Mr. Ponzi’s name has been bantered all around the media this week. Watch below as Rick Santelli from CNBC and Thomas Friedman from the NYT stoop to calling each others idiots over Mr. Ponzi.
Is the Governor right? Is Social Security a Ponzi scheme? Let’s start by taking a look at what a Ponzi scheme is?
In 1920 Charles Ponzi was convicted of defrauding investors out of millions of dollars. He devised a plan where investors were promised enormous short term gains on their investments. These profits would range from 50%-100% in 30-45 days. Investors however would not be paid by any actual earnings of the company. Profits were generated by new investors entering into the scheme. For Ponzi to continue the scam and the promise of high returns, an ever increasing flow of new investors was needed. Eventually the scheme was discovered and he was arrested.
These schemes are always destined to collapse. The out flow of earnings to earlier investors eventually overwhelms in flows of new capital. Those entering into the scheme at the beginning can do well but those at the end usually lose their investment.
Now let us examine some facts of Social Security. When Social Security was first instituted the maximum contribution was 2% for employee and employer up to $3000. Thus the maximum pay in was $60 per person. Today the maximum rate is 12.4% for those earning more than $100,000 per year.
For those born in 1877 and retiring in 1942 the average rate of return on their contributions was 36.5%. However for those born in 1950 their rate of return would average 2.2%. Unfortunately those born in 1975 will see their rate of return drop to 1.8%. This number is continuing to fall. Apparently it was beneficial to get on the Social Security bandwagon early.
Consider Ida Fuller. She was the first American to receive a monthly Social Security check. By the time of her death she received a total of $22,888.92. Her total contribution to the system was $24.75. That’s a handsome profit. She got in early.
In 1935 there were 45 people paying into the Social Security system for every one person receiving benefits. Today that number has fallen 3:1. The rate of return has fallen drastically to a point where it has barely kept up with inflation. The maximum contribution of $60 in 1935, adjusted for inflation, is equal to $990 today. However currently the maximum contribution is over $12,000.00. Also the system may be insolvent. It is said that young people today have a better chance of seeing a UFO than a Social Security check.
While it seems that Social Security has many aspects of a Ponzi scheme the Social Security Administration has vigorously denied this. Click here.
There are however, other aspects of the Social Security system that need considering. Social Security is basically a contractual system. Citizens contribute and the government promises to provide benefits at a certain age. However, what if the government raises the original retirement age from 65 to 67. Has the government broken its contract?
Now, what if a person bought an annuity that promised to start paying benefits at age 65, then that company refused to pay until 67. Would that company be subject to prosecution. Probably.
Also key here is that this contract is not a voluntary contract. Citizens are forced to enter into the contract by threat of violence. Imprisonment. Money therefore is forcibly transferred from one group of people to another. The nobility or good intentions of the act is irrelevant. Taking money from people against their will is a violation of the 8th Commandment. Interestingly the citizens of Galveston, Texas were allowed to opt out of Social Security. Subsequently they earned a greater rate of return on their money and some became millionaires with the money they saved. Click here.
The fairness of the system should also be questioned. If a segment of the population has a lower life expectancy than another group would not the benefits of the system be skewed to the group that lives longer. Some have suggested that since the life expectancy for blacks is lower than other groups, blacks are treated unfairly by Social Security. Not only do they receive fewer benefits, their children also stand to inherit less. Click here.
This leads us to those who die before they reach retirement age. If a person started to contribute to Social Security at age 15, by age 65 he would have contributed for 50 years. But if they were to die at age 65 before they received their first check they would receive nothing. Their children also would receive no part of that money. Since it is a pay as you go system, those 50 years of contributions went to someone else.
A crucial question, especially for “baby boomers”, is; will Social Security be there for me. It must be realized that Social Security was based on politics and a socialist ideology. It was a means to control large amounts of private capital and large segments of people. It was not based on Biblical principles. Click here.
If the political landscape changes, obviously Social Security can change. Suppose younger voters perceive that they are paying enormous taxes for a system, they will never realize benefits from. Theoretically they could vote to take granny’s benefits away. This could be done by raising the retirement age, means testing (if you have or make more than a certain amount your benefits are adjusted) or, they could do away with granny altogether. Which do you think they will chose?
There are legitimate roles for government. Protection against fraud and theft are some of them. Providing people, as FDR said, “with some measure of protection” against “poverty ridden old age”, is not one of them. The government is failing miserably at this attempt.
Notice what Alf Landon said during the 1936 presidential campaign,
Social Security is unjust (emphasis mine), unworkable, stupidly drafted and wastefully financed.” Beginning in January 1937 it would impose the largest tax bill in history. The administration said the taxes would go into a reserve fund, which would pay the old- age benefits. In fact, he charged, the Treasury would buy government bonds with the money and spend it. It was as if a father took deductions from his children’s wages to invest for their old age, invested them in his own IOU, and spent them, leaving the children nothing but those IOUs. Hence its forced savings were a cruel hoax.
The idea that a paternalistic government can provide cradle to grave care for its citizens is a cruel hoax. Its a hoax that must be funded with ever increasing transfers of money. All hoaxes, including Ponzi schemes must come to an end. If not done away with by voters, they will fail by their own weight.
