Wealth destruction has been occurring in cycles for centuries. Businessmen have made and lost fortunes. Regions have suffered from depression-like cycles while others enjoyed expansion. However this time looks to be different. Nobody likes a personal economic compression (or depression). Compression is valuable in that it functions to remove unproductive actions, ventures, assets, and thoughts. During these times is when we find out that we are "void of GOD’S Word". When times are good we tend to coast through life and become lax in our relationship with Our Heavenly Father. It seems that there is no need to enter into our prayer closet and seek His Holy Face.
I was taken through the financial wilderness for 18 months from March ’95 to September ’96. During that time I could not seem to generate revenue for my family. Fear gripped my heart. Each day I would spend at least one hour in prayer prior to beginning that day’s activities. Peace would come as well as reassurance that HE was still on the Throne. Some days I would weep, other days I would dance before the Throne, and some days I would just be still and wait for a Word. What a roller coaster of emotion! At the end of the 18 months, Our Heavenly Father gave me the revelation of The Feast of Tabernacles and its implications to my life. After our darkest hour comes the morning light.
The prodigal son in Luke 15 parallels what is happening today:
Luke 15:13-17
13 "And not many days after, the younger son gathered all together, journeyed to a far country, and there wasted his possessions with prodigal living.
14 "But when he had spent all, there arose a severe famine in that land, and he began to be in want.
15 "Then he went and joined himself to a citizen of that country, and he sent him into his fields to feed swine.
16 "And he would gladly have filled his stomach with the pods that the swine ate, and no one gave him anything.
17 "But when he came to himself, he said, ‘How many of my father’s hired servants have bread enough and to spare, and I perish with hunger!
Prodigal living is functioning in a "wastefulness and riotous excess"; lawless, reckless, and extravagant expenditure, chiefly for the gratification of one’s sensual desires. Doesn’t this reflect the American culture of the past three decades? Didn’t Wall Street capitalize on this type of living by providing excessive credit to satisfy those wasteful, reckless, and extravagant expenditures?
Notice the compression cycle that occurred in verse 14. Just as he was totally "strung out" (on leverage), the severe famine came and he began to be "in want". His standard of living took a nose dive and became a servant to swine. After he hit bottom, he came to his senses (or revelation) and knew that if he returned to his father, at least he could eat as well as the hired servants. Upon his return, The Father rejoiced with a party and the son enjoyed a steak dinner.
The Global Leaders are attempting to sustain the party. The amount of debt created over the last 30 years is unsustainable and some type of compression will take place. In previous recessions, the Federal Reserve and other central banks used interest rates to stimulate the economy as well as fiscal spending programs. With interest rates approaching zero, what worked in the past is not working now. The Central Banks will do whatever is necessary to prevent a severe depression. Compression is coming! Hearing GOD’S Word will determine what we will be eating for dinner- pig slop or steak.
Eight new acronyms to remember:
- TARP: Troubled Asset Relief Program. This is the Treasury’s big $700 billion ($850B including pork) program that has been used to prop up financial institutions.
- TAF: Term Auction Facility (or TAFfy). Program by which the Fed auctions funds to financial institutions — allowing them to use their toxic assets for collateral.
- TALF: Term Asset-Backed Lending Facility (or "son of Taffy"). Recently announced Fed program designed to help the market for student, auto and other consumer loans.
- CPFF: Commercial Paper Funding Facility. Buys commercial paper directly from corporations.
- AMLF: Asset-Backed Money Fund Lending Facility. Fed program designed to buy short-term paper (including commercial paper) to prevent money market funds from "breaking the buck."
- TSLF: Term Securities Lending Facility. Fed program that lets banks swap bad mortgage and other debt from their books in exchange for Treasuries.
- SLF: Special Lending Facilities. Originally designed to loan money to fund JPMorgan’s purchase of Bear Stearns in March. Also used to back AIG’s balance sheet to avoid total collapse.
- PDCF: Primary Dealer Credit Facility. This is the Fed program that allowed broker/dealers and other non-banks to tap the Fed’s discount window (back when there were independent broker/dealers).