When will the Economic Crisis End?

…The Law of Unintended Consequences

Chapter 11 – Recognizing Deception

by

Dene McGriff

The market is soaring because the Federal Reserve lowered the rate to 0.0 percent. (Decemuseer 16, 2008)  This is unprecedented and represents the last arrow in the Fed’s quiver short of hyperinflation (pumping more and more money in the economy).  This action shows how terrified and desperate the Fed is.  There has NEVER been such a precipitous drop in the Fed rate.  The action is huge and historic.

Practically every day for the last few weeks there is more bad news about housing, employment, business failures, etc., and yet the market climbs.  Bad news keeps piling up but the markets cling to life.   What will be the consequences of the disastrous policies, especially of the past eight years.  We have already seen the unintended consequences of bubbles and busts.  The U.S., even the world economy is in a downward spiral.  The Federal Reserve and Government somehow think they can micro manage it and avert disaster.  Every move breeds a counter move, that somehow seems to make it worse.   

So what is going on?  Is it over?   When will it be over?  Are we at the bottom yet?  What is really happening and how will it end?   

We’re looking at broken records: the worst downturn since the Great Depression, historic loss of jobs week after week, the lowest number of housing starts in 50 years, not to mention the failure or near failure of some of the nation’s icons (all three automakers, the nation’s largest banks and investment houses, thousands of long established businesses (all the while the bankers deceptively collected gross financial bonanzas!). 

In response, the government (the Treasury and the Fed) has pumped over $10 trillion into the economy in a Herculean effort to free up the frozen monetary system.  Now they have lowered interest rates to zero.  

And, if that weren’t enough, Americans have just lost $10 trillion in asset values…

1) Flow of Funds data for Q3 was startling. It showed that household net worth (in 2008 dollars) has declined by more than $10 trillion from the cyclical peak, easily surpassing the 2001 and 1974 declines in percentage and real dollar terms.

2) The data also showed that household borrowing has declined on a year-to-year basis for the first time on record. Intense stress on household balance sheets has crippled retail sales.

3) November (2008) data showed that nominal retail sales have collapsed 7.4% year-to-year, the largest decline in post-WWII history. In real terms, retail sales have fallen at the fastest annual pace since 1980.

4) Despite the pullback in borrowing and spending, household debt levels are still high relative to after-tax incomes. With the labor market collapsing, household assets down sharply, and financial conditions tight, we expect to see at least three more quarters of negative consumer spending before the economy begins to climb out of the current ditch sometime in late 2009 or early 2010 (Note:  This is James Pethodoukis’ calculations – not the TribNet’s.). As we’ve said before, it’s likely to be a long, slow, sloppy and bumpy bottoming-and-recovery process." ($10 Trillion Down the Tubes - Capital Commerce – James Pethokoukis – U.S. News, Money and Business, Dec. 21, 2008)

You do the math:  $10 trillion “LESS” $10 trillion = .00 . . . as fast as the Fed pumps in dollars, that’s as fast as we’re losing it!  All the while we’re involved in what appears as a “zero sum game” – the Terminator or Governator, as we in California call him, declares that California is “heading for a Financial Armageddon” – a $40 billion deficit!

OBAMA THE DEBT MAKER – THE UNINTENDED CONSEQUENCER

Obama has a list of $850 billion in Depression Era style public works projects to create jobs and pump money into the economy.  Theory has it that the economy needs to be jump started by massive amounts of capital and credit.  What will be the result of these extraordinary measures?  The question is will it work?  Did it work in the ‘30s?  Did it work in Japan, Argentina, Zimbabwe, Ecuador, Brazil, Mexico, Germany, etc?  Have these economic policies ever worked?  Can someone give me a single example of  when intervention by a central bank anywhere and at any time in history has ever worked?