To see how much socialism is biblical click here.
For an excellent resource for the biblical nature of government click here.
When I was about fourteen I used to grow tomatoes in my parents backyard. There were only a few vines but I was proud of them. I remember picking a ripe tomato and bringing it to my mom. She carefully sliced the tomato and some mozzarella cheese, added Genoa salami and then with fresh Italian bread made the best tasting sandwiches ever. Wow. Were they good. This was one of those’ “We had it better in my day stories”, I often told my children. It was true though. Vegetables today just don’t have the same taste.
Three years ago I saw a video that revived my interest in having a vegetable garden. The video was on urban homesteading. This family had taken their 1/8 acre in the middle of a major city and turned it into a small farm. They were 100% self sufficient in vegetables and produced an abundance to sell to local restaurants. The video was not simply on gardening. It conveyed another message. Growing your own food was empowering and liberating. It was a path to becoming free from control by others.
We decided to give it a try. We started with two, 4’ x 8’ x 12”, raised boxes. To see how to make a raised bed click here. We used 2 x 6’s and stacked them. Our local local nursery gave us suggestions for 100% organic, soil and fertilizer. click here. After a weekend of carefully deciding the right placement of the boxes (full sun), and then building them, we were ready to go. Barbara cautioned me, “Not so fast”. Its best to wait until after Mother’s Day.” She was right of course. It still was a little cool. Any way our organic seedlings weren’t doing that well.
Its wise to grow vegetables you are going to eat. We chose tomatoes, beans, zucchini, bell peppers and cucumbers. Growing and caring for 5 different varieties in 64 square feet might seem like a big undertaking but at the time I figured how hard could it be. Put them in the ground and watch them grow. I was in for a surprise. By the time planting time arrived only the beans had survived. Fortunately our nursery was well stocked with organic seedlings so we substituted these. Below is a picture of one of our raised beds.
After putting them in the ground the learning process began.
Lesson 1) You can use theory as a guideline but its not always a substitute for experience
There turned out to be a lot of questions that had to be answered before those little plants went in. How many plants would be sufficient for the space we had and the out come we wanted, how often would watering be necessary, how would pests be dealt with? Books can give theoretical guidelines but until you do it yourself you just don’t know exactly what will happen. We planted the zucchini as directed but we didn’t know exactly how prodigious the zucchini would be. Within a short time it was taking over the box. Its yield was terrific, but the peppers were in danger of being overwhelmed. The next year we decreased the number of plants and still had a great yield.
Lesson 2) A good plan will increase your desired result
The cucumbers were doing ok. We installed a net from the box, to the top of our fence (6’). The fence was about 18” away from the box. They were growing vertically away from the zucchini with no problem. That was planned well. In the other box, after a month the tomatoes had taken off. They were about 3 feet high and lush. This was great. However they were beginning to block the sunlight from reaching the beans. Tomatoes vines can reach 6’ high. Eventually the beans would have no light. Duh. Our beans did ok, but not great. We should have realized this from the start. With two large boxes we were constrained for space. No matter where the tomatoes went they would have blocked some other plant. A little more planning before hand would have shown us that we could have built a smaller box in another area just for tomatoes. We did this the following year.
Lesson 3) Use what your given
The net technique for cucumbers and beans is a fabulous idea. In urban gardens where there is not a lot of space vertical growing can be an efficient means for increasing yield or growing vegetables you wouldn’t consider. I’ve seen tomatoes grown in compound buckets. Don’t be limited by space. I saw a Discovery Channel program on how they grow tomatoes indoors in Mexico. They supported the plants by dropping a wire down from the ceiling of the greenhouse. It was a brilliant idea. I was able to do this with some old wire and my fence. It worked wonderfully. Use what your given.
Lesson 4) We cannot control every outcome
The tomatoes started out great. It looked as though we would have a bumper crop. However at about 4’ high they began to look a little odd. Their leaves were turning yellow. We tried to save them but it was futile. Within a month our entire tomato crop was destroyed. They had contracted a tomato blight. It destroyed over 60% of the East’s tomatoes, including ours. It was a helpless feeling watching our food wither and die day by day. Concerning tomatoes our labor was in vain. We did gain a new respect for farmers though. They sow but they are never 100% sure they will reap. They may be able to control nature in some aspect (irrigation and fertilizers) but they can’t control the weather. At any time their crop can be destroyed by tornados, floods, droughts etc. Like them we are not in control of the growing and sustaining process. We couldn’t control the late frost or constant rain which probably weakened the tomatoes. We sowed faithfully in good soil but God was in control of the rest. I would have to wait another year for tomatoes.
Lesson 5) Be optimistic and persevere, there will be another harvest
Overall, except for the tomatoes, our crop was a moderate success. We had an abundance of zucchini and peppers, enough for the whole summer. The cucumber yield was about one every week, but the beans were sparse. That wasn’t so bad. No tomatoes, but not a total failure. We would try again next year. Maybe the harvest would be better. We had tried something we had not tried before. We weren’t farmers and didn’t come from farming families. We did see produce though, and that was encouraging. We had started to take back the land. It was a small beginning, but a better harvest lay ahead.
