decisions that not only do we generally hold as stupid today, but decisions that there have been laws against, ever since then.  Basically, the stock market was booming.  It was seen as a “sure thing” investment, and many people, even your average Joes, decided to start investing.  And there was the problem…Joe Blow didn’t have much money to invest…but when he did put a little into the stock market, and saw those dollar signs…there was only one thing to do:  Take out a loan, to get more money, to invest.  With interest rates low, and returns high, it was pretty much a sure bet that he was still going to make gobs of money.

Credit can be a great thing, when used properly.  But it also increases the risk of any investment.  If the stock market tanks (which we know it did), then you haven’t just lost your money that you invested, you’ve lost everything.  People mortgaged their homes, and took our unsecured lines of credit, to invest in the stock market.  When it crashed, they lost it all.  Multiply this nationwide, and you see why the economic system collapsed.  People couldn’t pay their bills, 1/3 of banks failed, businesses went under.  It was bad.

Precipitating Events

Let’s skip almost 80 years into future, to about a year ago.  We have laws governing who can borrow for investing in the stock market, and how much they can borrow, to help prevent another similar scenario.  But when the .Com Bubble burst in 2000, and stocks fell, people began looking for other places to invest their money.  Because the economy was struggling, the Fed lowered interest rates (more on why this happened in another post), to help stimulate the economy.  Low interest rates makes it really easy and cheap to buy things on credit.  With 9/11 and the economic turmoil that followed, and rates hitting their lowest points in history, it became almost free to take out a loan and buy some property to resell.  The lower the rates went, the more people bought.  The more people bought, the higher the prices went.  The more the prices go up, the more people look at real estate as a great way to make some money.

What we then saw (as evidenced by numerous TLC shows, like Property Ladder and Flip that House!), was average Joe Blows, with no investment or Real Estate experience, deciding they could make money buying and selling property.  They took on massive amounts of debt to do so, and the real estate market began cooling.  What we have then, is a repeat of 1929.  People made really stupid decisions, took on massive amounts of debt in order to invest, and got screwed when the market started falling.  Only this time it’s the real estate market, and not the stock market.  People can’t pay back their loans, so banks start losing money.  Economic collapse will be forthcoming soon enough.

How did it Happen?

I recently used this example explaining things to a friend of mine.  Just to warn you, this is a very simplistic view of how the banking and monetary systems work, but it’s basically the way it goes.  Let’s say you have $100,000, your life savings.  You go put it in the bank to earn some interest.  The bank says they’ll pay you 3%.  The next day, Jim Bob walks into the bank, and requests a loan for $100,000, to buy a house.  Jim Bob has only mediocre credit.  But the housing market has been so great, the bank gets greedy and says, “Hey!  He may not be able to pay, but then we’ll just sell the house for a 25% profit!  Everybody wins!”  The bank tells Jim Bob he’ll have to pay 6% interest on the loan.  He agrees, and the bank gives him your $100,000, and he goes and buys the house.  Here’s the current situation.  Jim Bob pays 6% annually on the loan.  The bank pays you 3% on your deposit.  The bank gets the difference, 3%, as profit.  That’s how they make their money.

Now, Jim Bob was stupid, and got a variable rate mortgage…so as interest rates go back up, his payments begin to go up too.  Jim Bob can’t seem to get enough money to pay his bills, so he defaults on his loan.  The bank repossesses his home.  Poor Jim Bob.  But wait… the bank now has lost the income it was getting from Jim Bob, but they still have to pay you 3% on your money.  They try to sell the house, in order to get your money back, but the real estate prices have dropped, instead of rising, so they can’t get your full $100,000 back.  They can only get $80,000.  In the meantime, you’ve been watching the news, and decide that you don’t want to keep your money in the bank, because you’re scared it will go under . . . and you’ve got a little over the $100,000 FDIC limit in there now, so you better move quick.  The bank only has $80,000 of your money left, so they have to take $20,000 of their own money (or borrow it from another bank) in order to pay you all they owe you.  Imagine this happening nationwide, and you have what happened last Wednesday night.  The economic system freezes up . . . people won’t lend money to the banks, because they’re concerned about them collapsing, and the banks don’t have enough cash to pay out to their depositors.

