Servias Ministries Blog

I attended a technology conference in Orlando last week.  In my business you must keep up with the latest developments or get left behind.  There will be over 600 million touch devices shipped in 2012.  Layers and layers of complexity are being built around the globe.  I can’t help but believe that a collapse will occur at some point.  Developers are generating lines and lines of source code on a daily basis to embrace the “touch” technology.  Everyone has their heads bowed down but they are texting not praying.  Ten years’ ago the Internet was just moving to a reliable platform for business.  Now we can’t do without it.  I wonder what would happen if an epic solar flare took out all of our technology?  Would we remember how to communicate face to face again?

At the Universal Studios resort we stayed at you would think there were no economic issues.  Downtown Disney served up a view that all is well around the world.  The properties were impeccable and there were no signs of deterioration anywhere.  The crowds were notable.  In the meantime world events continued their march to a day of reckoning.

China has decided to pay for Iranian oil with gold.  The SWIFT system of international wire settlements will be bypassed.  The U.S. attempt to force sovereign countries to submit to an agenda inconsistent with the needs of their countries may have just reinstituted the gold standard system by default.  Central governments have become major buyers of physical gold.  Once the U.S. crossed the line on international settlement, other countries have begun moving into a defensive posture from a monetary point of view by necessity.  They can’t allow a foreign power to control their medium of exchange any longer.  Executive Orders have been passed to control the Internet, banking system, etc. which causes the average person to get concerned about what is coming soon.  Americans have always valued their freedoms and rights to pursue constitutional assured activities.

Our Heavenly Father is the only true reality.  We must repent and turn back toward Our Heavenly Father.  We can only live in the land of make believe for so long.  Any escape from reality last only until the money runs out and Orlando will make sure that happens sooner than later.

50% unemployment in the youth sector in some countries has missed the mainstream media’s (MSM) radar.  Greece, Italy, Spain, and Portugal all have systemic problems that can’t be solved by further quantitative easing.  Gold is moving out of Italian banks into Swiss banks, a sign that wealthy Italians don’t trust their own banks anymore.  Europeans are expecting a major event soon.  Until then, they are hesitant to make any financial moves other than taking their gold to a safe haven.

The IMF is obtaining commitments from countries with cash to help build up its war chest.  If everything was rosy, why would the U.S. Federal Reserve reconfirm 0% interest rates into 2014?  You don’t need to listen to the rhetoric about recoveries, lower unemployment, improved housing starts, etc.  Just look around.

The U.S. economic statistics are pointing to recession once again.  QE3 is not far off now, maybe within the next 120 days.

Oil speculators are not the villains as we are being told.  $80 oil would slow down the Canadian tar sands and expensive well stimulation and development.  This would tighten the supply even further than it already is.  Alternative fuels are over a decade away from becoming a serious large-scale alternative to the oil-based transportation industry.  Think tank planners know this and hence we are keeping troops in the oil-rich Gulf region on an indefinite basis.

All of this bodes well for those who hold precious metals.  Quantitative Easing (QE) will put support underneath precious metals’ prices.  Attempts to manipulate the prices to lower levels last only for a few days or weeks.  Silver has resisted the $30 level in the last few attempts.  Mining companies continue to grow their cash reserves and are looking to buy junior miners.  Those of us who have held steady in our positions are being rewarded with buyout premiums of 30% or better.

Eliminate leverage when possible.  You will sleep better at night and not worry when the dips in your investments come.  I have seen 20% swings in the stocks I hold but I am unconcerned about the short term volatility.  A bull market will always attempt to shake off the investors who are not fully committed.  Solid mining companies with good management and sizable cash positions are excellent candidates for investment of discretionary cash.

On the positive side, the Kingdom of Heaven is at full employment, zero inflation, no crime, and plenty of resources set aside for development.  The universe is still expanding and the Throne is still occupied.

When we are called to be stewards, we are given three things:

1. Responsibility and accountability.  Jesus expanded on this principle in the following passages:

Matthew 25:14   “For the kingdom of heaven is like a man traveling to a far country

Luke 19:12   Therefore He said: “A certain nobleman went into a far country to receive for himself a kingdom and to return.

13   So he called ten of his servants, delivered to them ten minas, and said to them, ‘Do business till I come.’

We are given resources to do business.  We are expected to conduct business in a reasonable fashion and produce good fruit.  If Our Heavenly Father tells us that all the gold and silver (true money) is His then we are to be stewards over wealth.  Yes, we are given ownership over assets but we are still accountable to Our Heavenly Father for ultimately we are called to be good stewards.  As we embrace the reality of stewardship, we open up ourselves to the blessing of Heaven.  Each person has a different level of stewardship based on his or her calling.  We should not be envious of someone else’s level of stewardship for with it comes greater responsibility and accountability.  We should focus on what matters.  Are you willing to establish the Kingdom of GOD on earth or are you concerned about “me and my four and no more”?  Do you believe that the Creator of this earth would fail to set aside sufficient resources to establish HIS Kingdom?

2. Time and Resources.

Mathew 25:19   After a long time the lord of those servants came and settled accounts with them.

