Servias Ministries Blog

Many Americans have never traveled overseas thus they are unaware that other countries pay close attention to the news coming out of the U.S.  Since we are the largest economy in the world, our actions or inaction causes ripples in other countries.  The current fiscal cliff impasse is pathetic.  Politicians have known for years that this day would come.  Addiction to power has caused them to become blind to the real reason they are there- to serve the people.  Instead they walk the halls as though they have been “anointed” kings.  Our Heavenly Father DOES select men and women to carry out judgment on the land.  HE does use vessels of dishonor to carry out HIS plan when lawlessness prevails in the hearts of men.  This is not a time of blessing.

The U.S. Treasury Secretary came out on 12/26 saying that he could do some maneuvering to postpone the shutdown for up to a couple of months.  Why is this just now being divulged?  The politicians do not really care if the average worker lives in fear and uncertainty about their upcoming budget crunch.  Congressman have a sweet retirement and healthcare plan that is much better than all but a few of their constituents.

The damage done to global confidence in the U.S. dollar from collapsed negotiations may be severe and largely irreversible.  Normally gold is a good barometer but it has been heavily manipulated recently, more so than usual.  As an alternative, the price of oil appears to be a good short-term barometer.

Federal Reserve actions to avoid systemic collapse in 2008 and to boost economic growth merely did nothing more than assist politicians in kicking the proverbial can a bit further down the road.  Expanded quantitative easing by the Fed  in an effort to keep the system liquid has failed to produce a sustainable outcome.  The systemic-liquidity crisis continues and appears to be intensifying anew, and it is likely to come to a head in 2013.  The day that the bond market has an epiphany about the sad state of the U.S. fiscal balance sheet, the dung will hit the fan.  Interest rates will ratchet up and the dollar will slide.  The price of gold and silver will open up with extreme gains and oil will look at new highs in terms of the U.S. Dollar.  To make things worse, Japan (3rd largest economy) will be inflating its currency.  All this is destined to occur unless Our Heavenly Father intervenes and changes the course of the path we are all on.

If this is the transition to Kingdom economics, bring it on.  Throughout Scripture, transitions never occur without pain.  There are 13 global famines mentioned in Scripture.  Times were tough.  Noah understood the term “transition”.  However, Our Heavenly Father is in control and those of us who believe that HE will ultimately fulfill HIS plan will continue to seek HIS Face and be a part of the solution to the huge mess mankind has once again created.  Prepare yourself.

Incompetence is the lack of physical or intellectual ability or qualifications.  The U.S. continues to pursue increased complexity in all aspects of its various systems.  Banks are thought to be too big to fail, Government follows a path of unlimited borrowing and unsupportable financial commitments, and students borrow money for fields of study that are in no way economically justified.  The ego’s standard modus operandi is to create a problem to be fixed.

How many of us use more than 20% or our smart phone’s capability?  How many electronic gadgets are now collecting dust on our shelves?  We marvel at our children’s toy boxes full of under-utilized toys yet we continue to create complex solutions that are suppose to make our lives better.

What new feature do we need in our automobiles?  It is increasingly difficult for auto makers to find the next big thing.  Hey, stick  your foot under the tailgate to open it!  I wonder how much that will cost to fix when it breaks?

In growing up, many teenage boys learned to work on their car, by necessity.  I could replace a starter in twenty minutes.  Now, there is no way I would tackle the job.  Fuel pumps now located in the tank???  Engineering is now been compromised by the financial manipulators.  The goal is to extract wealth from the unsuspecting public.  The cost to replace a Lexus starter is much more than a Toyota starter even though they are probably the exact same part.  It is all about perception.

Financial engineering has now become an art form, anything goes.  Regulation occurs with a “wink” at the highest levels for the so-called greater good.  How much longer will this path to collapse be sustained?  Only Our Heavenly Father knows for sure.  Until then we must step back and assess our personal path.  We can be assured that another bubble will burst.  What day will that happen?  Probably on a day least expected by most people.  After the fact there will be many to claim that they predicted the collapse.  If you throw out enough predictions, you are bound to get one right.

Specific prophecies and predictions require specific performance.  Until Our Heavenly Father gives you a specific word about the future, you should live your life based on HIS written Word and your specific calling.  How many contemporary prophets have prophesied specific words that have not come to pass?  Often these words will cause many people to place such weight on the prophecies they will cease any fruitful works.  The Mayan Calendar end date was one such prophecy.  The prophetic landscape has become so complex that on any given day, prophetic events could be deemed to occur.  The predictions I write about are based on what I see going forward based on my calling.  Unless Our Heavenly Father gives me a specific, unsolicited Word, I prefer to keep my comments generalized.  In the meantime our guide should be confirmed by HIS Word in Scripture.  We are all to be fruit inspectors.  “End time” prophecy teachers on TV have been issuing the same predictions over and over.  If their word does not come to pass, shouldn’t we focus on what we are called to do rather than the distractions all around us?

