The View From 1776

Pastor Dan Gardner’s sermon at the Cohocton, NY, Assembly of God Church focused on the meaning for each of us in Jesus’s message to his disciples as he revealed to them the full truth of his divine destiny.

His text was Matthew 16:13-28.

13When Jesus came to the region of Caesarea Philippi, he asked his disciples, “Who do people say the Son of Man is?”

14They replied, “Some say John the Baptist; others say Elijah; and still others, Jeremiah or one of the prophets.”

15"But what about you?” he asked. “Who do you say I am?”

16Simon Peter answered, “You are the Christ, the Son of the living God.”

17Jesus replied, “Blessed are you, Simon son of Jonah, for this was not revealed to you by man, but by my Father in heaven. 18And I tell you that you are Peter, and on this rock I will build my church, and the gates of Hades will not overcome it. 19I will give you the keys of the kingdom of heaven; whatever you bind on earth will be bound in heaven, and whatever you loose on earth will be loosed in heaven.” 20Then he warned his disciples not to tell anyone that he was the Christ.

21From that time on Jesus began to explain to his disciples that he must go to Jerusalem and suffer many things at the hands of the elders, chief priests and teachers of the law, and that he must be killed and on the third day be raised to life.

22Peter took him aside and began to rebuke him. “Never, Lord!” he said. “This shall never happen to you!”

23Jesus turned and said to Peter, “Get behind me, Satan! You are a stumbling block to me; you do not have in mind the things of God, but the things of men.”

24Then Jesus said to his disciples, “If anyone would come after me, he must deny himself and take up his cross and follow me. 25For whoever wants to save his life will lose it, but whoever loses his life for me will find it. 26What good will it be for a man if he gains the whole world, yet forfeits his soul? Or what can a man give in exchange for his soul? 27For the Son of Man is going to come in his Father’s glory with his angels, and then he will reward each person according to what he has done. 28I tell you the truth, some who are standing here will not taste death before they see the Son of Man coming in his kingdom."

Obviously, Peter did not fully comprehend (verse 22) the Lord’s simultaneous human and divine state on earth, His mission, and His submission to the Will of His Father.  Just as Jesus followed God’s Will in taking the sins of the world upon his shoulders and laying down his life, in excruciating suffering, for our salvation, He calls us to follow Him. 

That means, “Then Jesus said to his disciples, “If anyone would come after me, he must deny himself and take up his cross and follow me.” (verse 24)

Denial of oneself means recognition that our personal desires must be put aside when they conflict with what our prayers tell us is God’s will for us.  Jesus sets the goal for us in Matthew 26:36-39.

36Then Jesus went with his disciples to a place called Gethsemane, and he said to them, “Sit here while I go over there and pray.” 37He took Peter and the two sons of Zebedee along with him, and he began to be sorrowful and troubled. 38Then he said to them, “My soul is overwhelmed with sorrow to the point of death. Stay here and keep watch with me.”

39Going a little farther, he fell with his face to the ground and prayed, “My Father, if it is possible, may this cup be taken from me. Yet not as I will, but as you will."

Taking up the cross implies death, not necessarily perishing physically at the hands of those who hate Christianity, but death of the old, self-centered being and spiritual rebirth, softening the heart to the loving Will of God.  In the Apostle Paul’s words (Galatians 2:19-20)

19For through the law I died to the law so that I might live for God. 20I have been crucified with Christ and I no longer live, but Christ lives in me. The life I live in the body, I live by faith in the Son of God, who loved me and gave himself for me.

If we do not repent, which means striving to turn away from our sinful ways, we are not followers of Jesus.

Again, in Romans 6:4-11,

4We were therefore buried with him through baptism into death in order that, just as Christ was raised from the dead through the glory of the Father, we too may live a new life.

5If we have been united with him like this in his death, we will certainly also be united with him in his resurrection. 6For we know that our old self was crucified with him so that the body of sin might be done away with,[a] that we should no longer be slaves to sin— 7because anyone who has died has been freed from sin.