The servants were given plenty of time to produce fruit.  They were given resources.  It was up to them to make the correct choices with the resources which had been provided to do business.  Each of them knew that there would be a day of reckoning but only after they had been given the opportunity to produce fruit.  Just as in the Law of fruit trees, time must be given to produce.  Those trees that were not producing might be given fertilizer (opportunity) before the day of judgment.  If the fruit tree did not produce it was cut down.

3. An Adversary

What is the test of stewardship?  An adversary will come to test your commitment.  Sometimes that adversary is another person who would rob you by attempting to redirect your focus on other callings.  They would have you focus on areas that just don’t matter and send you on a wild goose chase.  They would want you to waste your resources on a “get rich quick” scheme that had no relevance to your calling.  Typically those schemes only enrich them.  Sometimes the adversary is your flesh or ego.  Will you consume resources to satisfy the lust of the flesh, the lust of the eyes, or the pride of life?  The adversary will force you to make choices.  Those choices will reveal what is in your heart.  The day will come when the accounting of your stewardship will be judged.

For those who have ears to hear:

Matthew 25:23 His lord said to him, ‘Well done, good and faithful servant; you have been faithful over a few things, I will make you ruler over many things. Enter into the joy of your lord.’

For those who are blinded by their flesh:

26 “But his lord answered and said to him, ‘You wicked and lazy servant, you knew that I reap where I have not sown, and gather where I have not scattered seed. 27 So you ought to have deposited my money with the bankers, and at my coming I would have received back my own with interest. 28 So take the talent from him, and give it to him who has ten talents.

These parables were spoken by Jesus for our benefit and instruction.  Jesus doesn’t particularly need your resources, he wants your heart.  He wants you to be an expression of the Love of Our Heavenly Father on earth.  When people look at you, HE wants them to see Love.  These parable express a reality of stewardship.  They also express the ramifications:

29 ‘For to everyone who has, more will be given, and he will have abundance; but from him who does not have, even what he has will be taken away. 30 And cast the unprofitable servant into the outer darkness. There will be weeping and gnashing of teeth.’

Now is the time to see what is in your heart.

We should pay close attention to what the average town is doing in Greece.  They have been decimated by the previous “borrow and spend” economy.  They have returned to a system that worked in the old days: bartering.  It now uses a computer system to track it.

http://www.bbc.co.uk/news/business-17686384

Hmmm!  Selah!

Gold and silver represent honest money.  It puts value in the hands of the person who generates the value the money represents.  In the current electronic system, money is stored by a system that can manipulate its value.  This lends itself to dishonesty.  If you work hard and save your money, you want your savings to represent the productivity of your labor.  In the current electronic system, the value of your savings is diluted by the excess printing of money.  Inflation eats away at your savings and the productivity it represents is transferred out of your control into the hands of the central bankers.  In turn, they enrich selected banks, government programs, and others who have found favor with them, all at your expense.  This system becomes dishonest as they encourage the transfer of wealth.  We are to love thy neighbor as ourselves.  Can anyone honestly say that this transfer of wealth is an act of Love?

By eliminating gold and silver as money, the central bankers have taken control of the monetary system.  Can they really know what is best for me?  Do they really care about my future, my retirement, or the inheritance I want to leave my loved ones?  They coin the term “greater good” to justify their actions.  Often it means for their own “greater good”.

Gold and silver place value in the hands of the people and decentralizes control of value.  This is a good thing.  It allows individuals to make decisions in their own best interest without any interference from those who know nothing about their situation.  What happens if the central bank makes a mistake in the handling of the monetary system?  If individuals have their value in their own pockets, they are protected from human error.

Honest money eliminates exchange rate issue with other countries.  In a recent trip to Australia, I was in sticker shock of the cost of a meal.  In terms of U.S. Dollars, an Aussie lunch was roughly 30% higher than its American equivalent.  With honest money, sticker shock would be a thing of the past.  Once ounce of silver has the same value around the world.

Banks would become depositories of gold and silver and could act as settlement facilities or clearinghouses for trade.  A transaction fee could be developed to cover the cost of acting as a depository for excess gold and silver beyond the working capital needed for day to day exchange.

Honest money will reemerge once the current system has collapsed.  Obviously I would prefer an orderly conversion from the current system to a bimetallic system.  I just don’t think the current debt-ridden system can sustain itself much longer.  Its days are numbered.  Only Our Heavenly Father knows when the inflection point will occur.  Until then, stay liquid, stay out of debt, and stay in prayer for guidance.

In 1968, the U.S. has $1 Trillion in debt.  Today the U.S. debt is now estimated at $50 Trillion.  Money had gold backing back in 1968 but today it is only a credit instrument, no different than a Treasury Bond.  Gold restrained credit from being created and minimized bad investment decisions since there was a limit on what could be lent.  With a restriction in lending, only the best opportunities would be funded.  Risk was therefore minimized by the lender.  Borrowers had to qualify and their projects had to prove they could cash flow the loan.

Debt and credit are two sides of the same coin.  One person has an asset and the other person has the offsetting liability.  The dramatic expansion of credit caused the strong pace of globalization.  The financial sector has become the largest borrower within the U.S. debt structure.  In 1945, it accounted for 1%.  Now it accounts for over 30%.  In the 1950’s the U.S. was a manufacturing based economy but now we are a service-based economy.  China now has many of our manufacturing jobs.

