Tag Archives: Finances

The collapse of the Western Financial System–A Moral Failure

G.K. Chesterton once said, “Meaninglessness does not come from being weary of pain. Meaninglessness comes from being weary of pleasure.” I think he was quite right.

The reason we sin is because we believe our choices will make us happy. There are very few people who do something knowing that it will make them miserable. Once you go down that path of self-destruction, you have abandoned happiness completely. We sin because we think it will make us happy. Do you know the phrase, “miserable as sin?” It is not an accident of the English language. Has anyone ever lied to you, cheated you, or have you ever been stabbed in the back by a friend? Did it hurt?

Of course it did.  In a way–you could say that it is impossible to break God’s moral law.  What do I mean by this?  Simply–that when you attempt to break God’s moral law, we ending breaking something else.  Consider:

If you were to put a cape around your neck, draw a big “S” on your chest, and put underwear on outside of your pants–and climb to the top of a tall building–what would happen if you were to jump?  Would you break that law of gravity?  No.  You would break something else–namely yourself–WHILE proving the law of gravity in the process.  It is in this same way that it is impossible for us to break God’s moral law.  We end up breaking ourselves and hurting others–all while proving God’s law in the process.

Consider Isaiah 1.  Now–when we read from the Old Testament–many times we do so with a presupposition that God is angry.  Read Isaiah 1:

“Ah, sinful nation,
a people laden with iniquity,
offspring of evildoers,
children who deal corruptly!
They have forsaken the Lord,
they have despised the Holy One of Israel,
they are utterly estranged.

5 Why will you still be struck down?
Why will you continue to rebel?
The whole head is sick,
and the whole heart faint.
6 From the sole of the foot even to the head,
there is no soundness in it,
but bruises and sores
and raw wounds;
they are not pressed out or bound up
or softened with oil.

7 Your country lies desolate;
your cities are burned with fire;
in your very presence
foreigners devour your land;
it is desolate, as overthrown by foreigners.
8 And the daughter of Zion is left
like a booth in a vineyard,
like a lodge in a cucumber field,
like a besieged city.

9 If the Lord of hosts
had not left us a few survivors,
we should have been like Sodom,
and become like Gomorrah.

10 Hear the word of the Lord,
you rulers of Sodom!
Give ear to the teaching[b] of our God,
you people of Gomorrah!
11 “What to me is the multitude of your sacrifices?
says the Lord;
I have had enough of burnt offerings of rams
and the fat of well-fed beasts;
I do not delight in the blood of bulls,
or of lambs, or of goats.

12 “When you come to appear before me,
who has required of you
this trampling of my courts?
13 Bring no more vain offerings;
incense is an abomination to me.
New moon and Sabbath and the calling of convocations—
I cannot endure iniquity and solemn assembly.
14 Your new moons and your appointed feasts
my soul hates;
they have become a burden to me;
I am weary of bearing them.
15 When you spread out your hands,
I will hide my eyes from you;
even though you make many prayers,
I will not listen;
your hands are full of blood.
16 Wash yourselves; make yourselves clean;
remove the evil of your deeds from before my eyes;
cease to do evil,
17 learn to do good;
seek justice,
correct oppression;
bring justice to the fatherless,
plead the widow’s cause.

18 “Come now, let us reason[c] together, says the Lord:
though your sins are like scarlet,
they shall be as white as snow;
though they are red like crimson,
they shall become like wool.”

What do you hear?  Do you hear anger?  Do you hear a malevolent egotistical dictator?  Do you hear a God who is agasint freedom?

THE PURSUIT OF PLEASURE

It is interesting—I read a book a while back by this guy who is the Chichele Professor of Economic History at the University of Oxford. To be honest with you, the reason I read it was because I wanted to be able to say, “I read a book by the Chichele Professor of Economic History at Oxford.” That title alone was worth reading the book!

The book is called “The Challenge of Affluence.” In it, he basically says that the perpetual flow of new rewards in our Western affluent economy undermines our capacities to actually enjoy them.

In other words, when you don’t have a lot of money, you are limited by scarcity. You cant do everything you want. You cant buy everything you want. You cant do it. Scarcity is a natural regulator.  However, in affluence, scarcity becomes scarce. You can do whatever you want, whenever you want, however you want to.  The rub is, no matter what psychometric study you use—and they are all uniform—it doesn’t seem to matter—they all agree: In the presence of affluence, Happiness seems to decrease.