8Now if we died with Christ, we believe that we will also live with him. 9For we know that since Christ was raised from the dead, he cannot die again; death no longer has mastery over him. 10The death he died, he died to sin once for all; but the life he lives, he lives to God.

11In the same way, count yourselves dead to sin but alive to God in Christ Jesus.

Following Jesus requires real devotion, faithfully persevering in the path God has set for each of us.  When we accept Jesus Christ as our Savior, our sins are forgiven, we are justified by His death on the cross.  But following Jesus thereafter is a lifelong process of striving for sanctification, becoming more like Christ. 

Truly to follow Jesus requires evidence of change.  Jesus said:

1"I am the true vine, and my Father is the gardener. 2He cuts off every branch in me that bears no fruit, while every branch that does bear fruit he prunes[a] so that it will be even more fruitful. 3You are already clean because of the word I have spoken to you. 4Remain in me, and I will remain in you. No branch can bear fruit by itself; it must remain in the vine. Neither can you bear fruit unless you remain in me.

5"I am the vine; you are the branches. If a man remains in me and I in him, he will bear much fruit; apart from me you can do nothing. 6If anyone does not remain in me, he is like a branch that is thrown away and withers; such branches are picked up, thrown into the fire and burned. 7If you remain in me and my words remain in you, ask whatever you wish, and it will be given you. 8This is to my Father’s glory, that you bear much fruit, showing yourselves to be my disciples.

9"As the Father has loved me, so have I loved you. Now remain in my love. 10If you obey my commands, you will remain in my love, just as I have obeyed my Father’s commands and remain in his love. (John 15:1-10)

With an economy as huge as ours, one with tremendous internal momentum, the Fed is in the position of a one-man row boat attempting to dock an ocean liner being pushed by heavy winds and strong tide.  Even if the Fed honestly seeks to forestall inflation, its loose money policies have already built up well nigh irresistible inflationary momentum.

In Bond Investment Guru Predicts Dollar to Lose International Reserve Status I wrote:

Interest rates have begun to rise, and there is little the Fed can do about it without triggering further rapid decline in the exchange value of the dollar.

Declining purchasing power of the dollar (a declining exchange rate vs. other currencies) , at home and abroad, is the manifestation of inflation.  The Fed has flooded the economy with far too much money over the last decade, and is now pumping trillions of dollars more into the economy to fund the stimulus plan and prospectively yet more trillions to fund the President’s budget imposing massive socialization of the economy. 

The odds are slim to none that it will be able to suck enough phony money out of the economy in a timely way to forestall inflation without throwing us into another severe recession.  History is altogether against Fed Chairman Bernanke’s confidence that he can pull it off. 

The only time since the creation of the Federal Reserve system in 1913 that the Fed has acted to drain the economy of excess liquidity and shut off inflation was in the Reagan administration under Paul Volcker in 1980.  Hammering inflation out of the economy was a very painful process that entailed about three years of recessionary conditions.

In that vein, read Fed Cannot Withdraw the Money, by Robert Blumen on the Mises.org website.

Governments, since the golden age of Athens and other Greek city states, as well as later in the Roman Empire, have repeatedly attempted to deal with excessive public debt by inflating their currencies.  This is precisely what President Franklin Roosevelt, for the first time since ratification of the Constitution, set out deliberately to do in 1933 (see How FDR Destroyed the Dollar).

Why did Roosevelt encourage inflation, particularly on the heels of Germany’s 1920s hyperinflation that wrecked its economy, wiped out the middle class, and set the stage for the political triumph of Hitler’s National Socialist German Workers Party (the Nazis)?

The short answer is that Roosevelt, and now Obama, wanted to expand Federal spending far beyond prior levels and far beyond the scope of potential tax revenues.  Inflationary expansion of the money supply was a fast, though illusionary way to do so.  Inflation amounts to a hidden tax on people who work and save, because, in effect, it transfers the future purchasing power of workers’ savings to the Federal government.

