Obamacare vs The Fed – Maybe He’s Playing the Long Game

Then I will draw near to you for judgment. I will be a swift witness against the sorcerers, against the adulterers, against those who swear falsely, against those who oppress the hired worker in his wages, the widow and the fatherless, against those who thrust aside the sojourner, and do not fear me, says the Lord of hosts. – Malachi 3:5

A Brief Recap of Fiat Currencies and Monetary Policy …

We’ve written on multiple occasions that the fiat monetary system and the shenanigans at the Federal Reserve are the mechanism by which the wealthy and powerful transfer money from the poor and middle class to themselves.

To the common man, money represents a medium of exchange and a store of value – and it must serve both functions to be money. We exchange our production with one another using money as an intermediary, lest we be reduced to barter – a much less efficient method of exchange. The money in our pockets represents the exchanged value of our productive lives. It is what we have gained in exchange for our ability and our quite-limited supply of time. It is what we have produced but not yet consumed. (Thus, when our “neighbors” tax us and take our paychecks for their own consumption, we take it personally – it is the democratic form of slavery.)

When the Federal Reserve prints money out of thin air (or banks lend it into existence out of thin air) they have generated something that competes directly with the exchange of our production, our lives, and our time. They have generated, with nothing more than the wave of a hand, the ability to bid in exchange for other goods and services. Thus, those with “first access” to the newly printed money – the government, the crony capitalists, the banks, and the already wealthy – gain something at the expense of the rest of us (it is zero sum … until it’s worse than zero sum). It is very much an “oppression of the hired worker in his wages” – to use Malachi 3:5 parlance.

They Keynesian justification for the fiat money system is just a facade. The elites need a reason to print; it’s now they stay elite.

At present, the justification for money printing (or, more correctly stated – “interest rate repression”) is the Fed’s dual mandate of stable prices and full employment. For whatever reason, “stable prices” has been defined as “2% inflation” and “full employment” has been defined as “around 5% unemployment”.

The Dual Mandate and the Obamacare Effect …

The Fed is now running into a problem with definitions. If you ever write down a set of conditions for the governance of monetary policy, people will take note if the conditions are met and yet you keep the printing presses going.

In the past these issues have been dealt with by changing the definitions (e.g., the removal of food and gas from “core” CPI), or by adding mandates (adding “full employment” to “stable prices”). More recently these issues have been addressed by calling into question the Fed’s own statistics (e.g., when the unemployment rate falls solely because the participation rate plummets). We discussed this last one further in “Bernanke Prints On“. (Remember, they always want to print – it’s how the elites stay elite. They only stop when the system threatens to blow up Wiemar style; a loss of confidence in the Fed is a game-ender.)

Of late the Fed has found an interesting foe in its printing policy: Obamacare. Through economically unproductive means, Obamacare appears to have brought about meaningful “improvement” in the Fed’s preferred statistics. (We use the scare quotes to note that “improvement” isn’t always a good thing – particularly when we’re talking about the goal of rising prices.)

For years now we have known that Obamacare reduces unemployment without improving the employment situation. First, Obamacare defines “full time” employment as 30 hours per week. Second, it makes stricter requirements for employers with 50 or more full time employees. Thus, small and medium sized businesses have an incentive to reduce hours below 30 per week and hire more people to fill the gap. No increase in production, but a decrease in unemployment – more hired workers.

Now Obamacare seems to be hitting the second part of the dual mandate as well. The latest CPI figures (released Friday) show a 0.2% decrease in aggregate prices, but a 1.8% increase in prices when ignoring food and energy. (Food and energy prices have been trending lower of late.) Why the massive increase in “core” CPI? Healthcare costs are spiking … thanks to Obamacare.

We’ve often harped on the fact that Obama follows the “favor-the-wealthy” policies of previous administrations. But here we have his signature legislation taking the legs out from under the Fed’s dual mandate for printing money and stuffing it in the pockets of the powerful. Do we dare give him the benefit of the doubt? Is it possible he’s been playing the long game this whole time?

I doubt it, but I do find these developments interesting to say the least. So, will the Fed finally raise short term interest rates from zero (or near zero) now that their favored measures (unemployment and core CPI) are very near the goal?

I obviously have doubts, but sooner or later they have to either raise rates or admit that fiat money has run its course and cannot be propped up any longer. If they do raise rates, I think a bit of the “forcing of the hand” will have to be attributed to Obamacare.