In affluence, the things that naturally limit us, disciple us, and train us, are taken away. The danger is we indulge in everything, we take pleasure in nothing—and we get caught running on a hedonic treadmill.  It seems as if we are running faster and faster to get the same amount of pleasure, and every amount of pleasure that we get must become more extreme just to meet our need for our increased tolerance for pleasure. This pattern becomes self-destructive and some individuals at the top actually lose it altogether from time to time as a result.

In the face of plenty, the well-off increase their satisfaction, not by increasing their consumption but by limiting it—not by increasing the pace, but by slowing it down.

The kind of moral command God has given us for life, provides that very framework.

Now, the thing to realize is this: breaking that framework doesn’t make us happy. There may be a short-term lift, but a long-term problem is bound to follow.  We may experience what seems to be a short-term feeling of happiness, but in the long run—we will eventually lose out.

Now—economists talk about a principle called Myopic Choice. If you look at economics—most models rest upon the ‘premise’ that basically says that the study of economics could be modeled in terms of rational consumers. Milton Friedman, the brilliant economist, said that a rational consumer is someone who is ‘aware of their motives, options, goods before then, and the consequences.’  You could call this being bilaterally and voluntarily informed. The problem is–if you pick up an economy text today in a university, it will basically imply that there is no such thing as a rational consumer. It will say we make only myopic choices.  A myopic choice means we know our choices are bad, but we make them anyways.  We know that printing money is not wise, but we do it regardless.  We know raising a debt limit is fatuous, but we do it.  The short-term gain outweighs the price of the long-term reward.

Why do you think we sin? We are convinced that the short-term pleasure outweighs the price of the long-term reward. “Meaninglessness does not come from being weary of pain. Meaninglessness comes from being weary of pleasure.” It isn’t our pain that lets us down. It is our constant drive toward pleasure that destroys us.

When we break God’s moral law–we get hurt.  We hurt ourselves while proving His law in the process.

Now—how about some practical examples of how our desire for short-term gain has led us to the brink of disaster?  I don’t mean to scare you—BUT–It may just about be possible that we witness the collapse of Western Civilization as we know it.  We are on the brink of collapse.  These are not statements of hyperbole.  These are statements of great concern.  You know that if you take the word debt and change it to the word credit, debt doesn’t go away; however, many of our leaders seem to think they can operate under that very assumption.

There is no free lunch—and there is no way that you can live beyond your means as an individual or as a nation and hope to stay afloat.  Anyone who says otherwise is engaging in idiocy.  We are very keen to blame politicians and bankers for this failure—and they are to blame for a great deal of it.  I am very critical of politicians, and rightly so.  We should be.  They especially need prayer when they fail to lead….wisely.  Let me just say that our current leadership needs fervent prayer.

Be this as it may—I never thought anyone could ever take the place in the blame game for politicians…but bankers have pulled it off.  But this is wrong.  We should blame ourselves.

What do you know about derivatives?  You have heard of hedge funds, investments, trading—but what do you know about the derivatives market?  To put it plainly—Derivatives are something that derives it value from something else.  It has no value in itself, but its function gives it value.

They have their history in trade—and they were originally good.  Let’s supposing that you are a wheat farmer in colonial America.  Now—you want to sell your product—so— you send it across the ocean to England.  You sold your wheat for $4.00/bushel.  When it gets to England, it sells for £1.00/bushel.  This would mean that the exchange rate is $4.00 to £1.00.

Now—lets suppose, you are in the same situation.  You send your wheat to England at the same rate—but there is a problem. While it is on the ship, the exchange rate changes.  When it gets to England, instead of the wheat going at the $4.00/bushel-£1.00/bushel exchange rate—things have shifted.  Now one pound is equal to three dollars.  So—your bushel of wheat only makes you $3.00—not $4.00—though it still sold for £1.00/bushel.  Simply put—you are bankrupt.

So—they started signing papers called futures—they would say, give us a small amount of money down now, and regardless the exchange rate, we will exchange at $4.00 to £1.00.  This gave certainty.  As long as he could sell his wheat for what he expected to sell for in England, he would be ok.