In my forty plus years of exposure and experience in the Information Technology arena, I can attest that higher complexity produces ultimate collapse.  Modular programming is simpler and maintainable.  One huge program with many functions may work but will not stand the test of time.  The same is true for other systems around us.  My recommendation is to continue to simplify your life in this world of ever increasing complexity.  In the end, the complexity will make us all incompetent. 

2012 will mark the end of an era.  Japan, the world’s 3rd largest economy, will drive the Yen down and force inflation.  As the Yen declines, Japanese bond rates will rise.  They are now set for hyper-inflation.

The fiscal cliff in the U.S. is akin to rearranging the deck chairs on the Titanic.  The true fiscal cliff of $70 Trillion +- is much greater than the $1.2 Trillion that the politicians are debating about on the Sunday news magazines.

Japanese Funds are starting to put money into gold as an inflation hedge.  The physical gold market shows much greater strength than the paper market. as does the silver market.

The golden era of retirement funds reliability is over.  The Federal Reserve “experiment” is just about over and we will look back and exclaim “What were they thinking?”  I expect notable pain as the new era begins.  It will be up to those who have been prepared for these times to step up into their callings and serve mankind.

I expect nations to repent of their corporate sin and look to those who have been anointed by Our Heavenly Father to turn them back toward Holiness, just laws, and service to their populace.  The hidden sins of leaders will be exposed and cause a major shift in the liberal and immoral attitudes allowed by the silent majority.

The death and destruction of the current system will be a pruning with extreme prejudice.  We must remove the dead in order for life to spring forth.  The dead weight must be pruned away in order to restore health to mankind.

For thousands of years gold has been a fundamental store of value and medium of exchange, based on equal weights and measures.  Once technology allowed for easy accounting and flow of transactions, the Laws were changed, and regulators opted not to enforce the spirit of the Law, the global financial bubble inflated to epic proportion.  Note that gold is the green triangle at the bottom.

If you took all of the “Real Banking System” money, you could not pay off the true financial obligations of the U.S.  I wonder if this is why China keeps building up its gold reserves?

Now that the Mayan Calendar has reset for another 26,000 years, we can get back to the business at hand.  This astronomical event captured the interest of many but failed to bring the catastrophic zenith that Hollywood had predicted.  The illusion is once again exposed.

Gold and silver were attacked this week just as the Fed created the next installment of Quantitative Easing… as expected.

The facade of economic growth continues and it will be interesting to see how the Christmas season will be reported.  With 8 to 10% inflation and a possible stated improvement of 3%, the true growth rate will be –7% based on raw statistics.  We’ll see how the numbers are reported by the spin doctors.  The busiest store at the mall was the Lego Store.  We will not deny our little ones!  After all, they are the future.  The rest of the stores were not too busy and allow for crowd-free shopping.  Heavy discounting reduced our overall cash requirements for this season.  The billfold was happy.

Our long awaited EDS beta machine might be delivered today… finally.  This month marks ten years since Dr. Speckhart decided to retire from active practice.  I hope that 2013 will see a dramatic improvement in the development of this technology.  Mankind could use a break from all the challenges that prevent a healthy life.

Our Bible study has maintained 100 to 150 views for each broadcast.  We are thankful for those who share our desire to mature in Love.  I have now completed seven years of focusing on this aspect of Our Heavenly Father and will continue until the fullness comes.  Our Heavenly Father is definitely patient with me.

Now that we survived the end of the world, I hope many of you will focus on producing good fruit by serving others who are less fortunate.  Acts of kindness and words of gratitude are “presents” to those who are struggling.  You don’t have to be wealthy to be a give, just willing.

Join us tomorrow as we continue the discussion of the Judgment of Love.  I am going to share the prophetic aspect of my trip to Canada last year that subtly dealt with the swallowing up of death, the ultimate judgment of Love.

For the last year and a half, gold has been in a trading range of consolidation.  I expect a violent move up and it will not be expected by the market.  Paper gold in the futures market is risky since there is not enough gold to satisfy delivery.  The paper market has been manipulated by the agents of the Fed.  Just like clockwork when the Fed announces a new program of Quantitative Easing, the price of gold and silver get smacked.  These are times when those who believe in gold and silver as insurance against epic money printing can add to their positions.