Lesson 6) Be patient, good soil and good seed will produce a good harvest
Last year we added the separate 4’ x 6’ box for the tomatoes. In our other two boxes we again went with organic seedlings. We chose lettuce, Brussels sprouts, beans, bell peppers, zucchini and cucumbers. The weather was perfect. We used a drip irrigation hose to water when it was needed. There were no pests and no diseases. We were totally self sufficient in vegetables for the whole summer and early fall. A harvest cannot be rushed, it cannot be predicted, it cannot be manipulated. A gardener must submit to the elements and to the One who is in total control. Grumbling, complaining or cursing will not make the crop grow any faster or better. After he has done his, all he can simply bow and give thanks.
Lesson 7) Use your produce to be a blessing to others
Last year our garden produced so much food that we gave basketfuls away to our neighbors. The Lord blessed our efforts, but he also used us to be a blessing to others. Our neighbors were so appreciative to receive organic food. Fresh organic produce is rather costly. However it meant more than this. It gave us an opportunity to build relationships and to provide each other support when needed. It has given us a sense of community. We continued to do the same this summer.
Lesson 8) Enjoy your produce
This year our yield was also a success. It was not as good as last year’s due to a very damp spring and fungus problem. We had a problem with bean beetles early on but we dealt with them. Overall we continued to be 100% vegetable sufficient. The cucumbers were great. The Zucchini as usual was too much to handle so we were always giving it away. I love beans and they are still going strong as are the peppers. We tried broccoli. It was a little sparse but Peter loved it. While we didn’t have as many tomatoes as last year, we still ate and enjoyed 1-2 a day. Oh, and the taste. They were the best tasting tomatoes I have ever had. Wow. Perhaps even better than those I had as a teen.
…Let us fear the Lord our God, who gives the rain in its season, the autumn rain and the spring rain, and keeps for us the weeks appointed for the harvest. Jeremiah 5:24
To see how to protect your seedlings from frost or get an early start to planting click here.
For ideas on vertical gardening for the urban gardener click here.
What a week for New Yorkers. As I write this post we are waiting to find out what Hurricane Irene has in store for us. Earlier this week we sustained a 5.9 earthquake. Thank God there was no damage. I found out about the earthquake during a business meeting in Manhattan. A concerned manager ran in notifying us that NYC and DC had just been hit with an earthquake. I hadn’t felt anything. Neither did anyone else in the room. Years ago I had the experience of being in a quake. When you are in one you don’t forget it.
As we left the meeting one of the attendees started to explain to me that we haven’t seen anything yet. Always the curious one I asked, “What do you mean?” He enthusiastically proceeded to explain to me that we are going to experience a lot more disasters and we should not underestimate old cultures like the Mayans. Astronomically or astrologically (he wasn’t sure) they were extremely advanced. The complexity and accuracy of their calendars was evidence of this. They could also use astronomy to predict the future.
I wonder if they had a date on it for their cultural extinction.
He went on. The planets are now aligning themselves as they haven’t in 100s of years. We are in for some bad times.
As I was listening my mind was furiously trying to come up with a response. If I politely agreed, then I would have subjected my self to validating an astrological response as a reason for disasters. If I disagreed, I’d run the risk of insulting a good friend. Then, the light went on.
“Ok,” I said. “I see what your saying. We are to expect more disasters, and this is a result of the way the planets and stars align.
“That would mean then that these disasters are not random. There is a specific cause behind them such as the alignment of the planets.”
“Right, you got it.” He nodded approvingly.
Trying to be accommodative I suggested a scientific answer, I continued, “Maybe it has something to do with increased gravitational pull or something like that.” Then I asked, “I have one question though. What is causing the planets to align in such a way in the first place? In other words is there something or someone aligning them? If not, then the whole process is random and non-predictable.”
My friend smiled, thought for awhile, then said, “we’ll have to talk about this again”, and then he had to get going.
This discussion started me thinking about causation. How much do we really believe in cause and effect? Do we really believe that every effect has a cause? Questions of causation tend to arise during times of disaster. What caused the earthquakes in Haiti and Asia where so much suffering ensued?
Scientists are ready to give naturalistic answers. There is movement with the earth’s plates and energy build up. This just pushes the cause back. What caused the plates to move? What caused the energy to build up? These questions eventually rise to “why” questions. Why did the plates move, why did the energy build up, why did it happen here and not there,why does the earth act like this at all? And so on and so on until an ultimate un-caused first cause is sought. For Christianity and Judaism, this un-caused first cause is God. Since the time of Christ, this type of reasoning dominated Western thought.
With the advent of the Enlightenment causation started to come under attack. Skeptical philosophers saw the obvious implications of this argument. If God is the ultimate cause of everything, this would include evil. Since God allows evil, he is either not loving (because he would eliminate evil) or he is not powerful enough to do away with evil. This argument had two points of attack. The first, was to impugn the character of God thus making him not worthy to be believed in. The second was to disassociate God from the cause of suffering. Either he didn’t cause it or he was impotent of stop it. This argument demanded an answer and Christian theologians readily provided cogent ones. Click here. However the attack oncausation had begun.