Posted in Uncategorized | Leave a comment

Sometimes Words are Cheap … But Sometimes They’re Not

Do not eat the bread of a man who is stingy;
    do not desire his delicacies,
for he is like one who is inwardly calculating.
    “Eat and drink!” he says to you,
    but his heart is not with you.
You will vomit up the morsels that you have eaten,
    and waste your pleasant words.” – Prov 23:6-8

I’ve gone rounds with a handful of Christian brothers over the meaning of Proverbs 23:6-8. Actually, the debate began over the first half of verse 7, which the ESV (above) translates as “for he is like one who is inwardly calculating”. The KJV  renders this “for as he thinketh in his heart, so is he.” Some of the word-faith ilk seize on this poetic translation into the king’s English of 400 years ago to claim that the Christian experience of today ought to resemble something akin to New Age Mysticism with “thought power” and “self-actualization” and the like.

Of course the verse means nothing of the like. It simply means that a man may say one thing while thinking something completely opposite in his heart and mind. A modern, colloquial translation might render this as “words are cheap”.

I was reminded of this yesterday as I was surfing around the 24-hour news channels. I was looking for updates on the Philadelphia train derailment, but when I tripped across Fox News I found them dredging up quotes from President Obama in 2009:

“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street”

I thought immediately of Proverbs 23. You’ll have to forgive me, Mr. President, but words are cheap. You may recall that this is the same Barack Obama who supported the Troubled Asset Revitalization Program (TARP) during the 2008 financial crisis (and presidential campaign), a $400,000,000,000+ taxpayer funded bailout of the massive margin call that was about to wipe out every Wall Street investment bank. Around the same time, the federal government took Fannie Mae and Freddie Mac into conservatorship (backstopping trillions of dollars of debt with, you guessed it, taxpayer backing). Then there’s the 2009 Public Private Investment Program (PPIP), again using taxpayer dollars to backstop the unloading of toxic assets (basically, we would partner with Wall Street to buy worthless paper and share in any losses or … snicker … profits).

None of this gets to Mr. Obama’s greatest giveaway to Wall Street fat cats – the Federal Reserve. Since 2009, the president’s Federal Reserve chairs (Ben Bernanke and Janet Yellen) pegged short term interest rates at zero and the purchased some $4,500,000,000,000 of U.S. government bonds and mortgage backed securities (remember the “worthless paper” from above?) – money that pushed stock prices to never-before-seen heights but did little to help the real economy. It was one of the greatest transfers of wealth in all of history – without firing a shot – and the man at the helm the whole time middle-class America was forced into Wall Street fealty … Barack Obama.

Mr. president, you may not have run for office to help out fat cat bankers on Wall Street, but that will be your legacy. And while your words have been cheap, your policies have cost the common man plenty.

Speaking of the Fed and Janet Yellen, they find themselves in an awkward situation these days. In past boom-bust cycles, the Fed was able to hike interest rates when their inflationary policies started hitting the wallets of the common man. These hikes always preceded the next market collapse, but they gave the Fed room to lower interest rates again, ostensibly to “rescue” the economy.

This time around things could be different. Interest rates have been at zero since the 2008 crisis. And yet, the economy appears to be slowing (all of the indicators of late have been seriously below estimates, and GDP was barely positive in the first quarter). We could already be in a recession (Mish thinks so). What to do if you’re the Fed?

If you raise short-term rates now and a recession follows (or is already in process) you’ll get blamed for raising the rates too early. But if you hold rates at zero and a recession follows you have little-to-no room for maneuver, and you risk your entire approach to monetary policy being called into question on a broad scale. (“You kept rates at zero for seven years and we still went back into recession … why do we have you again?”) It’s a pickle. Yellen and the Fed may be stuck with choosing the less embarrassing of two evils (and then deflecting blame onto Congress or perhaps even Ben Bernanke).

“Then I will draw near to you for judgment. I will be a swift witness against the sorcerers, against the adulterers, against those who swear falsely, against those who oppress the hired worker in his wages, the widow and the fatherless, against those who thrust aside the sojourner, and do not fear me, says the Lord of hosts.” – Malachi 3:5

Posted in Uncategorized | Leave a comment

Can the Church Survive the American Experience?

“12 Now if Christ is proclaimed as raised from the dead, how can some of you say that there is no resurrection of the dead? 13 But if there is no resurrection of the dead, then not even Christ has been raised. 14 And if Christ has not been raised, then our preaching is in vain and your faith is in vain. 15 We are even found to be misrepresenting God, because we testified about God that he raised Christ, whom he did not raise if it is true that the dead are not raised.16 For if the dead are not raised, not even Christ has been raised. 17 And if Christ has not been raised, your faith is futile and you are still in your sins.18 Then those also who have fallen asleep in Christ have perished. 19 If in Christ we have hope in this life only, we are of all people most to be pitied.” – 1 Cor 15:12-19

It’s been about a year since I’ve written (getting my family moved and settled into a new house turned out to be quite an undertaking). In that time plenty of worthwhile topics have come and gone – and we’ll try to pick them up as time permits. For now, I want to pass on a quick thought on something the preacher said in church a few weeks back.

