The View From 1776

Sunday’s sermon at the Long Ridge Congregational Church (non-UCC) in North Stamford, Connecticut, was delivered by Rev. Dan McCandless.  The lesson was that each of us must respond to Jesus’s call, whatever it may be. 

We cannot compartmentalize our lives into Sunday worship and the rest of the week.  We must strive to deal with a loving heart every day, with everyone.  Hundreds of passages in the Old and New Testaments stress that message.  For example:

Above all else, guard your heart, for it is the wellspring of life. (Proverbs 4:23)

Create in me a pure heart, O God, and renew a steadfast spirit within me. (Psalms 51:10)

But the LORD said to Samuel, “Do not consider his appearance or his height, for I have rejected him.  The LORD does not look at the things man looks at.  Man looks at the outward appearance, but the LORD looks at the heart. (1 Samuel 16:7)

For where your treasure is, there your heart will be also. (Matthew 6:21)

Rev. McCandless’s spiritual heart stress-test theme was illustrated in Luke 5:1-11:

One day as Jesus was standing by the Lake of Gennesaret, with the people crowding around him and listening to the word of God, he saw at the water’s edge two boats, left there by the fishermen, who were washing their nets. He got into one of the boats, the one belonging to Simon, and asked him to put out a little from shore. Then he sat down and taught the people from the boat.

Then Jesus said to Simon, “Don’t be afraid; from now on you will catch men.” So they pulled their boats up on shore, left everything and followed him.

Rev. McCandless noted that Jesus was, in effect, administering a stress test to Simon Peter’s spiritual heart, much as medical doctors use a physical stress test to assess a patient’s state of physical health.

Jesus first asked Peter to lend his fishing boat, his source of livelihood, to serve as a speaking platform off the water’s edge to facilitate addressing the multitude crowding around Jesus on the shore.  Next, Jesus tested Peter’s faith by directing him to go out into the lake and lower his fishing nets, at midday, the worst time for fishing, after a tired Peter had been unsuccessfully fishing all night.

Peter, floored by the miraculous success of doing as Jesus directed, fell to his knees before Jesus and acknowledged his own lack of worthiness.  Jesus then told him not to be afraid, that he would become a fisher of men. 

Whereupon Peter, passing his spiritual stress test with flying colors, displayed complete faith in Jesus.  Peter, James, and John pulled their boats up on the shore, left everything, and followed Jesus.  They did not know what lay in store for them, but their faith in the Lord let them follow his command and become his disciples.

Summarizing, Rev. McCandless abstracted four tests against which we must assess our own spiritual health.

First, are we willing to be inconvenienced for Jesus? If something is the right thing to do, do it.  Too many of us wait to see if someone else will do what needs doing.

Second, are we teachable?  Can we, as did Peter, put aside our supposed knowledge of skills like fishing and do as Jesus, often counter-intuitively, directs us.

Third, are we humble enough to admit our need of God’s Grace?  Everything in modern society schools us in the prideful, materialistic faith that human reason alone is adequate to control nature and human behavior.  This disease of modernity has to be thrust away if we are to have pure hearts and to see God in our lives.

Fourth, when Jesus calls, are we, like Peter, James, and John, ready to leave worldly things and follow him?  This is the toughest of all tests, of course.  Don’t be afraid, Jesus told them; greater things than we can know beforehand will be given to us. 

Blessed are the pure in heart, for they will see God. (Matthew 5:8)

Richard Dawkins is one of today’s most widely known defenders of Darwinian evolution.  Professor Dawkins goes beyond defending evolution, using extravagant language to attack the personal qualifications of anyone who questions Darwinian evolution.  Of such people, he opined, It is absolutely safe to say that, if you meet someone who claims not to believe in evolution, that person is ignorant, stupid or insane (or wicked, but I’d rather not consider that).

Needless to say, as a believer in evolution, professor Dawkins regards himself as not ignorant and not stupid.  Yet, some of his speculations, to a non-believer in evolution, appear to be a few cards short of a full deck.

In Darwin’s evolutionary hypothesis, and in the many variants since 1859, the fundamental thrust, indeed the starting point for Darwin himself, was to disprove what he called the “damnable doctrine” of God as the Creator of the cosmos and of life on earth.  All events, for the evolutionists, are attributable to material causes, without the intervention of a Creator existing before and outside the universe. 