Now—let me complicate it.  What if you go on holiday from England to the United States.  Lets supposing that £1.00is equal to $1.50—and you need pocket-money.  Lets say you are a lavish spender, and you decide to take £1,000,000 and convert it to $1,000,500.  This is an equal trade.  So—you get your U.S. money, and you go to the United States.  Lets say that while in America, you spend nothing.  You eat the free ice in the hotel room, you wait for people to leave in the restaurant and eat their leftovers—and you buy nothing.  You spend nothing on your trip.  You even get your hotel room free because of loyalty reward points.

SO—you return to England and you get ready to re-convert your money back into pounds.  The problem is the exchange rate has moved.   £1.00 is now equal to $1.00.  You have $1,000,000.  So when you make the conversion, you get back £1,000,500!  You just had a free holiday and now you are richer.  Now what if you had gone and you returned in the same situation, and the exchange rate moved against you—now $1.00 is equal to £.6.  When you convert your $1,000,500, you get £623,016.00.  You have taken a serious hit.

Now—imagine, what if you bought a contract—it allows you convert pounds to dollars at 1 to 1.5.—and you take your £1,000,000 and you put it down as a deposit on this piece of paper.  This contract allows you to convert £100,000,000 to $150,000,000.  Now, of course—You don’t have 100 million pounds, you’ve got 1 million—but you use it as a deposit to buy a piece of paper that allows you do it.  So, you go to America—you spend no money and you come back—same situation as before.  Again—The exchange rate has moved from 1-1.  The difference is, now you have a contract that allows you to sell £100,000,000 and get $150,000,000..

BUT the present exchange rate (1-1) would allow you sell £1,000,000 and get $1,000,000.

That paper now has a value.  It derives its value from what it allows you to do.  You have traded something that doesn’t exist in order to realize a real profit.

Now—lets talk about money—I like money even though it doesn’t seem to like me—

Money used to be made out of precious metal—copper, silver, gold.  If you get an old coin—it has ridges—you even see this on modern coins…..why?  The temptation with gold coins before ridges was to take a sharp razor blade and remove small portions from each coin and make new ones!

Ridges stopped this.

There was a problem with this precious metals system though.  Gold is heavy.

Imagine a bag of gold coins—if you put them in your jacket—it will destroy the lining of your coat.  This is why you should never cut the thread that guards the pockets in your suit.  Why?  Because once you do, you will be tempted to put your wallet or cell-phone in there and it will distort the way your suit hangs.  My basic philosophy on buying suits is this:  Don’t mess up the lining—keep it long enough and eventually, even though I bought it on clearance, if I keep it long enough, it will come back into style.

The weight of carrying gold around was inconvenient.  They did away with this.

They developed promissory notes.  Promissory notes—you would take gold to bank—and you get a receipt—“we promise to pay the bearer of this note—x pounds”—x pounds of what?  Gold, silver…etc.  So, on the note, they would write your name.  When you went back to the bank and turned it in, they would scratch out your name.  The next guy that brought gold in, they would write his name on it.  This is how the system worked.  Eventually they made them universal and printed them en mass.  No longer did you trade gold for them, and no longer was your name on it.   They weren’t convertible.  The question is:  what did they now represent?

What if you decided after reading this blog today that your money was better off in a casino than a bank?  There you are playing—you can use your chips to play games, pay for food, hotel room, etc…But then the casino announces it is suspending the convertibility of chips into money.

The problem is—Everybody sits at the table and keeps playing.  What do those chips now represent?  What does the dollar in your pocket represent?

Combine those two facts together—derivatives and our system of money—with the fact that we are addicted to credit and you have the makings of a disaster on your hands.

Lets complicate it further.

Let us say that a guy came to me and asked for a loan.  If I were a banker, I would try to figure out what type of risk he was.  I would categorize him.  Lets say 1/21 people like him WONT pay me back.  But that’s not a problem—cause if I charge him 5% interest, on what I lend him, I will get back everything I lent out plus 5% on everyone—and even if he pays me nothing—I am still ahead of the game.  That’s why you get different interest rates for different people—in case you are trying to apply for a mortgage…if you are—good luck.