And this brings us to today . . . the banks simply don’t have enough money to give their depositors their money, much less meet all the interest payments they owe, pay salaries of their employees, and stay in business.  They were greedy.  They made unbelievably poor financial decisions, and took on way too much risk, because they were betting on a booming real estate market.  They’re trying to get this bailout to happen, so they stay in business.  But this is America . . . a free market economy.  The possibility of total failure is supposed to help you make good financial decisions.  The Bailout is not the answer.  No one will get a home back, because of the bailout.  No one will be able to pay their bills, that wasn’t able to previously, because of the bailout.  The banks will basically just get to dump off the bad debt, and go back to business as usual.

I’m going to refrain from expounding on my opinions on that for now, and save it for another post.  But I hope this has helped shed just a little light on where we’re at, as a nation, and just how dire the situation is.  Make no mistakes.  We are on the precipice of a Financial Crisis.  Perhaps the worst in our history.  Bailout, or no Bailout, we are still on the precipice of a Financial Crisis.  The form it takes, and circumstances that happen because of it will be different, depending on how or if the bailout happens.  But nothing is going to stop this from happening.  Next time, I’ll be talking about what effect this bailout may have, and what effect doing nothing may have, as well.

On that note, have a nice day! 🙂

Church

The Moral Recession of America

Damon Thompson, who is, most notably, a regular preacher at The Ramp, recently spoke at a men’s conference.  An opening point that he made was that our current financial crisis is just a symptom of the moral recession in America.  He went on to say that if we quit killing babies, and promoting the gay agenda, and glorifying all manner of sinful activities, that our financial trouble would turn around.

My immediate thought was, “No…the financial crisis is the result of overspending, pandering, bad debt, greed, and general mismanagement of funds…not just in the Government, but in corporate America as well.”  And then the absolute brilliance of Damon’s words struck me…that all is the result of moral problems.  Greed, shady money dealings, promising all kinds of freebies to people to get a vote, lying, cheating, stealing . . . even irresponsible accumulation of debt:  These are all MORAL problems.

If I decide to buy more than I can pay for, and live a lifestyle of debt and overspending (which I’ve done in the past)…the problem is more than just being financially stupid.  The problem is an intrinsic misunderstanding of what is important.  It’s greedy and lustful, but I want more than I can have.  It’s untrustworthy, and deceitful….and many other bad things because I’m just creating large problems for the future, perhaps insurmountable ones, in order to appear or feel like I’m comfortable now.  It’s gambling, because I’m just lying to myself in saying that I’ll have more money one day to pay for things…which never happens…because I spend it too.  That type of financial lifestyle is a moral problem.

And so to is our country’s financial problem.  Lehman Brothers, AIG, now $700 billion in bailout loans.  And all this money from a government that isn’t even able to pay its own bills…that is going more and more into debt every day without the help of a mega-bailout of the banking system.  This sort of bankrupt (ironic wording, huh?) morality, which exalts our lusts instead of being responsible, that panders to greedy people looking for handouts instead of creating a financial sound free market economy that enables them to create their own wealth, is what is destroying our country.  The same mentality would tell a pregnant woman, “Meh…it’s not a baby yet, because you can’t see it!  It’s just a fetus…you can just have an abortion and go on with your life.”  Or, in the case of Obama, “Oh…well, the baby’s out and alive, but it was supposed to be aborted…let’s just kill it anyway.”

Could it be that our country’s problems can only be solved one way?  Through Revival?  I believe so…because we can see the anemic church is actually becoming more like the world, instead of fighting for change.  If our churches get on fire for God, get passionate about having a relationship with Him, and in seeking the lost and giving them an experience with a God who loves them, and wants to set them free from their past and their sin…then I believe we’ll begin to see a shift in this country back towards prosperity.

***Update:  Listen to Damon Thompson’s message at the Men’s Ramp 08