Because the minds of evolutionists cannot conceive of God as existence preceding essence, for them He cannot exist.  Their only reality is the tangible, sensible world of processes with material causes that the human brain is capable of fathoming and presumptively controlling.

For evolution to stand on its own two feet, Darwinians must be able to explain how life was created by purely material factors.  This they singularly fail to do.  And without a materialistic beginning of life, there can be no purely materialistic, Darwinian evolution of life forms.

Darwinians therefore gloss over the origin of life and focus instead on the hypothetical mechanism of natural selection, through billions of tiny, random modifications over eons, which might plausibly have differentiated a single, original elemental life form into all known life forms of today.  To date there have been only unsuccessful attempts in chemistry labs to create life from inorganic chemicals.  Every theory attempting to explain the origin of life has collided with contradictory facts in chemistry and geology.

In The Blind Watchmaker, in the chapter titled Origins and Miracles, professor Dawkins deals with the origin of life and of the presumed inception of the evolutionary process itself.

Most text books, he writes, favor the ‘primeval soup’ concept in which lots of chemicals got mixed up at the beginning of planet earth, and life just happened.  It seems probable that the atmosphere of Earth before the coming of life was like that of other planets which are still lifeless.  There was no oxygen....Chemists know that oxygen-free climates like this tend to foster the spontaneous synthesis of organic chemicals.

However, this standard version, taught to students of biology today, appears to be erroneous in its postulation of an oxygen-free atmosphere before the creation of life.  As noted in Jesus vs. Darwin: Points 1 and 2:

For example, the “primordial soup” hypothesis for the origin of life entirely by chance, proposed by the atheistic Soviet biochemist A. I. Oparin in 1924, requires that there be no free oxygen in the atmosphere, otherwise the postulated sequential combinations of chemicals would screech to a halt as oxygen, in effect, would “rust” the process.  Geologists, unfortunately for the evolutionists, since then have found clear evidence in ancient rocks that there were significant amounts of oxygen in the atmosphere at the postulated time of the “primordial soup”.

Professor Dawkins’s preferred hypothesis, however, is not the ‘primeval soup’ one, but the ‘inorganic mineral’ theory of Glasgow chemist Graham Cairns-Smith.

Cairns-Smith’s view, Dawkins writes, of the DNA/protein machinery is that it probably came into existence relatively recently, perhaps as recently as three billion years ago....Although the chemistry of modern Earth-bound life is all carbon-chemistry, this may not be true all over the universe, and it may not always have been true on this Earth.  Cairns-Smith believes that the original life on this planet was based on self-replicating inorganic crystals such as silicates.  If this is true, organic replicators, and eventually DNA, must later have taken over or usurped the role.

Continuing, professor Dawkins writes, Cairns-Smith’s guess is that the original replicators were crystals of inorganic materials, such as those found in clays and muds....Since it is replication we are interested in, the first thing we must know is, can crystals replicate their structure?...Sometimes crystals spontaneously start to form in solution.  At other times they have to be ‘seeded’, either by particles of dust or by small crystals dropped in from elsewhere....Flat crystals give rise to a population of flat crystals.  Chunky crystals give rise to a population of chunky crystals.  If there is a tendency for one type of crystal to grow and split more quickly than the other, we shall have a simple kind of natural selection.  But the process still lacks a vital ingredient in order to give rise to evolutionary change.  That ingredient is hereditary variation, or something equivalent to it.  Instead of just two types of crystals, there must be a whole range of minor variants that form lineages of like shape, and that sometimes ‘mutate’ to produce new shapes.

Now to move on to the next stage of the argument, some lineages of crystals might happen to catalyse the synthesis of new substances that assist in their passage down the ‘generations’.....Cairns-Smith believes that organic molecules were prominent among non-replicating ‘tools’ of his inorganic replicators.

Notice in the foregoing, and in most writings by evolutionists, the frequent use of words like “may,” “probably,” “could have been,” “we could imagine,” “we may guess,” “must somehow,” and “must have been.”

Notice also that professor Dawkins begins with a tangential glance at the ‘primeval soup’ thesis as the mechanism by which life just happened on earth, but then he slides into the origin of DNA as the information technology by which genetic information is created, accumulated, and passed along to later generations.  He never specifically comes to grips with the origin of life itself, the all-important first step in evolutionary hypothesizing. 