This article is subtitled, “The Law of Unintended Consequences” which states that any purposeful action, no matter how well intended, may have unintended consequences.  In 1859, a well intentioned farmer, Thomas Austin, brought 24 cute little bunny rabbits and released them on his farm in Australia.  They multiplied like crazy and began consuming everything in sight.  You know the rest of the story.   By the 1890’s, with no natural predator, rabbits reached plague status in Australia.  What to do?  Introduce foxes, of course which upset things even more.  And so the story goes.  We killed off the wolves and deer, elk and moose overgrazed, destroyed habitat and completely upset the balance in the great Northwest.  Now they are being reintroduced and the eco system is improving.

When it comes to the economy, the question isn’t just whether it does any good, but are there unintended consequences?  It isn’t the first time nations have lowered interest rates, printed money and spent it on public works.  Did it help bring the U.S. out of the Great Depression?   Did it help Japan get out of her 18 year slump (beginning in 1990…and still counting)?  Has the $10 trillion pumped into our economy in the past year helped?   It not only doesn’t help.  It postpones the inevitable adjustments that have to take place to restore healthy economic order.

Lessons from History

The Great Depression began in October of 1929.  Manufacturing declined and unemployment increased.  Businesses and banks failed and people lost their jobs, homes, and savings.  But there wasn’t a sudden final crash.  As the chart to the right discloses, the economy bounced up and down but gradually slid down hill for the next 15 years or so.  From 1929 to 1933, personal income almost dropped in half. 

Trade and manufacturing dropped by more than half.  But fortunately most of the world, including much of the United States, still supported themselves by farming so farm production actually increased.  The Great Depression dragged on for many years.  It took 26 years (until 1955) for the Dow to recover to 1929 levels.  The truth be told, World War II, not the extraordinary spending and market manipulation, pulled America out of the Depression.

OBAMANOMICS = HOOVERNOMICS

Interest rates were cut to 1 percent.  Deficit spending and public works ensued.  The gold standard was abandoned leaving currencies without boundaries, discipline or control opening the door to future inflation.  The lesson many took from the Great Depression is that the government and the Federal Reserve didn’t do enough, fast enough.  This includes such notables as Milton Friedman, Alan Greenspan and Ben Bernanke.  But others believe it only prolonged the inevitable adjustment and made matters worse.   Peter Schiff concluded:

“In an amazing feat of revisionist history, somehow Hoover's interventionist policies have been completely forgotten. It is taken as fundamental that his inaction led to the Depression and Roosevelt's "heroics" got us out. Unfortunately, since we have learned nothing from history, we are about to repeat the very mistakes that lead to the most dire economic circumstance of the last century.”

The cheerleading economic pundits of CNBC would say that things have changed and you can’t use such an old example.  We have learned from our mistakes.  So let’s look at a modern day example. 

Japan is the second largest economy in the world and a net creditor.  After the war, Japan experienced incredible growth, one might even say bubble growth as markets and assets grew by 500 percent in the 1980s!  But in 1990, something happened and the pin found the bubble.  Both the stock market and real estate have lost 75 percent of their value in Japan and 18 years later it still has not gone back up. 

Meanwhile, what did the Japanese government do?  In July 1991, the discount rate was 6 percent and fell to near zero where it remains to this present day.  The hope was that free money would reinflate real estate values and asset values but it didn’t.  The Japanese central bank did what it was supposed to by making more money and credit available.  There was a banking crisis, a freeze in credit (sound familiar?) followed by bank bailouts.  No amount of government or central bank intervention helped.  The Japanese pumped trillions of Yen into the economy.  They spent trillions more on public works.  The only difference between the U.S. and Japan is that the Japanese people are famous savers (rather than spenders) and exporters rather than importers.  So we think house prices always go up?  Just ask the Japanese.  Eighteen years later and they are still at the bottom.  After nearly 20 years, their Nikkei Stock Index and housing prices have never recovered – they are still at 1980 levels! 