The comment was simple enough (I’m paraphrasing): “without the resurrection of Christ, there is no Christian church today.” Now, as a religious expression the thought is unassailable. As Paul notes in 1 Cor 15 (above), without the resurrection there is no point to Christianity. The message would be both false and futile. But I think the sentiment has truth beyond the obvious religious context.

Any organization, or movement, or social undertaking relies on people to choose to participate. We are creatures of free will, and any enterprise that cannot get people to choose to participate will not last long. This doesn’t necessarily mean that the choice is made of hope or good  will – plenty of choices are presented to us as the lesser of a multitude of evils. These are choices all the same.

Without naming names we note here that there are plenty of religions that have carried on through the ages by social convention, by parental indoctrination, and even by threat of violence. People chose to maintain those religious foundations – even if the choice was not based on a heartfelt conversion, repentance from sins, or a brazen hope in a loving God.

At its foundation though, Christianity had none of these modes of promulgation available. There was no Christian tradition – these were the first Christians. There was no parental indoctrination – nobody was “raised in a Christian household” at the time. There was no threat of violence (“convert or be killed”). There was no threat of social ostracization – we were the outcasts. There was no means to maintain the religion other than the heartfelt conversion of the new believers, a repentance from sin, a brazen hope in a loving God and a willingness to abandon all for the sake of knowing Him. (And it cost many their lives.)

So, could the church have started without the resurrection? I say no. But this leads us to a more ominous question. Can it continue without the resurrection? Can it continue without the gospel? Here the answer is not so simple.

In America today there are plenty of reasons one might become a Christian that have little to do with loving Jesus. In some parts of our society (read “the Bible Belt”) one may find himself a social outcast by not choosing to participate regularly in church attendance. Furthermore, America has seen the rise of mega-church social clubs, where people join to fit in, join to be part of the excitement of something that is growing. I don’t mean here that mega-churches are expressly evil, simply that one can conceive of how they can grow and exist apart from the gospel.

My point here is simply that I am dubious of a Christian organization that can grow and thrive apart from the gospel. That’s not an accusation of wrongdoing – Christians in America are not to be held to account for the fact that they happen to live in a time and place where the church faces little-to-no opposition. But it is often the “trial by fire” as it were that purifies. Such fire would appear to be scantly seen in America today (… but this could certainly change).

Ultimately the church will survive the American experience. If the “gates of hell” cannot prevail, then obviously ease and comfort will not succeed in destroying the message either.

For now though we must wryly shake our heads at an American Christendom that appears to speak the loudest on such topics as “immigration reform” (doesn’t our Bible tell us to be gracious to the “sojourner”?) and enforcing morality through the ballot box (isn’t such morality farce?). More on the social wars later. For now, I’m off to work. (It’s good to be back.)

“I’m not a coward, I’ve just never been tested. I like to think that if I was I would pass” – The Mighty Mighty Bosstones

Posted in Uncategorized | Leave a comment

Ferguson, The “What If” Questions, and What Happens Next

“He has told you, O man, what is good; and what does the LORD require of you but to do justice, and to love kindness, and to walk humbly with your God?” – Micah 6:8

I’ve been painting the house of late, and have had little spare time to blog. This is my first attempt to get my thoughts down in writing for several months. But, with Ferguson MO in an uproar around the Michael Brown shooting, it seemed like a good time to get back in.

First, the obvious – this is bad. An unarmed kid was shot dead by a police officer. That’s just not a good situation. Forget for a moment the riots, property destruction, police crowd control tactics and tear-gassing of protesters and journalists (and the intentional dismantling of journalist equipment). Eighteen year-old Michael Brown’s life has ended. That’s horrific.

Something of the sadness of this has been lost in the back & forth about what actually happened that day.

Then there is the “what happened” question. Were Brown and Dorian Johnson running away from officer Darren Wilson or was Brown charging Wilson? I don’t know, and accounts differ. Did Wilson confront Brown and Johnson for walking in the middle of the street, and then return after hearing an APB regarding the convenience store robbery, or did he get confrontational because he felt disrespected by the teens? I don’t know, and accounts differ. Was Wilson so amped up after the initial confrontation that he fired his weapon without cause? I don’t know.