In the mid 19th century, Charles Darwin proposed a theory on origins that seemed to sound the death knell for causation. Darwin insisted that the natural order was a result of the natural selection of randomly produced mutations, not supernatural design. Nature therefore, (including man) becomes the product of chance causes not the result of cosmic purpose. This produced a revolution in intellectual thought whereby secular men were no longer constrained by biblical criticism. Man was now free from God. He had achieved autonomy. He became the ultimate designer. Secular academia sensing the “God liberating” implications of evolution quickly assimilated evolutionary thought into all academic disciplines including theology, economics, history & sociology.
As Richard Weaver reminded us ideas do have consequences. Consider what atheist, philosopher-mathematician Bertrand Russell said,
The world of modern science is more purposeless, more void of meaning than the world outlined by Mephistopheles to Dr. Faustus. The modern world has no meaning. Amid such a world, if anywhere, our ideals henceforward must find a home. That Man is the product of causes which had no prevision of the end they were achieving; that his origin, his growth, his hopes and fears, his loves and beliefs, are but the outcome of accidental collocations of atoms; that no fire, no heroism, no intensity of thought and feeling, can preserve an individual life beyond the grave; that all the labours of the ages, all the devotion, all the inspiration, all the noonday brightness of human genius, are destined to extinction in the vast death of the solar system, and that the whole temple of Man’s achievement must inevitably be buried beneath the debris of a universe in ruins – all these things, if not quite beyond dispute, are yet so nearly certain, that no philosophy which rejects them can hope to stand. Only within the scaffolding of these truths, only on the firm foundation of unyielding despair, can the soul’s habitation hence forth be safely built.
Russell understood the logical outcome of a purposeless universe much more clearly than did many of his peers then, or today. All of man’s love, achievements, heroics and genius are devoid of meaning and destined to be buried in a ruined universe.
Unfortunately Russell did not see the fallacious logic of such a position. If there is no ultimate purpose, design or meaning in the universe why should Russell’s ideas have any meaning. He did not perceive that this philosophical position is ultimately destructive of reason itself. Click here.
Without an ultimate starting pointing for reason, can there be reason? Without an ultimate starting point for logic, can there be laws of logic? Without an ultimate starting point for intelligence, can there be intelligence? The answer is no.
Today however our schools and universities have infused their disciplines with the evolutionary paradigm. History is taught as a series of random of events connected in time. Biology is taught as a series of random events over long periods of time. Economics is taught as a series of human actions without any ultimate meaning or purpose. As Shakespeare’s Macbeth lamented, “life is sound and fury signifying nothing.” These institutions should be avoided like the plague.
Consider Genesis 1:14-16
And God said, “Let there be lights in the expanse of the heavens to separate the day from the night. And let them be for signs and for seasons, and for days and years, and let them be lights in the expanse of the heavens to give light upon the earth.” And it was so. And God made the two great lights—the greater light to rule the day and the lesser light to rule the night—and the stars.
Design is embedded in the universe. It is inescapable. God from all eternity, did, by the most wise and holy counsel of His own will, freely, and unchangeably ordain whatsoever comes to pass.
Also consider these verses from Deuteronomy 8:11-20
Take care lest you forget the Lord your God by not keeping his commandments and his rules and his statutes, which I command you today, lest, when you have eaten and are full and have built good houses and live in them, and when your herds and flocks multiply and your silver and gold is multiplied and all that you have is multiplied, then your heart be lifted up, and you forget the Lord your God, who brought you out of the land of Egypt, out of the house of slavery, who led you through the great and terrifying wilderness, with its fiery serpents and scorpions and thirsty ground where there was no water, who brought you water out of the flinty rock, who fed you in the wilderness with manna that your fathers did not know, that he might humble you and test you, to do you good in the end. Beware lest you say in your heart, ‘My power and the might of my hand have gotten me this wealth.’ You shall remember the Lord your God, for it is he who gives you power to get wealth, that he may confirm his covenant that he swore to your fathers, as it is this day. And if you forget the Lord your God and go after other gods and serve them and worship them, I solemnly warn you today that you shall surely perish. Like the nations that the Lord makes to perish before you, so shall you perish, because you would not obey the voice of the Lord your God.
I asked at the beginning of this post if we believe that every effect has a cause. Deuteronomy 8:11-20 is bursting with cause and effect. Do we believe this type of cause and effect. Do we believe there are laws to be obeyed. Do we believe in all the moral laws in both testaments? If we believe in wealth and prosperity, if we we believe in poverty and disaster, If we believe in cause and effect, let us hasten and not delay to keep his commandments.
Below is a video of the day before and the day after the San Francisco earthquake of 1906.
For Dr. Greg Bahnsen’s view on the continuing validity of OT moral law click here.
For an article on John Calvin and theonomy click here.