Lets complicate—lets say I lend him money, and I charge him an arrangement fee—plus interest.  I made money off the bat… and lets say I break it up into two lots.  Lets say I sell one of the lots to a guy with a fee—and the other lot to another guy with a fee.  Now the credit risk is his…and I get more money…  I made money from person A from arranging the loan, I sold the actual risk to person B, and the interest I could have collected and the risk I have sold to person C—and I am collecting from him.

IN other words—the moral constraints and the normal concerns of lending money have gone out the window.   What is the most profitable way to lend money?   To lend it to as many people as I can!

We fool ourselves by thinking we can live without consequence for our actions.

You might say, “But John, We live in a free market…!”

That is correct—BUT–Freedom isnt doing whatever you want to whenever you want to however you want to—that is anarchy.  When you remove the moral framework in a system you don’t get more freedom, you get a loss of it.  Freedom only works within a moral framework. This is exactly what is happening in Isaiah.

God has blessed them—he has given them a framework to live by—

Instead of living by this, they have broken his law.

GOD’S MORAL LAW

BUT–In a way–you could say that it is impossible to break God’s moral law. What do I mean by this?  Simply–that when you attempt to break God’s moral law, we ending breaking something else.  Consider:

Let’s supposing–that you were to put a cape around your neck, draw a big “S” on your chest, and put underwear on outside of your pants–and climb to the top of a tall building–what would happen if you were to jump?  Would you break that law of gravity?  No.  You would break something else–namely yourself–WHILE proving the law of gravity in the process.  It is in this same way that it is impossible for us to break God’s moral law.  We end up breaking ourselves and hurting others–all while proving God’s law in the process.

IS GOD ANGRY?

Now–I have spent a great deal of time trying to answer the question of skeptics.  It is a good thing to do.  One of the questions I get asked is this:  “Look, John, the God of the OT is a God of wrath, but then in the NT, he seems to have a character change, and he is all good and sweet.  How on earth do you explain this change in divine character?”  It is as if God has had a 360 degree job review meeting with his boss and has decided that in the OT he is being too mean to the customers.  In the NT, he engages on a Public Relations campaign.

The truth is–God is unchanging.  He is the same in the OT as He is in the NT, and as He is now.

Here is the thing:  We filter and interpret what we hear to fit with our pre-conceived notion of who is saying it. Now, the God of the OT is much maligned today.  I want to challenge that by reading something from the book of Jonah.  You all know the story of Jonah—a sinful people are on their way to destruction, and God has pity on them and decides to send Jonah to evangelize them.  So Jonah, through a set of disobedient circumstances does go to Nineveh and he ministers to the people and they turn to God.  Now–this doesnt make Jonah happy.  Listen to what he says to God in Jonah 4:

“But it displeased Jonah exceedingly,[a] and he was angry. 2 And he prayed to the Lord and said, “O Lord,   is not this what I said when I was yet in my country? That is why I made haste to flee to Tarshish; for I knew that you are   a gracious God and merciful, slow to anger and abounding in steadfast love,   and relenting from disaster.   3 Therefore   now, O Lord, please take my life from me, for it is better for me to   die than to live.”

Now–Jonah is one of the earliest pieces of literature we have.  It is perhaps the first written.  Does this picture of God seem malevolent?  Does it seem like a God who hates creation?  Consider Isaiah 1.  Now–when we read from the Old Testament–many times we do so with a presupposition that God is angry.  We read it with a specific tone that makes God seem like a power-hungry dictator who is bent toward our destruction.  What did you hear when I read Isaiah 1?:   What do you hear?  Do you hear anger?  Do you hear a malevolent egotistical dictator?  Do you remember this line?

 “Why will you still be struck down?
Why will you continue to rebel?”

Have you ever asked your child–“Do you want a spanking?” What kind of question is that?  Why would we ask such a silly question.  The answer is–it is a warning.  We dont really want to know whether or not they want a spanking.  In reality, we are warning them what will happen if they continue down the path they are on.  In essence we are telling them what will happen if they break the moral law.  If I were on stage speaking and I had my eyes closed in a deep moment of creative rapture, and I began to come toward the end of the stage–would you let me walk off and hurt myself?  No.  You would say, “John, you are going to fall!”  Now–this isnt a threat.  This is a warning based on my actions in context to the reality around me.