Again, in the quotations above he casually assumes that, after clay crystals ‘evolve,’ organic chemicals (the building blocks of living tissue, which evolutionists acknowledge did not exist when earth was formed) are handily, by chance, available to be catalyzed by his ‘evolved’ crystals.  This is circular reasoning on the order of stating, “The weather is cold, because it is cold.” It explains nothing.  If the appropriate organic chemicals essential for living tissues came into being, via an unexplained process, at the appropriate time to catalyze Dawkins’s mud crystals, why do we need mud crystals?

Finally, notice that professor Dawkins and his fellow evolutionists offer no proof at all for any of their speculations, for the simple reason that there is no way to prove them.  One might as plausibly speculate that the sun was originally blue when the earth was formed; no one can disprove it.  Because they are “scientists,” we are required to take their word for it.

In any case, there you have it: the “scientific” hypothesis that one of the world’s most prominent Darwinian evolutionists uses to counter the ignorance, stupidity, and insanity of people who don’t accept Darwinian atheism and materialism.

Because the established scientific organizations and journals control the dictionary of science, they can get away with decreeing what is science and what is not.  It’s apparently scientific to construct a whole theoretical edifice on the foundation of sheer speculation, provided that the speculation affirms Darwinian evolution. 

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Phillip E. Johnson’s Darwin on Trial was one of the first works to lay bare the absence of conclusive scientific evidence to support Darwin’s hypothesis: that life originated by chance and that all living things evolved, by random chance, from a single, elemental form of life. 

Professor Johnson is a graduate of Harvard and the University of Chicago, who served as law clerk for Chief Justice Earl Warren and taught law at the University of California at Berkley for more than twenty years.  In Darwin on Trial he wrote:

I approach the creation-evolution dispute not as a scientist but as a professor of law, which means among other things that I know something about the ways that words are used in arguments.  What first drew my attention to the question was the way the rules of argument seemed to be structured to make it impossible to question whether what we are being told about evolution is really true....It is as if a criminal defendant were not allowed to present an alibi unless he could also show who did commit the crime.

This comes about, he notes, by employing a circular argument.  Evolution is defined as science by it adherents; anything not supporting evolution is therefore not science; intelligent design, however factually based, does not support evolution, therefore it is religion, not science.

Professor Johnson continued: A second point that caught my attention was that the very persons who insist upon keeping religion and science separate are eager to use science as a basis for pronouncements about religion....Another factor that makes evolutionary science seem a lot like religion is the evident zeal of Darwinists to evangelize the world, by insisting that even non-scientists accept the truth of their theory as a matter of moral obligation....[Richard Dawkins, for example] can scarcely restrain his fury.  “It is absolutely safe to say that, if you meet someone who claims not to believe in evolution, that person is ignorant, stupid or insane (or wicked, but I’d rather not consider that)."

Now, in an article posted on the Discovery Institute website, professor Johnson bring us up to date on the efforts of Darwinians to stifle discussion of the manifold inconsistencies and gaps in their quasi-religious hypothesis of atheistic materialism.

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A root of New Deal failure to restore prosperity in the 1930s was its authors’ ignorance of business and finance, overlain with simplistic arrogance.  The same may be said of today’s San Francisco and East Coast liberal-socialists.

The New Dealers were a brash, cock-sure bunch who came from the academic world to Washington intending to wipe out as much of our capitalistic system as possible.  They viewed the business and financial communities as a cross between Neanderthal ignorance and evil perversity.  They assumed that all right-thinking people were united in the view that businessmen and bankers existed to oppress “the people.”

While 1950s apologists like liberal historian Arthur Schlesinger, Jr., prettied the recollections of the New Deal by describing it as “saving business from itself,” the facts show clearly that the New Dealers were rabid anti-capitalistic socialists.

Describing the literally revolutionary frame of mind of FDR and his “brains trust,” the author of The New Dealers, published in 1934, wrote:

Roosevelt had the benefit of several other great national experiments as useful points of reference for the American New Deal.  He had before him the spectacle of the Soviet Union with its recent dramatization of economic reorganization through the Five-Year Plan.  He had before him the example of Fascist Italy with its regimentation of business, labor and banking in the “Corporative State.” He had before him the instances of Kemal [Ataturk in Turkey], Mussolini and Hitler in restoring national pride and self-confidence to beaten or dispirited peoples.

A key word in the foregoing, which illuminates the entirety of liberalism, is experiments.  Liberal-socialism-progressivism is all about ivory-tower theory aimed at constructing sand castles in mid-air, without the benefit of a foundation in real life.