I often listen to CNBC’s Fast Money on the way home from work. Over the past year, one of the announcers has repeatedly stated that she does not “believe in” gold. Gold today is flirting with $1900/oz. On October 7, 2007 gold was at $730/oz. That’s a gain of over 150%. If you had your savings in the S&P 500 during the same time period you would have lost about 28%. I don’t “believe in” the stock market. I don’t “believe in” gold either. Gold will not save me. However the rise in the gold price is telling us something that we should be listening to very carefully.
As of late gold’s rise has been especially fast and furious. Since August 1 it has risen sharply, over $250/oz. This has not been as many assume, because of inflation. There is no significant inflation. Click here. What then is the reason?
On August 2 the United States government announced that it will raise the debt ceiling another 2.1 trillion dollars. Subsequently on August 5, Standard & Poors downgraded the U.S. credit rating to AA+ from AAA. On August 9 the Federal Reserve Bank painted a gloomy picture of our economic situation and vowed to keep interest rates low for 2 years. Following S&P’s downgrade the Dow Jones Industrial Average has dropped almost 1300 points and economic situation in Europe has worsened.
These events seem to have given rise to what financial analysts call a “fear trade”.
“Fear is breeding fear now,” said Nader Naeimi, a Sydney- based strategist for AMP Capital Investors Ltd., which manages almost $100 billion. “There’s a total lack of confidence in policy makers’ ability to defuse the situation.”
When volatility in the markets reaches a point where people feel their money is at risk they tend to place it into safe haven assets. Traditionally these have included treasuries (bonds, notes, bills), dollars and gold.
As I have noted gold has surged. Indeed treasuries have also surged. Click here. But the dollar has not.
This suggests that this is no ordinary fear trade. Something else is going on. Lets look at an S&P quote on the U.S. credit downgrade,
“the U.S. was downgraded based on the “current level of debt, the trajectory of debt as a share of the economy, and the lack of apparent willingness of elected officials as a group to deal with the U.S. medium term fiscal outlook.”
Translation: The U.S. debt is too high, it is rising too fast and the U.S. government is not willing to do anything about it.”
The Government Accounting Office anticipated S&P’s concern with the federal debt when they announced in March,
The timing of the debt build up varies depending on the assumptions used, but the overall picture is the same: the federal government is on an unsustainable fiscal path.
Note the GAO’s use of words. The U.S. is on an unsustainable fiscal path. An unsustainable fiscal path points to a crises. The United States is in the midst of a debt crises. The government cannot continue its rate of borrowing. Yet raising the debt ceiling did nothing to solve this problem. In fact the logic of taking on more debt to pay off debt is ludicrous and will only make the situation worse.
To solve this problem the government would have to raise taxes or revise the tax code and severely cut spending or default on its obligations. The Economist wrote in May 2009:
Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign creditors. Given the political implications of such austerity, the temptation will be to default by stealth, by letting their currencies depreciate. Investors are increasingly alive to this danger..
The recent debt ceiling fiasco showed us that there is no political will to raise taxes or cut spending. Right now currency devaluation seems to be the only acceptable option. A devalued dollar makes it easier for the U.S. to service its debt. As we saw from the dollar chart above this is what is apparently happening. Unfortunately, this lowers the purchasing power of the dollar. Your dollars will buy less.
To safe guard ones money one could chose to invest in other currencies. However the U.S. is not alone in this debt crises. The choice would be one deteriorating currency versus another. Expect other countries to suffer downgrades.
No currency today is backed by anything except a promise to pay. Investors are beginning to lose faith in government’s ability to honor their promises. To avoid a loss in real value they are fleeing to something that has retained real value for 5000 years. That something is gold. Click here to see chart of gold versus the dollar.
If the dollar continues to fall gold will continue rise. Can gold fall. Absolutely. Governments are not happy with rising gold prices. It reveals that their policies are causing a destruction of wealth. They still still have significant tools at their disposal to manipulate markets. But gold’s trend is up. If the government prints money its climb will be higher and faster. Below is the national debt and its rate of increase.
|National Debt Clock|
What does this mean for those who “believe in” dollars? A decreasing standard of living. What does it mean for those who “believe in” governments who back their money with nothing but promises? Higher taxes, less services and possible default. What does it mean for those who “believe in” what gold is? Safety against financial destruction.
To learn more about what gold is and how it functions Click here.
To see what central banks think about gold Click here.
As the small commuter bus makes its way up the winding road to Kykuit, it feels as if one has left the confines of a small urban city and enters onto the mountainside of a European Estate. The approach to the main house is greeted with a 9 hole reversible golf course on a slope below the main house. Then gardens, a playhouse and the Orangerie (a structure to grow oranges in the winter that was modeled after one at Versailles) appear. Finally as one arrives at Kykuit he is welcomed by an enormous fountain of the god Oceanus.
Kykuit was the Westchester, New York home of John D. Rockefeller and two subsequent Rockefeller families. Kykuit is a Dutch word meaning lookout. It is an apt name for from the driveway in front of the house one can see 10 miles away to the city of White Plains and from the back of the house, clear across the Hudson River. The Georgian style house is magnificent, however it is not as impressive as some of the other mansions of the Gilded Age. This may seem curious considering Rockefeller was probably the richest man of his era.