God is telling the people exactly what their sins are going to do if they do not turn away.  He isnt sitting on a cloud someplace rubbing his hands together devising a way to be cruel to humans–on the contrary–he is warning them about what will happen.

We live in a broken world.  We are broken.  We need someone who is not broken to help us fix our situation.

The question is:  What side of the law are you on?

We all yearn for justice. We cry out for it. When justice collapses—hope also collapses. Many people have experienced a breakdown of justice in their lives, and it breeds despair. A breakdown of law and justice breeds despair in a nation, and when it breaks down in your life, the despair runs deep and it runs strong.  It will destroy. This is why every victim cries out for justice, and everyone wants to see it done when they have been wronged.

Now, Its different if we have done the wronging. Consider a story: Lets supposing you go out to dinner, and when you are done eating, you walk out to your car to go home. Before you stick your key in the door, you notice that your car has been keyed. How would you feel? You would want justice. You have been wronged. Now, lets suppose that there were security cameras on the premises. You go back inside and the manager agrees to give you a DVD of the surveillance footage. You take the DVD and you go to the car and head home. You get the recording of the footage, and you watch it. To your surprise–Not only do you see who did it—but, shockingly, you know them.

Its your next door neighbor. For as long as they have lived next to you, the relationship has been strained—but, on this night, they saw your car in a random parking lot and pulled off the road and keyed it.  Imagine how you would react.  Justice.

Could you imagine going home and the next day, inviting the neighbor over for coffee? The conversation might go—“Hey, by the way—I have a video I want to show you…” Now your neighbor is sitting there thinking he has gotten away with keying your car—little does he know what you possess.  You see where I am going with this?

Now—lets pretend that YOU are the person that keyed the car.  The roles are reversed. You are sitting there drinking coffee thinking—“Wow, this sucker has invited me into his house after I have keyed up his car. Not only does he not know I am the one who did it—he’s serving me coffee!” –But then all of a sudden, the screen comes up, and you are watching the DVD implicating you of the crime. Now how do you feel?

Have you ever noticed that when we get caught doing something wrong, we get angry? Angry that we’ve been caught. How we respond emotionally to the prospect of justice and judgment tells you unequivocally what side of the law you stand on.

So if I were to tell you—“There will come a time that God will judge the world,” and you felt angry at that, what does that tell you about what side of the law you are standing on when it comes to God? Every victim cries out for justice. It is sweet when it is served, but it is heartbreaking when it is denied.

When we break God’s moral law–we get hurt.  We hurt ourselves while proving His law in the process.  We must respond with a heart of humility before him.  You want to know why those who have led us into our financial collapse are not trusted?  Simple–when is the last time you ever heard one of them say “sorry?”

What I love is God’s solution.  Lets suppose someone killed your friend.  The perpetrator is caught, and all the evidence shows him to be guilty.  He has perhaps even confessed to the crime.  What would you seek?  Justice.  Now–what would happen if the judge was all merciful?  Simple–he would let the perpetrator go.  What would be done in the process?  In the presence of pure mercy, justice would be done away with.  You see, with humans, the more justice we demand, the less mercy there is.  The more mercy we show, the less justice is exercised.  If the judge let him go, would justice be served?  No.  This would be gross injustice.

Now, many Christians sadly think this is how salvation works.  They think that when God forgives them of their sin–that he is purely merciful and that is it.  This is heresy.  Anyone who separates the attribute of justice away from God doesn’t understand His character.

The truth is–God is fully just and fully merciful.  In granting mercy to us, justice must still be exacted.  God cannot contradict Himself.  He is perfect.   Our sin has been against Him.  He must get justice.  This justice is found through the substitution of Jesus for us.  Jesus essentially bore our condemnation and God exacted His justice against us through Christ.   When the song says, “On the cross as Jesus died, the wrath of God was satisfied,” this is accurate.  To remove this from hymnals as some denominations have done is to strip the Gospel story entirely.

I am reminded of Billy Graham.  Someone once asked him why he preached about the Cross– he replied that without the Cross of Christ, there would be no Gospel left to preach.  I agree.

I also agree with John Piper, that to remove the substitutionary atonement of sin from our “Good News” would render it to be neither good nor news.

We have broken God’s law.  We live in a broken world.  Without God’s provision, all we are left with is hopelessness.  I pray that you will consider the One who can put back together what is broken.

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