Over the last 45 years, this transition was accommodated by rising home prices and Americans were extracting “equity” from their homes to fund their lifestyle.  This minimized the pain of transition from a manufacturing-based to a service-based economy.  But now, the environment is changing.  Housing is no longer assumed to be forever growing in value.  The Fed is desperately wanting to keep inflation alive but the average American is no longer buying into the plan.  This 4 1/2 decade sustained expansion brought about by credit expansion is now at the end of its cycle.  A bust cycle is needed to cleanse the system.  Generally speaking, the bust must be similar in breadth to the boom cycle.  Either the length or depth must compensate for the extended boom cycle.

The private sector can no longer handle any more credit and this began in 2008.  Inflation is currently masking the reality by distorting the numbers.  The transition of the market to globalization brought forth a 95% drop in labor costs.  This is a one-time event and it impacted the prices of manufactured goods during the transition.  This is why the price of a PC has moved from $2,800 to $500.  The labor factor is the major ingredient in the decline of the price.  American workers built the first PC’s and now those same PC’s are built in China at 5% of the labor cost thus the consumer price index (CPI) has appeared to be reasonable but does not reflect the future challenges.

If we weren’t in dire straights, the Fed would not keep the interest rates at 0% through 2014.  Global stock and asset prices have been the beneficiary of the credit expansion policies of recent years.  Last year’s budget deficit of 8% kept the economy looking better than it would have with a balanced budget.  This deficit is keeping the U.S. economy on life support.  As long as the government spends on consumption, the hole will only get deeper.  The constituency does not want their consumption payments to drop and Congress will accommodate that request.

Low interest rates can only be supported by massive money printing.  This cannot be sustained forever.  Unless honest money arrives on the scene soon, Our Heavenly Father only knows how ugly this will get.  We must get back to honest money that cannot be manipulated.

The move toward making money all electronic is the essence of control.  This computerized environment enables a select few to control the masses in very short order.  Without personalized money, i.e. currency and coinage, those in control of the banking system can evoke stifling power at a moment’s notice.  An all electronic environment can control communications by shutting down cell towers, the Internet, and major telecommunications trunk lines.  When people conduct business with currency and checks, they bypass the controlled system hence the move to eliminate those mediums of exchange.

Creation of money is now done on a pure electronic basis.  In a stroke of a key, money is created out of nothing and this allows those in control to do what they think is best even though they do not have the perspective of Our Heavenly Father.  How much money is enough?  Only Our Heavenly Father knows.

The control of money can now be administered from a central location.  Commerce could be shut down in a matter of minutes or hours.  Emergency Executive Orders are in place to initiate such an act in the U.S.  What are we to do, move to another country where there is more individual freedom?  The answer lies in the Heavenlies.  We must pray for Thy Kingdom come, Thy Will be done.  The physical will ultimately line up with the spiritual.  The less money you have, the less control man can have on you.  Jesus’ ministry was not known for the size of His ministry funds.  If He needed to feed the multitudes, He expressed enough Love over a small sample of food to multiply it enough to satisfy the thousands.  He was in command of the “GOD” particles and those particles cannot be controlled or manipulated by man.  The Kingdom economy looks like a more efficient system to me AND it eliminates man’s quest to control.  Selah!

A fundamental expression in nature is a wave.  The following image provides a simple expression of a measurable wave:

However, waves can also rotate as shown below:

Cycles are a reality of life and at the most fundamental level we observe expansion and contraction.  Muscles are developed by expansion and contraction, stress and rest.  Our sleep patterns are cycles to allow us to be restored on a daily basis.  Economies work the same way.  Men do not make perfect decisions on expanding their business.  Some ideas simply fail.  Financial capital is directed toward those ideas and pursuits and they don’t produce the expected fruit.  Just as with a plant, you must prune away the unproductive branches for they are using resources the fruitful branches need.  It is also true with a nation’s economy.  Extended expansion needs an offsetting contraction.  However, politicians in their quest for power try to keep the economy in an expansionary mode in order to get reelected.  Since most citizens don’t understand the need for contraction, they oblige by reelecting the politician who promises them a rosy future.

As an entrepreneur for the past 27 years, I have grown accustomed to the cycle.  There have been lean years and there have been exceptional years.  Throughout those years, we have learned to live below our means.  It is easy to live up to a higher income but it is brutal when you attempt to contract your family budget.  However it can be done.

America has over-expanded for the last few decades and the piper wants to be paid.  The only question will be how much economic carnage will occur.  Historically, other economies crashed and burned after they attempted to do the same thing.  The world did not end but there was extreme pain.  This time looks no different.  Those who have followed this blog have been encouraged to downsize their needs and budget, get out of debt, and minimize financial risk (if possible).  Only Our Heavenly Father knows the timing when the unraveling will be in full swing.  That is why I encourage readers to seek HIS Face.  HE can and will guide each of us through the tumultuous times.  Love and peace will sustain us individually as the contraction gets into full swing.