Robert Higgs, in Depression, War, and Cold War (2006), writes:

Accepting his party’s nomination for the presidency in 1936, Mr. Roosevelt railed against the “economic royalists” who were allegedly seeking a “new industrial dictatorship”..... Privately, he opined that “businessmen as a class were stupid, that newspapers were just as bad”.... Just before the election of 1936, in an address at Madison Square Garden, he fulminated against the magnates of “organized money...” ....To uprorious applause, he threatened: “I should like to have it said of my second Administration that in it these forces met their master."

Illustrating further the New Deal frame of mind was Mr. Stuart Chase’s 1932 book, A New Deal, from which Franklin Roosevelt’s campaign strategists took the name for his campaign theme and the new administration itself. 

Mr. Chase said regarding the Depression, …the cycle is a direct product of that specialization which appeared with the industrial revolution.  It is a product of laissez-faire, and the neglect to inquire what an economic system is for…There never has been control from the top, and that is the only point from which the cycle may be steadied.…I suspect it is the end of the economic system as we have known it – and suffered with it – in the past…a new deal is in order.

What remedies did Mr. Stuart Chase propose?  The drive of collectivism leads toward control from the top. … At bottom the conception of economic planning is science supervising a people’s housekeeping. … And so the final idea of a National Planning Board emerges; …a group which knows the past, can give capable advice as to the present, and sees into the future, especially the technological future. …The real work, the real thought, the real action must come from the technicians: that class most able, most clear-headed of all in American life, hitherto only half utilized in technical detail and in college class rooms. …This is a long-swing project we are starting, longer than the secular trend; longer than the industrial revolution itself.  Errors will be made; methods will be tried out and discarded; but the principle of control from the top must go on.

After taking office in 1933, Mr. Roosevelt followed this advice closely, both in the words of his speeches, which echoed Mr. Chase’s ideas, and in the creation of his “brain trust” of university policy advisors and in the creation of the National Recovery Administration (NRA).  At the outset of the New Deal there were only a handful of Federal agencies.  By 1936 there were more than five hundred Federal agencies that had offices in every state in the union.

It is also instructive to note the New Deal thesis about the relationship of the individual to the state, as described by Mr. Chase: The state is the embodiment of the whole community, and its rule of action, in theory at least, ‘the public interest.’ If your corporation is busily dynamiting the public interest, the state has the right to close you up. …To tell an American that he cannot invest his money in this project, or even to suggest that it is thrown away in that, is a bold and unheard-of step to the left; …

It is not an attempt to bolster up capitalism, it is frankly aimed at the destruction of capitalism, specifically in its most evil sense of ruthless expansion.  The redistribution of national income, the sequestration of excess profits, the control of new investments, are all designed to that end. …And woe to Supreme Courts, antiquated rights of property, checks and balances and democratic dogmas which stand in its path.

Compare this to Benito Mussolini’s statement in The Political and Social Doctrine of Fascism (1933):

Fascism conceives of the State as an absolute, in comparison with which all individuals or groups are relative, only to be conceived of in their relation to the State. …The Fascist State has drawn into itself even the economic activities of the nation, and, through the corporative social and educational institutions created by it, its influence reaches every aspect of the national life and includes, framed in their respective organizations, all the political, economic and spiritual forces of the nation.

This is a concise statement of liberals’ unquenchable thirst to regiment every aspect of your daily life, from smoking, to eating, to the automobiles you drive, the words you use, and the religious views you may express.

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All governments lust for taxpayers’ money.  The ability to direct the expenditure of large sums of money confers great power upon political leaders.  But the spending requirements that President Franklin Roosevelt had in mind upon taking office in 1933 were of extraordinary dimensions.  Inflating the currency, in socialist theory, was a way to create more money for that end.

In the 1920s, after the disillusionment of World War I, socialism enjoyed great vogue in the United States.  Social Gospel ministers extolled it, intellectuals lauded it, and popular magazines ran many favorable articles about it.  In that period, the general public had no awareness of the horrors then being effected in the name of socialism in the USSR, and Hitler’s National Socialism was still in the future.

It was against that background that Franklin Roosevelt campaigned for the presidency in 1932 with the promise to give state-planning a try.  Described in that way, it seemed to be no more than a proposal to coordinate government spending more effectively.