In some regards we’ll never know the thoughts and intents of the heart. The police department as well as the Department of Justice will do an investigation. Without knowing the information they’ve already collected, I have to say that the eventual results seem to be trending in a clear way. To date, the physical evidence (as I understand it) is consistent with officer Wilson’s account. This doesn’t mean he’s telling the whole truth, it simply means that the physical evidence doesn’t contradict his story. Such a contradiction would be quite useful in a legal proceeding. (The same was true in the George Zimmerman trial – whether Zimmerman was lying or telling the truth, neither the evidence nor the witnesses could contradict him; which is why there were no charges initially.) I expect no charges from the local municipality or from the state.

The DoJ investigation is another issue altogether. Back in the Zimmerman trial, folks were fairly certain that violation-of-civil-rights charges would come from the  DoJ, but it never happened. Perhaps they couldn’t build the case, who knows? In this case my understanding is that the Federal government has 90 days from charges to trial, by law, so one shouldn’t expect charges soon as it starts the clock.

As a mental exercise, without knowing the actual events, it is useful to consider the “what if” – what if either side is telling the truth. If Dorian Johnson is correct in his description of officer Wilson’s behavior and engagement of Brown, well, it is appalling and nobody should feel safe in Ferguson. If Darren Wilson is correct in his description of  the events, the confrontation, being punched, Brown grabbing for his gun, Brown turning and charging him – then one has to suspect that he acted reasonably in opening fire. I point this out because so many people on the TV these days claim to “know” exactly what happened, even though they know exactly as much as I do, which is not much.

So what happens next? Without any evidence to support my claims, I will add that I think the “no charges” result is already baked in. The National Guard has been deployed well ahead of time to be on station in case of riots. And, I suspect there will be riots. (Of course, I suspected the same thing after the Zimmerman verdict, and was proven wrong.)

It’s also fairly clear that the Ferguson PD has lost the ability to “serve and protect” in the community. There is zero trust. That will take a major overhaul of the department and I suspect a long period of state and county jurisdiction over the policing functions.

Tomorrow we’ll try to take up Kareem Abdul-Jabbar’s oped on the “coming race war [which isn’t about race]“. He makes some interesting points. For now though, we’ll continue to watch events unfold and see what the night brings.

Be safe out there.

Posted in Uncategorized | Leave a comment

Roberts Defends Religious Freedom … Just Not Regular Freedom

“If children do not understand the Constitution, they cannot understand how our government functions, or what their rights and responsibilities are as citizens of the United States” – Chief Justice John Roberts

When I was a kid I wondered what stopped a man, any man, from starting his own “religion” – and then demanding that he could do anything he wanted under the pretense of religious freedom. It sounds silly, I know, but I actually did think about these things when I was a kid.

It seems like a legitimate question though. If we have religious freedom, how does one go about deciding what does and doesn’t qualify as an actual religion? (I think I’ll start a cult of monetary freedom tomorrow and see how it goes.)

Earlier today the Supreme Court struck down the “contraception mandate” of Obamacare. The ruling stated that corporations (which are fundamentally aggregations of individuals, presumably with rights of their own) can hold religious objections to providing contraception in their insurance benefits package. The logic seems to be (i) people have religious freedom, (ii) a religious expression of conscience can lead one to be morally opposed to contraception and (iii) corporations are people too.

I don’t disagree with the ruling. In fact, I don’t think it goes far enough.

How is it that the Supreme Court can distinguish between religious freedom and plain, old, run-of-the-mill freedom? Is it that we only have freedom, no-kidding freedom, if we are scared that God will “get us” if we do something the law mandates? (One suspects this puts those poor atheists at a significant disadvantage. Having no fear of eternal retribution they can hardly claim “religious freedom” when protesting a government mandate like the one in Obamacare.)

I contend that the reasons are actually unimportant from the standpoint of the law. What business is it of our neighbors what our reasons are for behaving in this way or that?  Why should it matter that Hobby Lobby protests contraception on religious grounds? Why can they just not be free … like all the other “free” people here in the land of the free?

I will admit though, it is comforting to see the Supreme Court, and Justice Roberts in particular, struggle with the gray areas they have constructed over the years.