These price manipulations play into the hands of the Chinese.  They continue to acquire more gold reserves at these prices.  It reminds me of Great Britain’s sale of gold at the bottom of the current price cycle- “Between 1999 and 2002, Gordon Brown, Chancellor, ordered the sale of almost 400 tons of the gold reserves when the price was at a 20-year low.”  This single decision cost British taxpayers Seven Billion Pounds at today’s prices.

Acquisition of gold and silver and their related stocks is not for the faint of heart.  Price swings have been substantial and will prove to be wild in the future.  Macroeconomic factors support hard asset investments over the long term but it will not be without some heart stopping moves.

On a six month basis, gold looks like it may of peaked out:

However on a ten year basis, the trend is intact:

Note the similar consolidation phase in 2008.  At $875, many were calling the top in gold then.  They now hope that everyone has forgotten their market calls.

Production in the mining sector is in serious decline.  India is being strong armed into selling gold reserves but it is not working.  Governments can put up barriers but the people will continue to protect their families.  The “gold cartel” is now desperate and China will be happy to buy up all the cheap gold they can.

Silver has even greater volatility which requires even greater courage to stay the course:

During the last days of the year, the cartel can manipulate the price with greater ease since many traders are on holiday.  They attempt to “paint” the charts to dissuade technical traders from buying.

The need for manipulation speaks volumes.

Disclaimer:

This website contains the ideas and opinions of the author. It is a conceptual exploration of financial and general economic principles. As with any financial discussion of the future, there cannot be any absolute certainty. What this article does not contain is specific investment, legal, tax or any other form of professional advice. If specific advice is needed, it should be sought from an appropriate professional. Any liability, responsibility or warranty for the results of the application of principles contained in the article, website, readings, videos,  books and related materials, either directly or indirectly, are expressly disclaimed by the author.

The “fiscal cliff” is another attempt to shift the attention of the public from huge problems to small ones.  The automatic spending cuts and tax increases were intended to reduce the deficit but instead it will be only by an insignificant amount over next ten years.

The problem is that you cannot legislate austerity to a faltering and recessionary economy.  This provides the setting to turn the Great Recession into the Great Depression of the Century.  The fiscal cliff is small compared to the Derivatives tsunami, Bond market bubble, or Dollar market bubble. (See previous blogs)

The fiscal cliff requires that the federal government cut spending by $1.3 trillion over ten years.  This means the federal deficit has to be reduced about $109 billion per year or 3 percent of the current budget.  The Derivatives tsunami and the other bubbles are of a different magnitude.  According to the Office of the Comptroller of the Currency’s fourth quarter report for 2011, about 95% of the $230 trillion in US derivative exposure was held by four US financial institutions: JP Morgan Chase Bank, Bank of America, Citibank, and Goldman Sachs.  The commercial banks became casinos, like the investment bank, Goldman Sachs, betting not only their own money but also depositors money on uncovered bets on interest rates, currency exchange rates, mortgages, and prices of commodities and equities.

The exposure of the 4 US banks accounts for almost of all of the exposure and is many multiples of their assets or of their risk capital.  Today these four US banks have derivative exposure equal to 3.3 times world Gross Domestic Product.

The entire economic policy of the United States is focused on saving four banks that are too large to fail.  The purpose of QE1,2,3… are to keep the prices of debt, which supports the banks’ bets, high. The Federal Reserve claims that the purpose of its massive monetization of debt is to help the economy with low interest rates and increased home sales.  But the Fed’s policy is hurting the economy by depriving savers, especially the retired, of interest income, forcing them to draw down their savings.  Real interest rates paid on CDs, money market funds, and bonds are lower than the rate of inflation.

Moreover, the money that the Fed is creating in order to bail out the four banks is making holders of dollars, both at home and abroad, nervous.  If investors desert the dollar and its exchange value falls, the price of the financial instruments that the Fed’s purchases are supporting will also fall, and interest rates will rise. The only way the Fed could support the dollar would be to raise interest rates. In that event, bond holders would be wiped out, and the interest charges on the government’s debt would explode.

With such a catastrophe following the previous stock and real estate collapses, the remains of people’s wealth would be wiped out. Investors have been deserting equities for “safe” US Treasuries.  This is why the Fed can keep bond prices so high that the real interest rate is negative.  If the “bond vigilantes” finally surface, it will be all over but the shouting.

In the meantime, under the disguise of the threat of the fiscal cliff, lawmakers will try to destroy the social security safety net.  There is no substantial job creation, real family incomes have been declining for decades, and wealth and income have been concentrated to a few.  Historically, this environment produces major changes in a society.  Change IS coming!