FDR’s ideas, however, went much further than that, as demonstrated by the barrage of government take-over programs enacted immediately after his inauguration.  His “brain trusters,” socialistic Ivy League professors, were proposing to nationalize the private banks and agriculture, and to regulate industrial production, prices, and wages on the model of Mussolini’s Fascist state-corporatism.

The tenor of the times was flippantly described in The New Dealers, an admiring book written in 1934, the second year of the New Deal.  The author wrote:

To-day, as the New Deal moves slowly towards the nationalization of the banking system through the social control of credit policies, there is lamentation in the tents of ... the Wall Street group… For the monetary controversies of the first year of the Roosevelt Administration can be understood only an the assumption that there is a profound struggle between the Government and the bankers for the control of the American credit system.....

The President knew that financing the imposition of socialism and collectivization of power in Washington would require a huge expansion of Federal spending power.  Along with that, his “brain trusters” proposed to inflate prices with the theoretical intention of giving farmers and workers more spending power.  Inflation, they assumed, would enable easier debt repayment, force higher wages, and reduce unemployment.  In practice the results were quite disappointing.

Throughout the history of the world, the one universal measure of value has been gold.  In times of war and economic weakness, people owning gold have always been able to buy what they needed in exchange for gold.  Paper currencies, like the present-day U.S. dollar, have no intrinsic value.  Their worth changes daily with inflation and foreign exchange dealers’ transactions.

OPEC, for example, came into existence in large measure because oil-producing countries were being paid fixed prices in dollars, but the exchange value of the dollar was declining rapidly.  OPEC pushed oil prices from around $5 to more than $90 per barrel, adjusted for today’s inflation, in the 1970s.

To the consternation of everyone outside the New Deal government cohort, President Roosevelt almost immediately abandoned the gold standard in order deliberately to produce overnight inflation.

In April, 1933, the President issued an executive order that abrogated gold payment clauses in government and private contracts and made it illegal for private citizens to keep their gold coins or to own gold for any purpose other than industrial applications.  He completed the destruction of the dollar by arbitrarily reducing the dollar’s gold content.

Before FDR’s executive orders, Federal Reserve currency could be exchanged at the Federal Reserve banks for gold at a price of $20.67 per ounce.  President Roosevelt ordered that the dollar be devalued almost 41% by raising the price per ounce of gold to $35.00.  At the $20.67 gold ratio, one dollar would buy 0.048 ounces of gold.  At the $35 ratio, one dollar would buy only 0.0286 ounces of gold. 

The inflation set in motion by FDR’s actions has continued without cease.  The London gold price was $664.95 on February 16, 2007, a de facto 96.9% devaluation of the dollar vs the price before President Roosevelt began the devaluation process.  The Consumer Price Index is now approximately 905% higher than in 1932.

Before FDR’s inauguration, gold coins minted by the Treasury were in common use, Federal Reserve paper currency was exchangeable for gold, and U. S. Treasury debt gave holders the option to take payment in currency or gold, at a fixed rate.  Moreover, most corporate debt similarly provided for payment in currency or gold.  This gave the dollar a fixed value and made it one of the world’s strongest currencies, “as good as gold.”

In effect, President Roosevelt confiscated 40% of assets in the hands of individuals, corporations, and banks, without offering any compensation to them.

Needless to say, the President’s action was profoundly unsettling to private individuals, corporations, and to the international banking community, particularly to central banks which held dollars as part of their currency reserves.

Senator Carter Glass was one of the most financially knowledgeable and most highly respected figures in Washington (and a Democrat).  He had sponsored the legislation that created the Federal Reserve in 1913 and later served as Secretary of the Treasury.  Outraged at the President’s actions in 1933, he said, It’s dishonor, sir.  This great government, strong in gold, is breaking its promises to pay gold to widows and orphans to whom it has sold government bonds with a pledge to pay gold coin of the present standard of value.  It is breaking its promise to redeem its paper money in gold coin of the present standard of value.  It’s dishonor, sir.

Oklahoma’s Senator Thomas P. Gore put it more bluntly: Why, that’s just plain stealing, isn’t it, Mr. President? At the next election, FDR financed a rival candidate in the Democratic primary and defeated Senator Gore.

To make FDR’s perfidy even clearer, he had pledged to support the Democratic Party’s 1932 presidential campaign platform, which explicitly promised to uphold the existing gold standard for maintenance of a sound currency.

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This is not a prediction of specific events or the timing thereof.  But you should become aware of the many economic warning signs that have become increasingly evident in recent years. 