The point is that those pundits on CNBC and Bloomberg who call for a turn around next month or next year do not learn from history.  First, these huge financial imbalances need to adjust.  Even America cannot continue generating debt at current rates.  It is not sustainable.  Trends always revert to the mean.  Just look at the graphs above.  Second, it takes a long time for adjustments to occur (roughly 20 year cycles).   

WWII brought the U.S. out of the Depression, but things were indeed different then.  America was the biggest creditor nation, the biggest manufacturing producer nation, the biggest exporter.  Today, manufacturing has gone from 60 to 10 percent of our GDP.  Our Federal Budget Deficit is in excess of $10 trillion and our balance of trade deficit is at $10 trillion and growing.  Only massive infusions to the tune of $2 to $5 billion every day from other countries keeps our debt ridden economy going.

There is a good reason for a recession or depression.  This is how the economy strengthens itself by weeding out the weak and inefficient, by working out the debt, the over supply and by balancing the books between trading partners.  Deficits cannot go on forever.  The interest on debt eventually becomes unmanageable.  We may think countries are different than businesses or individuals.  They can borrow on future production, future value.  But in the end the books have to be balanced and there is no “free lunch.”   The chart below shows inflation adjusted home values from 1890 to the present in America.  Please note that values dropped for 25 years before recovering to the mean.  Here is an example of a trend reverting to the mean.

So let’s get back to unintended consequences.  We understand with hind sight that loose monetary policy resulted in the “dot-com bubble,” the real estate bubble, the commodities bubble, etc.  So what makes us think that more loose monetary policies will do any good?   With the Fed Rate at zero, what does that do to the economy?  It encourages borrowing and discourages savings. 

Why put money in the bank and lose principle to inflation?  Why buy a bond that pays one percent?  The dollar has fallen again against the Yen, the Euro and Pound.  As we just said, we depend upon other countries to loan us money every day if we are to stay afloat.  Why would they buy long term bonds that make no money?  Long term rates dictate real estate loan rates.  The housing bubble can’t be reinflated.  It didn’t work in Japan and it won’t work here.  Real estate values will continue to fall—while property taxes soar (only public schools are hiring!).

WELCOME TO THE UNITED STATES OF FORECLOSURE

So let’s review where the economy stands.  Housing starts are one third of what they were in January 2006 and are at a post WWII low.  Foreclosures continue to increase and houses are selling at about 70% of their previous price (i.e., they’ve lost around 30% of original value and declining much further). 

We have worked our way through the sub-prime mess, but according to 60 Minutes broadcast last Sunday (December 12), the Alta-A and ARMS – adjustable rate mortgages – are about to be reset.  This represents 50 percent more than all subprime mortgages and foreclosure is expected to be anywhere from 25 to 50 percent.  This will be further exacerbated by growing unemployment.  More unemployment means more foreclosures and the downward spiral accelerates.

Estimates are that 30 percent of homes with mortgages are “under water” and this number will grow to 50 percent.   Unemployment is setting all time records with over a half million a week and previous weeks are being adjusted higher by a considerable amount.  The number of layoffs from all kinds of industries – automotive, banking, retail, etc. seems to have no end.  We are watching the closure of huge chains such as Linen N’Things, Mervyns, Circuit City, etc.  Car sales are 30 to 50 percent off and the Big Three are hanging on by a thread.  Default on credit cards, student and auto loans are soaring.  Notice on the chart above that debt service payments aren’t keeping up with growing debt.