I had always been fascinated by John D. Rockefeller. How did he earn his millions? Was it true that he taught Sunday school at the same time being an unscrupulous businessman? How did he live? What motivated him to give away vast amounts of money to charity? How did the name Rockefeller eventually lend itself to institutions and foundations that many today view as secretive & conspiratorial (CFR, Trilateral Commission, U.N. etc). This tour would give some insight.
After leaving John Sr.’s private study we came to Laura Rockefeller’s room. Here the guide made it very clear that the Rockefellers were strict Baptists. They had allowed no drinking, smoking or gambling in the house. Upon entering the main area the guide then pointed out that there was no grand stairway as was common in most other mansions of the era. Interestingly this was because Rockefeller believed that grand stairways were part of ostentatious parties, and since he wouldn’t have those kind of parties he didn’t need one.
As we left the dining room we came to an alcove that featured a marble bodhisattva statue. I found this odd. The god Oceanus in front of the house and now a Buddhist religious icon inside the house. As we left the house numerous Maillol sculptures of naked women adorned the gardens. This was too much for me. What had happened here? How had a strict Baptist home been transformed into a haven for pagan and immodest art?
Our guide had been very clear that the last Rockefeller to occupy the house was Nelson Rockefeller, former governor of New York and Vice-President of the United States. As Nelson was an avid art collector it seems that most of this art was probably brought to Kykuit by him. This however just raised another question. How did a Baptist Sunday school teacher, albeit a millionaire, give rise to a grandson with a passion for nude statues and a legacy that seems to support anything but fundamental Christian causes? How did such a dramatic paradigmatic worldview shift take place? As usual, history gives us some answers.
Rockefeller’s mother seemed to be the dominant influence in his early life. From what we can tell, she was a devout Northern Baptist. In 1864 Rockefeller married Laura Spelman. Her father Harvey was an abolitionist and active in politics, the underground railroad and the Congregationalist Church. Before marrying Rockefeller, Spelman had attended the Oread Institute. Oread in Worcester Massachusetts was founded by Eli Thayer, a radical abolitionist with close ties to John Brown. It was Brown who murdered 8 “pro-slavery” men in Kansas and led the failed raid on Harpers Ferry in 1859. Brown in fact was one of Laura Spelman’s instructors at Oread. (Rockefeller was probably sympathetic to the abolitionist views as he was also a strong supporter of the abolitionist wing of the newly formed Republican party). Transcendentalists Ralph Waldo Emerson and Theodore Parker also taught at Oread. Let’s take a deeper look at the philosophical roots of the Rockefeller family.
The Northern Baptists had split from the Southern Baptists in 1845. This occurred when a majority of Baptists in the South withdrew from the Baptist Convention in response to the Convention’s decision to ban slave holders from becoming ordained missionaries. This left the Baptist church divided.
For some 50 years a crisis of Biblical interpretation had been brewing in the American church. How were the verses in the Old Testament concerning slavery, especially Leviticus 25:44-46, to be interpreted? Were they to be taken literally, and thus condone permanent chattel slavery as the South argued? Most Northerners found this view repugnant. It seemed to deny the fact that God made all men equal. Or were the verses to be taken as many of the Northern churches said, in the context of the whole Bible with the implied dictum to” treat your neighbor as yourself”. Southern theologians saw in this type of interpretation the seeds for a possible undermining of biblical authority itself. Or were many radical abolitionists such as William Lloyd Garrison right when they said that the whole Bible was to be done away with. One view which garnered very little attention, and was probably closer to the mark, was that perhaps the verses had a different context and the way Southern slavery was practiced was not consistent with the Biblical view (Moses Stuart).
The Quakers began the abolition movement in the middle of the 18th Century. The Quakers had no fixed biblical doctrines or creeds and believed in a continuing revelation of scripture. Their argument against slavery was based more on a situational ethical approach than by an appeal to specific scripture. Their movement grew and slavery was abolished in Britain in 1833.
By 1830 the leading intellectual spokesmen for abolition in the U.S. were among the Unitarians. It should be noted that at this time a significant number of Congregationalist churches became unitarian in there beliefs. By 1800 all but one of the Congregationalist churches in Boston had become Unitarian. Their doctrinal reasoning might look like this syllogism:
1. The Bible says that God is not a man (Num. 23:19).
2. If the Bible says God is not a man, then Jesus, being a man (Acts 2:22; 1 Tim. 2:5), is not God.
3. Therefore, Jesus Christ is not God.
(Again there is an appalling lack of scriptural insight here. The Bible is clear that Jesus as pre-incarnate God added a human nature to his person. God did not become a man. )
By the time of the Rockefellers many Congregationalist churches in the country had also assumed views contrary to historic reformed Christianity. In 1847, Henry Ward Beecher was called to pastor the Plymouth Congregational Church in Brooklyn, New York. Beecher’s importance as an abolitionist is legendary, but consider what Beecher historian Debby Applegate wrote about his views,
“What is Orthodoxy?” thundered Beecher. “I will tell you. Orthodoxy is my doxy, and Heterodoxy is your doxy, that is if your doxy is not like my doxy.”