Typical is the following quotation from the Wall Street Journal’s February 17, 2007, editorial How Expansions Die:

Thus does a virtuous circle caused by easy money turn vicious, and interest rates aren’t even all that high—at least not yet. The Fed’s concern over housing’s potential effect on the broader economy is no doubt one reason it has kept short-term rates at 5.25% for several months, despite signs that inflation risks remain. Notwithstanding yesterday’s monthly inflation statistics (a function mainly of energy prices), gold has climbed back up to $665 an ounce, the dollar is weak, and “core” inflation remains above the Fed’s 2% upper limit.

The underlying problem is too many dollars sloshing around the world, the result of the Federal government’s unsatisfiable desire for more spending, along with consumers’ imprudent willingness to go into debt, spending more than they make.  These two economic drivers are facilitated by the Federal Reserve’s role as creator of fiat money in limitless quantities.  The inevitable result is inflation, which by definition is devaluation of the currency.

While our fiat currency is steadily devalued via rising prices for daily necessities and payment of ever higher taxes, the international foreign exchange markets have not yet reacted as strongly as many economic analysts fear they will.  In a Wall Street Journal article dated February 5, 2007, Dan Molinski reported:

Although many of the latest U.S. economic reports have been positive, there has been a peppering of negative news. In addition, the Federal Reserve left its key interest rate on hold for the fifth straight meeting and expressed less concern about inflation. That revived near-dead talk of rate cuts, which could be a negative for the dollar.

“There’s been a sea change in sentiment, and it seems no one wants to be” betting on the dollar to gain, said Michael Woolfolk, senior currency strategist at the Bank of New York.

An accelerated and significant dollar devaluation, among other things, would likely raise interest rates.  Foreign central banks holding billions of dollars invested in U. S. Treasury securities would demand higher interest rates as compensation for the risk of further loss of value in those investments.  Higher interest rates increase business costs and reduce profits, leading to lower business activity and increasing unemployment.  At the same time, prices of imported goods, now a huge part of what consumers buy, would increase.

In our severe, Great-Society inflation of the 1960s and 70s, the stock market cratered and interest rates soared into the 20% range.  It was this which gave rise to the leveraged buy-out phenomenon, in which stock market operators could buy an entire company, at depressed stock prices, for less than the value of its assets, then dismember the company and sell some of its assets to repay the acquisition debt.

Without the automatic regulatory mechanism of a true gold standard, the Federal government is able to expand its deficit spending by having the Federal Reserve System create fiat money out of thin-air, a bookkeeping process accomplished simply by purchasing Treasury debt directly from the Treasury and on the open market.  Government spending pumps dollars into the market, in the case of entitlement spending on Social Security, Medicare, and Medicaid, with no offsetting production of goods and services that add to the productivity base of the economy.  They are merely transfer payments: taking from wage-earners and giving to non-earners, while adding to consumer spending and pushing prices upward. 

Open market purchases of Treasury debt from financial institutions create new lendable balances on the books of the financial institutions. Those new lendable balances have been employed in a flood of credit card lending and 1st and 2nd mortgage home loans, which bid up domestic prices and suck in huge volumes of imported goods, manufactured more cheaply overseas.

At the end of the chain are the central banks of exporting nations like Japan, China, and Germany.  Their exporters are paid in U. S. dollars, which are converted into their local currencies, the exchanged dollars going into the accounts of the central banks.  Those dollar exchange holdings are then invested by central banks primarily in U. S. Treasury debt.  The amounts are huge and potentially great trouble for the dollar exchange rate and for the U.S. economy.

As Wall Street Journal reporter Andrew Batson wrote in a February 15, 2007, article:

China’s central bank sits on a hoard of $1.07 trillion in foreign currencies and securities, making it one of the biggest investors in the world. Now, officials have agreed that the traditional approach to managing this massive rainy-day fund—keeping it safely invested in bonds issued by U.S. and European governments—is out of date.

Even a slight shift of this type could have a significant impact in U.S. markets. China has long been one of the biggest buyers of Treasury notes, making it in effect a major lender to the U.S. government. China’s buying has helped keep interest rates low in the U.S.: The greater the demand for a country’s bonds, the lower the interest rates the country needs to offer.

Among other things, those huge dollar exchange holdings by China and Russia (the number three holder of exchange reserves) put foreign policy clubs into the hands of nations that do not want to see the United States remain the dominant world power. 

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