President Roosevelt was, as President Obama appears to be, a relative ignoramus regarding economics.  Both presidents were enthralled with ivory tower theories about magic solutions to political and economic problems.  In FDR’s case, he followed the policies propounded by his crew of Harvard and Columbia University socialist economists, chief among them Rex Tugwell.  In President Obama’s case, he follows the historically discredited doctrine of John Maynard Keynes, which has been since the mid-1930s the economic orthodoxy of the Democrat/Socialist Party.

Turning both Roosevelt and Obama to expansion of the money supply while disregarding its destructive inflationary impetus, is the belief that more Federal spending always guarantees higher employment.  To spend more - in Obama’s case, a great deal more - in the middle of a recession, with tax revenues sharply reduced, requires that the Fed manufacture money, a great deal more money, out of thin air, via bookkeeping entries.

Unfortunately, stimulus spending artificially channels money into employment in government-selected economic and geographic segments.  In those areas, employment increases only so long as the government keeps spending its stimulus money.  When that spending stops, the economy drops back into much the same status of misaligned investment and employment that produced the recession in the first place.  Note, for example, that government stimulus spending supports the very economic sectors which wildly over-expanded on cheap money (Fannie Mae and Freddie Mac, along with mortgages to sustain the over expansion of the housing bubble).  This amounts to increased dependence on debt as a supposed counter to excessive reliance on debt that caused our recession.

If that inflationary process continues, the exchange rate of the dollar will be further devalued and foreign suppliers and foreign holders of dollar-denominated investments will demand progressively higher prices for their merchandise and higher interest rates for their dollar-based investments.  The largest of these investors today are the central banks of major exporting nations, such as China, Japan, and Germany.  In addition to subverting our economy, placing such economic power in the hands of those nations will severely hamper our foreign policy efforts in the Middle East with jihadists and with a nuclear Iran, as well as in the Far East with North Korea.

Thus, at the very time the Fed seeks to keep interest rates low to facilitate domestic business activity and consumer purchasing, the force of rising inflation will push interest rates higher and choke nascent business revival.  This will leave the Fed two choices: continue inflationary flooding of the market with fiat money to fund Federal welfare spending, or squeeze the money supply.  Both policies will push interest rates skyward and torpedo the Fed’s prior efforts to resuscitate the economy.

The better choice when a recession hits is to allow the free market place to clean out excess inventory and reduce employment in industries that have expanded too much with the artificial impetus of the Fed’s loose-money and low-interest-rate policies. 

The free-market process is painful, but it is much quicker and much fairer than the muddle produced by government intervention and favoritism to special interest groups such as labor unions.  Moreover, it returns the economy to a more balanced state in which real, new jobs can be created.

In the 1970s stagflation, it was bond investors who called the changes on the financial markets.  The stock market was flat or down for roughly a decade.  But interest rates soared, in tandem with inflation.  Bond investors were in the driver’s seat, and they demanded ever higher interest rates to compensate for the inflation that continuously reduced the purchasing power of the dollar.

Extremely high interest rates coupled with inflation made for falling value of the dollar, low profits, stagnant business, and high unemployment.  All of it came as a consequence of the regnant Democrat/Socialist belief in Keynesian economics: the view that unemployment can be combatted only with higher wages (read, labor union pressure) and more government deficit spending.

Those are conditions already in evidence today, or conditions that will become dominant within the next couple of years, if President Obama’s budget plans become reality.

PIMCO’s Bill Gross is a titan of the bond investing world.  PIMCO’s Total Return Fund is the world’s largest bond fund.  His economic perspective is thus worthy of consideration.

Read about his latest assessment of the economic future for the United States.

"Growth will be stunted,” he said. “It will be a different type of world and we have to get used to that.”

The U.S. economy will grow at between 1% and 2% a year rather than 2% to 3% a year for the next three to five years at least, Gross said. “That will make a significant difference for corporate profit growth,” he said.