Just to set the record straight – the list of retailers in America having closed or planning to close stores by January 2009 staggers the conspicuous consumption of normal Americans:

Here's a list of some of the major US retailers who have closed some or all of their stores this year (2008) - note that this list will be updated as more store closures or details are announced:

• Ann Taylor (117 – Stores – same for every parenthesis hereafter)
• Movie Gallery (378)
• Sprint/Nextel (125)
• Ethan Allen (12)
• Dell (140)
• Friedmans (120)
• Pier 1 (25)
• Sigrid Olsen (54)
• Talbots Kids/Mens (78)
• Home Depot (15)
• Eddie Bauer (29)
• GAP (85)
• Footlocker (140)
• Bombay (all 384 stores)
• Disney (98)
• Macy's (11)
• JC Penney (scaling back)
• Loews (scaling back)
• Sharper Image (184)
• Wilson Leather (160)
• Pep Boys (31)
• Pacific Sunwear / PacSun (154 Demo stores)
• Zales (105)
• Cache (20)
• Lane Bryant (40)
• KB Toys (356)
• Dillards (26)
• Fashion Bug (100)
• CompUSA (all stores)
• Linens 'N Things (all 371 stores)
• Mervyn's (all 149 stores)
• Club Libby Lu (Saks owned) (all 78 stores)
• Steve & Barry's (all 173 stores)
• Sergio Rossi (all standalone US stores)
• Office Depot (126 stores)

(List of Retail Store Closings in US – Terry Potartz, Nov. 19, 2008 – NowPublic – Crowd Public Media)

UNINTENDED CONSEQUENCES

For years I have been saying that we will face deflation and inflation at the same time – deflation in assets such as stocks and real estate and in the value of the dollar and inflation in other costs.  At the present time we are not experiencing inflation in spite of the massive amount of dollars being dumped into the system.  There are several reasons for this.  First, debt is absorbing excess capital.  Banks are using the trillions pumped into them by the Fed to absorb derivative losses.   Second, banks are afraid to loan, not sure that the borrower can pay it back.  Third, the velocity of money is slowing.  Velocity means turn over.  You pay the gardener 30 bucks and he goes to the store and buys a new shovel, so the hardware store can order more stuff.  The money is used over and over again.  If I fire the gardener, or the gardener uses the money to pay down bills rather than buy something new, the movement of money grinds to a halt.  People start buying less, businesses lay people off.  Once unemployed, they spend even less, lose their house which puts more pressure on the banks to offer less credit, which causes less spending, more layoffs, more foreclosures and so on.  The government is hoping to jump start the spending process.  But what should drive an economy – spending or savings?  This is the flaw in their thinking.

 And as I have pointed out before, America has a demographic problem, a bubble of a different sort.  It is called the baby boomer which represents a huge number of people born from 1946 to 1964.  They have been busy spending on bigger houses, college for the kids, expensive toys (boats, RVs, etc.) and are now facing retirement without any money saved.  They are beginning to panic.  Look for this group to stop spending and start saving in earnest (with all of the failures in banks, stocks, etc., and low interest rates, how on earth do they do this?). 

A consumer economy such as ours which is 70 percent consumption thrives only if people spend.  We truly are a nation of consumers rather than producers (Revelation 18 anyone?)  In 1950, 60 percent of our economy was manufacturing.  Today it is 10 percent.  The failure of the big three auto makers highlights the difficulty of being competitive in a global economy.  Our manufacturing will continue to decline if we can’t compete.  An unemployed, underemployed and aging population does not consume much.  But even so, does it really make sense that a nation gets wealth by consuming rather than producing, by spending rather than saving and investing?

TOM JEFFERSON’S WORDS HAVE COME HOME TO HAUNT US!

Welcome to Japan or should I say the Weimar Republic, Argentina, or Zimbabwe – all countries ruined by unintended consequences of central banking gurus.  The result of bad monetary policy is always the destruction of the currency through inflation.  As Thomas Jefferson once said,  

“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”

The first and the last thing Jesus did in his ministry were to throw the money changers out of the temple (John 2:15,  Mark 11:15).  We throw $10 trillion at them and what good has it done?  There are no bench marks, no guidelines, no oversight and no easing of credit.  I would remind you that the Federal Reserve is neither “Federal” – nor does it have any reserves.  Please see my article entitled “Modern Alchemy: the Money Illusion” or go out and buy “The Creature from Jekyll Island.”  It will astound and anger you.  The Federal Reserve is a private banking cartel telling our government what to do.