Even more shocking to many Americans was what he called his all-forgiving “Doctrine of Love,” which upended the dogmas of his childhood. (Opponents gleefully renamed it the “Gospel of Gush.”) God, he insisted, was not an exacting judge, but a loving parent who wants his children to be happy here on earth as well as after death. “It is Love the world wants,” Beecher proclaimed to startled audiences in the 1850s. “Higher than morality, higher than philanthropy, higher than worship, comes the love of God. That is the chiefest thing.”
The point here is that orthodoxy in the North was becoming suspect. Traditional doctrines, creeds and a reliance on sound biblical exegesis (especially among the abolitionists) was becoming a thing of the past. The South, while severely misinterpreting the Old Testament verses on slavery, still held to a somewhat orthodox view of scripture. However it would be the views of many of the leading religious figures in the abolitionist movement that would lead to a compromise with future liberal doctrines such as Darwinism, higher biblical criticism, and the Social Gospel movement. These three philosophies contributed much to the cultural ills society faces today. And all three contain erroneous interpretations of scripture.
These were the prevailing worldviews at the start of the Rockefeller dynasty. Whether the Rockefellers adhered dogmatically to these views we don’t know. What we do know is that they were exposed to a point where John D Rockefeller and John Jr. became the main financiers of the Social Gospel movement. See here. This is evident when we look at what institutions they eventually supported. You can read about them here.
What is clear is that today we are not suffering so much from a Rockefeller conspiracy but from a crisis of biblical interpretation. Note what Dr. Gary North states this concerning theological liberalism,
“The point is, it was part of a major shift in the climate of moral opinion, and no conspiratorial group created it. They did, however, use it and profit from it. They still do.”
Since the late 1800s, this liberal view of scripture has caused a major revolution in theological, philosophical and moral thinking. Ideas do have consequences. Since 1900, we have seen one of the bloodiest centuries since the time of Christ: the ravages of Marxism, Communism, abortion, terrorism, financial collapse and moral disintegration.
What can be done to reverse this trend? Education. Social and theological liberals used it to their advantage. We must use it to ours. The first principles of our opponents must never be used in our reasoning. We must first assume the authority of scriptures over all areas of life, without being ashamed of offending current elitist thinking. A proper understanding of biblical hermeneutics must be taught. The application of biblical law must be an essential part in casting down false arguments concerning education, economics, politics, government etc. Compromise with any institution that sets itself up against the knowledge of God is not an option. This means capturing the important centers of learning as the social and theological liberals did. This starts with our children.
You shall love the Lord your God with all your heart and with all your soul and with all your might. And these words that I command you today shall be on your heart. You shall teach them diligently to your children, and shall talk of them when you sit in your house, and when you walk by the way, and when you lie down, and when you rise. (Deut. 6:5-7)
North is correct when he states, “You cannot beat something with nothing”. This starts not in the house of Rockefeller, but in the houses of God.
For an in depth analysis of Leviticus 25:44-46 click here.
For an analysis of the theological crises in the United States prior to the Civil War click here.
Forgive me for waiting almost a year to add a new post. It seems as though The Ghost of Inflation Yet to Come has fortunately not yet appeared. The median CPI (the Federal Reserve’s measurement of inflation) has risen a modest .8% since January. This data can be found here. However, the significant rise in inflation that was widely expected following Quantitative Easing 2 hasn’t happened. Why? This chart shows that QE2 in fact did happen. Notice the growth of new money after November. In all likelihood however the newly printed money did not make it into the general economy. This chart shows the amount of money flowing through the economy. It has not risen substantially. It should have following QE2. Zero Hedge blog ran an excellent article on where the new money ended up. According to Zero Hedge, the money ended up as increased reserves in foreign banks.
This is the author’s conclusion:
As to what happens next, the first chart above says it all: cash held by foreign banks jumps from $308 billion on November 3, or the official start of QE2, to $940 billion as of June 1: an almost dollar for dollar increase with the increase in Fed reserve balances. In other words, while the Fed did nothing to rescue foreign banks in the aftermath of the first Greek crisis, aside from opening up FX swap lines, one can argue that the whole point of QE2 was not so much to spike equity markets, or the proverbial “third mandate” of Ben Bernanke, but solely to rescue European banks! What this observation also means, is that the bulk of risk asset purchasing by dealer desks (if any), has not been performed by US-based primary dealers, as has been widely speculated, but by foreign dealers, which have the designation of “Primary” with the Federal Reserve.
The author is probably correct in his assessment. However it does appear that it was not the intention of the Federal Reserve to force banks to circulate this newly created money into the general economy. This would explain why we have not seen significant price inflation since the institution of QE2 in November.
Commodity prices have also remained relatively stable. Oil was $81/bbl in December 2010 and fell to the high 70’s/bbl this week. Corn & wheat also are not far off their end of 2010 prices. The Dow Jones Industrial Average is also lower today than it was in November. This data is more indicative of deflation rather than inflation. If the Fed’s newly printed money does not reach the general economy, then price inflation will not result. I will leave why the Fed has done this up to the speculation of the reader. Will this money eventually reach the economy thereby creating significant inflation? Probably.