Moreover, unemployment will hover around 7% to 8% rather than the recently typical 4% to 5%, he added, and the higher rate would be around “for a long time to come.”

Gross added that inflation would also start to accelerate in about three to five years’ time…

Gross also said, with certainty, that the dollar will lose its reserve status. “We simply have too much debt,” he said.

I wrote in Are We Next?

So-called green jobs (carbon cap-and-trade regulation, for example) that the Obama administration and Al Gore place so much weight upon are poor substitutes in today’s competitive world for real manufacturing jobs that higher taxes, government-created inflation, and labor union strangulation are driving overseas.

In Economic Reality of 5 Million Green Jobs, Tony Blankley reports the destructive economic effects in Spain, which boasted one of Europe’s most lauded green-energy programs.

Mr. Blankley notes that the Obama administration asserts, “...that by subsidizing alternative energy sources, it will create 5 million green jobs. To that end, Congress passed in the stimulus bill $110 billion to subsidize and otherwise support such green efforts.”

In the real world, where such measures already have been more extensively applied than here in the United States, the results belie administration claims.

Mr. Blankley writes:

Well, in March, one of Spain’s leading universities, Universidad Rey Juan Carlos, published an authoritative study “of the effects on employment of public aid to renewable energy sources.” The report pointed out: “This study is important for several reasons. First is that the Spanish experience is considered a leading example to be followed by many policy advocates and politicians. This study marks the very first time a critical analysis of the actual performance and impact has been made. Most important, it demonstrates that the Spanish/EU-style ‘green jobs’ agenda now being promoted in the U.S. in fact destroys jobs, detailing this in terms of jobs destroyed per job created."

For more data on the same theme, see Congress About To Dive Into The Shallow End Of The Pool?

Mr. Bucholtz hits the nail squarely on the head:

The government’s proposed restructuring plans benefit one class of retirees at the expense of another. I understand that we each have equal claims in bankruptcy. However, under the current plan GM’s union retirees will receive 39% of the restructured company and $10 billion in cash in exchange for $20 billion in claims. Bondholders, however, receive a mere 10% for $27 billion in claims in the form of stock (and no cash).

This egregious example of favoritism for insiders is crony politics of the most corrupt kind.  It is understandable only as a protection racket payoff to organized labor, one of the Democrat/Socialist Party’s two main sources of campaign contributions.

Read the entire article.

It was widely noted early in the presidential primaries last year, that Mr. Axelrod was the creator of the Obama public persona.  To many it appeared that Mr. Axelrod was a puppeteer who pulled Mr. Obama’s strings.

The President, on his own since his college days, has excelled primarily at rhetorically straddling fences, appearing to both sides of contentious issues that he supports their position.  His legislative career, in the Illinois State House and in the United States Senate, was notable for his frequent absences from crucial votes and for his failure to take stands against Chicago’s ward-heeler corruption.

Perhaps that’s why the President allowed Congress to run with the ball on the grotesquely swollen pile of pork called a stimulus bill.  Perhaps that’s why he backed away from approving Wall Street bonuses and allowed Congress to tar and feather recipients.  Perhaps that’s why he is giving socialist labor unions huge unmerited equity positions in Chrysler and GM, at the expense of bondholders, ignoring centuries of contractual law protecting bondholders.  Perhaps that’s why he relies on sweet talk and empty UN resolutions to deal with nuclear arms threats from Iran and North Korea.

That is not the same thing as personal leadership.

Characteristic of President Obama’s policies is sweeping pronouncement of vast goals with no realistic means to attain them.  Read Bret Stephens’s assessment in the editorial pages of the Wall Street Journal.

When will Mr. Axelrod get around to filling in the crucial blanks in the vacuous platitudes that constitute so many of the the President’s policies, from foreign affairs, to energy, to the economy and health care?  Mr. Axelrod is needed at the teleprompter scriptwriters’ meeting.

If, however, Mr. Axelrod still is on duty and telling the President what to say, he is unfortunately much better at getting Mr. Obama elected than at guiding him to effective governance.