Bankers  refuse to tell how they spent the $350 billion.  “There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money — not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that's happening and there are no consequences for banks who don't comply…"\We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."  There arrogance knows no bounds.  Over $10 trillion has been poured into the financial system and there is absolutely no sign that it is having any effect.  Compare that to the controversy over giving the automakers a mere $17 billion!  Who is calling the shots here?

MONETIZING = WHEELBARRELS OF DOLLARS TO BUY A LOAF OF BREAD?

Credit is frozen, not because it is too expensive but because lenders are afraid they won’t get their money back.  Asset prices are falling. So, the collateral that banks loaned against is going down in price.  Credit is frozen because excess cash is covering bad debt and bad derivative bets.  Confidence is at an all time low.  Our worst fears were confirmed by Bernanke.  He is going to buy Treasury debt.  This is known as “monetizing debt”.  Wikipedia defines it as follows: 

“Debt monetization can be seen as a flat tax because the ultimate result is that the government acquires additional funds and the currency decreases in value. However, monetization helps the government temporarily to meet its short term commitments at the beginning.  Debt monetization has the drawback of increasing the twin deficit. That is, when government financing is increased, along with interest rates and foreign capital, the trade deficit also goes up along with the budget deficit.”

The whole purpose of this exercise is to increase spending – the Keynesian “magic bullet” – to get the consumer economy going.  This is a sure fire road to disaster.  It has never worked except in the confused minds of economists.  It is spending and debt that got us into this mess in the first place.  Only savings and capital formation will bring us out.  Bailouts have the opposite effect and impede the tendency of the system to adjust itself.

Here is the studied opinion of the Daily Reckoning:

“Of course, there is nothing the government can do…but cause more mischief.  That’s the low road - the road the feds have taken…by cutting interest rates to zero and spending trillions of dollars they don’t have.  It’s the low road they’ve been on for many years…it’s where they feel most comfortable…and where they can do most damage. Instead of recapitalizing the economy by favoring savers, the feds are continuing the process of de-capitalizing it. Yields go down, not up. Savers get discouraged…and ripped off. Money becomes cheaper and cheaper…eventually reducing the debt load via inflation. Reckless spenders’ debts are erased. Mortgages are wiped away. Speculators make money on wild bets. Debtors come out way ahead - including the biggest debtor of all - the US federal government,

Meanwhile innocent savers, ordinary householders, taxpayers, foreign creditors, unborn children - all pay the price”.

The problem is monetizing debt inflates the money supply directly and immediately and leads to debasing the value of the dollar and inflation with the goal of paying off debt with cheap dollars.  But in this case, the desired disastrous result may not occur because the U.S. Government is in need of so much money (a $trillion budget deficit for next year alone) that no one will buy the debt unless the long term interest rates stay high.  This will prevent the re-inflation of the housing bubble, continued deflation of assets such as housing and inflation in the price of basic necessities.  We had one bubble after another: emerging markets, housing, consumer credit, the financial industry, commodities, food, art., dot.com bubble, and now a bubble in public debt.  This cannot end well or soon.

“Helicopter Ben Bernanke” will get his way (He earned the title by saying he would drop money from helicopters if he had to.).  He will hyper-inflate us into economic oblivion.  Hyperinflation occurred in Germany in the 1920’s leading to Hitler.  It occurred recently in many countries around the world, notably in otherwise wealthy countries such as Argentina and Zimbabwe (previously known as Rhodesia) where it costs a million marks or whatever to buy a loaf of bread.  Even if it isn’t hyperinflation, as we have said before, inflation is the most subtle, insidious tax of all.  Surely the 960 square foot, three bedroom, one bath house my parents bought 60 years ago for less than $10,000 is not really “worth” a half million today!  No, that old house is not “worth” 50 times more but the dollar is worth 2 cents of what it was then.  There has never been a fiat currency (paper) that has not eventually gone down to what it is really worth – the paper it is printed on.  They have all failed!  