The Fed’s QE2 also seems not to have stimulated the economy in any significant way. Unemployment is over 9%, GDP numbers have been revised down showing that the economy is far weaker than thought, and the ISM number (a gauge of manufacturing growth in the U.S.) was also very weak. Could this mean that a double dip recession is on the horizon?
After a 2000 point drop in the Dow over the last 2 weeks, Wall Street began speculating whether the Fed would institute another round of QE. On Tuesday, the Fed announced that it would keep rates low through 2013, but it made no reference to QE. QE seems to be off the table for now. The markets responded by rising over 400 points only to drop by 500 today. Those on fixed incomes who rely on returns from their retirement portfolio have seen their entire gains for 2011 wiped out. The Fed will meet again later this month. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., recently made this statement, “People have gone from asking is the Fed going to do something to will the Fed be effective in doing something?” It’s looking like the Fed is running out of answers to our financial problems. Should we even be looking for answers from an institution who was instrumental in creating this problem and probably has made it worse?
To learn more about the Federal Reserve System watch the video below.
It has been said that listening to Federal Reserve policy statements is akin to watching paint dry. While former Fed chief Alan Greenspan perfected the art of Fedspeak (his statements were unintelligible to the lay person), current Fed chief Ben Bernanke has also made reports so boring that it is hard to maintain concentration during his presentations. Recently, however, the Federal Open Market Committee (FOMC), the branch of the Federal Reserve System that is responsible for determining interest rates and the United States money supply, released its current policy statement that was anything less than intelligible or uninteresting. It announced on September 21 that due to the slowing economic recovery the FOMC would be prepared to provide “additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.” Apparently, if necessary, the Fed is ready to provide more quantitative easing to stimulate the economy. It may inflate. This statement immediately sent currency markets into a turmoil and gold soaring. It caught the attention of media outlets throughout the country and it should catch ours as well. Inflation does appear to be contained at the moment as the CPI is under 2.5%.
However, does the CPI reveal the whole story? Is a small amount of inflation acceptable? How much is not acceptable? Shawn Ritenour, economics professor at Grove City College, has a well-timed article on how we should view the morality of inflation. Gary North’s free ebook, Honest Money, has an excellent analysis on the history, mechanics and long term ramifications of inflation.
Christians can learn much from libertarian scholars. They often offer a wealth of insightful information in areas such as politics, economics, and history. Since their worldview is usually anti-statist and individualistic, their analyses are often consistent with Biblical truth. Murray Rothbard was a giant in the Libertarian movement. His brilliant work on economics, money, and banking have provided us with important sources to counter Keynesian and socialist fallacies. Once in a while, however, an expert in his field strays off the reservation and delves into a subject better left to others. Lewrockwell.com recently ran a reprint of a 1990 article written by Murray Rothbard on Christian eschatology. Rothbard summarizes the millennial positions and offers the possible political ramifications of each. The opinions of an intellectual giant of Rothbard’s stature are sure to carry enormous weight with his readers. However, when an expert is pronouncing judgement on someone else’s beliefs, we must ask if that expert is representing the other’s position correctly. Joel McDurmon of American Vision takes issue with Rothbard concerning his views on Post-Millennialism, theonomy, Christian Reconstruction, and natural law theory. McDurmon, while expressing admiration for Rothbard’s thought on other matters, suggests that here he was way off base. When reading libertarian authors — swallow the meat, but spit out the bones.
President Obama’s recent remarks concerning the building of a mosque close to the Ground Zero site have caused much controversy and provided ample material for talk show hosts, bloggers, and politicians. Opinions as to whether the mosque should be built have been quite diverse with people of the same ideological belief often in disagreement. Senate Majority leader Harry Reid, currently locked in a tight re-election battle, has come out against it, while NYC mayor, Mike Bloomberg, has come out for it. Republican Governor Christie has urged caution on both sides. Some libertarians have argued that since it is private land the owners have the right to say what should be done with their property. Other libertarians have argued against it. Wayne Root, 2008 Libertarian Vice-Presidential candidate has stated, “This proposed building of a mosque on hallowed ground is an atrocity towards America. To build a celebration of Islam within steps of 9/11 does nothing to increase religious freedom…it inspires hatred, divides our cultures, and increases the odds of violence and hate crimes.” Even Christians disagree. Christian scholar, Gene Veith, Provost of Patrick Henry College, sees no legal reason against building the mosque in light of the Constitutional protection of freedom of religion. However, Christian conservative author & blogger, Hugh Hewitt, believe it should not be built because Ground Zero is hallowed ground.
So who’s right and who’s wrong? Christian author Douglas Wilson has the most unique take on the subject.
Lately, there has been much disagreement among economists as to whether the economy is in a recovery, recession, or even a depression. Nobel prize winner Paul Krugman believes we might be in for a depression. Robert Schiller, founder of the Case-Schiller housing index, warns of a second recession. The Federal Reserve states that the economy is in a recovery, albeit a weak one. If Krugman is right, it may be a good idea to remember some of the lessons learned from our country’s last depression. Lawrence Reed president of the Foundation For Economic Education in this short booklet discusses what caused, what prolonged, and what we can learn from America’s last depression.