Posted in Uncategorized | Leave a comment

Father’s Day 2014, Remembering that Ideas and Ideals Still Matter

For I will pour water on the thirsty land, and streams on the dry ground; I will pour my Spirit upon your offspring, and my blessing on your descendants. They shall spring up among the grass like willows by flowing streams.” – Isaiah 44:3-4

Yesterday my eight-year-old had his first ever competitive swim meet. Swimming is apparently a big deal here in Maryland and I certainly want to encourage him to be a good swimmer (it can be a life-saving skill). The meet was a mad-house (though apparently well-organized underneath the chaos), and I set about getting him to the right places at the right times for his events.

His first event was the 25m free style, finishing 2nd in his heat. While there were four heats total and only four swimmers in his heat, he took it as a minor victory. He finished 2nd after all. Then came the 25m backstroke. Not so good. He finished sixth out of eight in his heat and came unglued. He had it in his head that he would win one of the races and be able to tell his entire Cub Scout troop about it later in the day at the picnic. Dreams dashed I tried calm him down by taking a walk away from the pool.

Somewhere along the way I decided that it would be a good idea to share the story of my high school basketball career. My father (my hero) had been a college basketball player at Shorter College in Rome, GA. While I was partial to the calm, lazy feel of golf in middle school, it seemed like basketball was the right route to take. Not that my father pushed me, he didn’t. It’s just that he was a basketball player, there were no fans (or, more importantly, cheerleaders) at the golf matches, and my lanky frame hardly seemed right for football.

So, when the 7th grade tryouts came about I went out and did my best … and got cut. I figured I needed to work harder. So, I practiced continually. Ball-handing drills, shooting, running, lifting weights. At the 8th grade tryouts I was much better … and got cut. No worries, I had this hard-work thing down, so I pressed on. Then the 9th grade tryouts (the JV squad!) … I got cut. I worked harder still until the 10th grade tryouts. I made the team! … and never played. So I worked even harder. Eleventh grade tryouts. I made the varsity team this time … and never played. Well, not “never” – when we were up 30 I’d be in the game.

Undaunted I pressed on, and poured everything into being a starter my senior year … and it happened. I started every game that year for the Newton-Conover High School Red Devils. We went 23-3 and were at one time ranked #1 in the state (though we did not win the state title). We won the Catawba Valley Classic, the Christmas tournament with all of the local schools. We tied for the regular season conference title and then won the conference tournament convincingly. Great days.

Was it time well spent? I think so. I mean, I could have been learning a computer language or studying investing books … or I could have been playing video games. In the end, I poured a ton of time into something that I really wanted – and got it.

(Side note: my father was always my biggest fan. He never missed a single game, ever. Even when I was a bench-warmer on the JV squad, he made every single game.)

The story didn’t really mollify my eight-year-old after his apparent “failure” in his first-ever swim meet. The concepts of “six years of hard work before glory” (and I use “glory” loosely) didn’t really appeal to him. Still, the time walking and talking did settle him down. We collected our things and headed home, then off to the picnic where burgers, chips, cake, kickball, and rocket launching made the day a hit.

A few days back I was having a conversation with a friend about politics, economics, world affairs, and the state of things in the United States. We discussed how the Right (at least Christians on the Right) has been co-opted by this need to enforce morality on their neighbors (ostensibly out of fear of reprisal from the Lord for allowing immorality to persist in the nation). We discussed how the Left (at least Christians on the Left) has become enthralled with the notion of setting every social ill right by forcibly taking the production of hard-working people and using it for themselves … and how they plan on sealing the deal by importing another 10-20 million votes from south of the border.

There was a palpable sense of despair. Is there hope that freedom could come back? Is there hope that this nation could throw off the “I’m on ‘team God’ and I’m here to make sure you live your life the right way” philosophy that is so pervasive, and actually let “free” people be free?

I really don’t know – but I certainly have hope. Hope that we’ll see a throwing-off of the current, broken system? Perhaps not anytime soon. But hope that years from now, perhaps for my kids or their kids, there will be freedom again.

And so we press on, hoping that in some small way continuing to press the message of freedom will make a difference. It is Father’s Day after all – and we all want a better world for our children.

Posted in Uncategorized | Leave a comment

Down Goes Cantor!

Just a quick note today. I’m sure most will have seen the headline today that House Majority Leader Eric Cantor (2nd in leadership behind John Boehner) has LOST his primary to a Tea Party challenger.

While I have noted in the past that the Tea Party may have lost its freedom-loving way, falling in with any number of Christian dominionist groups, at least there is still a push by libertarian-minded conservatives to oust Republican insiders. If only there were such a movement by freedom-minded liberals …

Until then, let us at least rejoice that the civil war within the Republican party continues, and the big-government, big-brother insiders are still taking it on the chin.

Posted in Uncategorized | Leave a comment