We are moving toward a planned, almost Soviet style engineering, economy or should we call it “state directed capitalism.”  In the past few months, we have seen the government take control over the banking, automobile and mortgage industry.  What’s next?  According to Bloomberg, “the increase of the government’s control of the economy has been breath taking.”  Obama’s public works programs occur at the expense of something else.

THE CREDITOR NATIONS OF CHINA AND JAPAN AREN’T STUPID!

If we think lowering interest rates will help the housing market to recover and re-inflate, we have another think coming.  Long term rates such as mortgages are tied to the rate for long term bonds.  These are the bonds that countries like China and Japan purchase to help us pay for our trade and federal deficits.  These countries are not stupid.  They will not continue to lend to us at low rates if they think our game plan is to deflate our currency so we can pay them off with cheap dollars.   They will insist that rates be kept higher (7 or 8 percent or more – at least ahead of inflation), or what is the point?  Although some 30 year rates have dropped below 5 percent (to all time lows), long term bond rates will ultimately prevail.  And if they didn’t, we would just inflate real estate again so it is no longer affordable to the average person.  Beware—interest rates on housing are going to go off the charts—and you can thank the Chinese and Japanese for that one!  Long term bonds and Treasury bills control long term (real estate loans) rates – not the “discount rate” which is for short term borrowing.

Our national budget and trade deficits are about $10 trillion each.  Bloomberg estimates the 2009 budget deficit could reach $2 trillion in a $13 trillion economy!  That’s 15% of GDP!  Who knows where the $10 trillion just created out of thin air to bail out the banks came from?  This doesn’t count the unfunded deficits (Social Security, Medicare, etc.) which amount to another $50 trillion, plus the billions of debt at the State, County and City level.  Do you think there is no cost associated with this massive debt?  Where does the money come from?  It comes from countries with savings and a positive balance of payments.  Do you think they lend it to us for free?  Of course not!  They expect a return on their investment.  Historically, America has been considered a safe haven for investments.  If they begin to expect we are a dead beat debtor, and the risk is growing, they will demand higher and higher returns (to offset risk and the threat of inflation – devaluation of the dollar).  This will put upward pressure on long term interest rates – mortgages in particular which will continue to put downward pressure on house prices and increase the cost of financing business and industry.  Poor bond rates means sky high interest rates.

We are facing a worldwide crisis and the utter destruction of the global monetary system.  Even if we didn’t have prophecy which so clearly tells us where this is all going.  We have no savings.  We can not borrow any more.  We are losing our jobs and being downsized (e.g. a two day a month work furlough program for California State workers – translation – no pay).

BEWARE OF CRITICS BEARING GIFTS

Society has a way of punishing and mocking those who aren’t politically correct.  There was a time when anyone who opposed Darwinian evolution was scorned – which today translates into those who promote “intelligent design” or doubt that global warming is a proven theory.  It is the same in economics.  CNBC and Bloomberg are the cheerleaders for banking and industry.  This week the above quoted Peter Shiff, the CEO of Euro Pacific Capital, was on a CNBC panel with five other “experts.”  In analyzing the current economic situation and in the light of what has happened over the past several months – in other words, in spite of the facts, the other five piled on poor Shiff for being a prophet of gloom.  And in spite of the fact that Shiff pointed to several books he had written several years ago predicting to the letter what has happened, the pundits ridiculed him.  In another interview, Shiff said,

“‘I see a real financial crisis coming for the United States,’ Schiff said. ‘I am helping my clients protect themselves.’

Schiff likes the Titanic metaphor. Everyone thought the ship could never sink, just like most people think the U.S. economy can't, he said. But people were wrong about the Titanic, and they are wrong about this country's economic stability, he said.

Schiff sees a mammoth iceberg ahead that’s going to obliterate the U.S. dollar. The investors’ lifeboat, he said, will be to put their money into non-dollar assets and foreign currency.”

Part of human nature is to believe what you are told by the experts.  We also believe the lie because we want to.  We are easily deceived.  History is full of economic collapses, invasions and natural disasters that caught people completely unaware.  And the Bible tells us that people will be unprepared for the great events of the last days.  (Matthew 24:37-39)

We have lost our bearings.  How can a country possibly believe that they can prosper by consuming rather than producing?  How can America believe it can prosper by spending rather than saving?   Certainly, this fits the description of that great consuming nation in Revelation 18, but it is hardly the nation most of us grew up with!  The church in general is caught up in the good life and has no sense whatsoever of what is coming. 

Conclusion

Where is all this headed?  As I have said many times before, it is headed toward the utter destruction of the world’s monetary system and the establishment of a paperless global economy.  And just as the water heats up as the frog basks blissfully in the pot of water most, including Christians, will be caught unprepared and unaware.  People have an uncanny ability to gradually adjust to changing conditions.  In fifty years we have gone from the greatest producing nation to the greatest consuming nation.  Although we have seen our pay check inflate, the buying power is far less than it was in 1972, thanks to inflation.  We have no idea what a mess we have made and the great danger we are in.

I was talking recently to a non-Christian friend of mine from San Francisco. He was born and raised in China but has been here for many years.  His parents were raised Buddhist and he just doesn’t have any belief.  He was not terribly impressed with American style Christianity but when I asked him about the church in China, it was a different story.  He was well aware of the fact that a Chinese Christian is not a “lukewarm” celebrity star flaunting their faith and fortune on “The Hour of Power.”  He knows they pay a price to maintain their faith and fellowship with other Christians.

IT’S TIME FOR ABSOLUTE COMMITMENT

Today’s level of commitment and practical experience of Christ by most American Christians is appalling.   What are they committed to?  Programs, services, buildings, pastoral salaries?  Few have a clue as to what it means to have a relationship with the Lord, be the church (rather than attend it), to be connected with other Christians in spirit and in reality, in their day-to-day living.  One of my theses is that it will take very hard times economically, the shaking of their security in this world that will draw Christians together in a dependent, supportive and meaningful way.  Only that will free us from our false dependence on possessions, activities and programs so that we will turn to the Lord and get real with Him and one another.  The wealthy Laodicean last days’ church needs to repent and be awakened to what is coming down.

Research by the Barna Group indicates that there is little difference in the lifestyle, debt, incidence of divorce or any other indicator between a “Christian” and so called non-Christian.  This indicates a dismal state of readiness and a poor testimony by those who should be shining light in a dark world.  God’s prophetic time table will wait for no one.  These things will happen.  There will be a global banking system.  The antichrist will rise and seem to have all the answers.  All buying and selling will be controlled by the “mark of the beast.”  We will either be ready to stand and testify or we will be deceived and caught up in the tide.

The main characteristic of the “last days” is deception and Christians are not immune if they don’t have a fresh relationship with the Lord.  So many Christians are just going through the motions of going to church and trying to be a “good person.”  Meanwhile, the message from society and even the institutional church keeps drumming in their ears.  Christians will turn on one another.  In fact, we Christians will either be a part of the problem or a part of the solution. Some will be deceived and caught up in the antichrist system delivering up their brothers and sisters (thinking they are doing God a favor).  While others will love not their lives even unto death.  The system so many believers support will become the enemy of true believers.

So am I pessimistic or fearful?  Not at all!  God will have a living and triumphant expression of His body on the earth – those “who overcome by the blood of the Lamb, the word of their testimony and love not their lives even unto death” (Revelation 12:11).  But that will happen only as we repent and are freed from the deception that so easily blinds and enslaves us, and cling to one another in community and in utter devotion to our Lord Jesus Christ.

Dene McGriff, Sacramento, December 20, 2008