5 May 2008
How to Treat a Spoiled Child
Posted by Joy Bischoff under: World Economy .
What is the biggest factor in the present credit crisis? Bad fiscal policy and not putting off til tomorrow what we want today. Our government and most of our citizens are in debt. So what is the answer? According to the Federal Reserve it is going into debt further to prop up the spoiled child that is Wall Street.
According to the latest headlines, things are turning around and the crisis is almost over. A few times I have almost grabbed some of those articles to post along with the wish and hope that it is true. I do not want to believe the economy will continue to suffer. I have children, we want things smooth for them. So why do I look askew at the rosy predictions? Because it is based on a fallacy. You do not correct a spoiled child by spoiling it more. Greater debt to solve the problem of debt is no solution and is in fact digging a deeper pit for the future. We can all hope for the best but if we decide things have been put right then we may not be as motivated to prepare for rough bumps.
Personally, I believe we have many years before the Second Coming. I even believe there is still some time before we enter the period designated as the three and a half years of the mark of the beast. Before that time comes, we read in Matt. 24 about what he calls the beginning of woes:
7 For nation shall rise against nation, and kingdom against kingdom: and there shall be famines, and pestilences, and earthquakes, in divers places.
8 All these are the beginning of sorrows.
Therefore we know that famines, pestilences, and natural disasters will begin the series of severe trials of the last days. There is no way we can be certain that we won’t see famine in the next few years.
For those of you who are LDS, I think it is very significant that in Oct. Conference of 1998, Gordon B. Hinckley quoted from the story of Joseph of Egypt regarding the seven fat years and the seven lean years. Exactly seven years later, he again repeated that story with strong counsel to prepare. That was three years ago. For the last three years the world food production has not kept up with demand. Does this mean we are certain to have famine shortly? No, but we could. I do believe we are entering in to a time where it will be much harder for the average person to be able to afford preparations. I actually do feel there is a good chance of a famine to some degree before that seven years is up at the end of 2012 and it could easily come sooner.
Cutting through the torturous twists of economic logic used to justify our economic policy, the bottom line is this. Great debt will hurt the dollar. No, the dollar is doing better you might say. Against the euro it is. Why? Because the credit crunch has hit Europe now and their currency is losing value. We must look at what the currency buys to understand where it really is. To compare the dollar to the euro does not equate to real value. How much oil, food and other commodities the dollar buys is the real test and we all can see that reality.
US Federal Reserve and European Central Bank pump an extra $82bn into banking system
Gary Duncan, Economics Editor
The US Federal Reserve and the European Central Bank united yesterday to open a new front in their battle to quell the persistent money market strains that are fueling the global credit crunch.
The Fed and the ECB lined up with the Swiss National Bank (SNB) to mount a third phase of joint operations to curb the transatlantic credit squeeze endangering the world economy. The central banks said that they would again raise sharply, by as much as $82 billion (£42 billion), the amount of funds they were pumping into the US and European banking systems in their effort to rein in elevated market interest rates.
The latest concerted action by the central banks comes as the continuing hoarding of funds by institutions in Europe and America has kept interest rates for lending between commercial banks high – despite an easing of conditions in broader credit markets. Steep money market rates are aggravating the squeeze on lending to companies and households, jeopardising economic prospects.
Yesterday the Fed increased by half, to $150 billion, the value of its Term Auction Facility, a monthly operation set up in December that makes one-month loans to US banks against collateral including devalued mortgage-backed securities.
The enhanced currency swap plan comes amid concerns by the Fed and the European central banks that European banks are exposed to a severe shortage of dollar funds, thus exacerbating stresses in dollar money markets.
8 Comments so far...
Sharon Anderson Says:
5 May 2008 at 9:47 am.
Consider this which illustrates the falling value of the dollar: About 1964 a silver dollar would buy 3 gallons of gas. In 2008 a silver dollar will buy 5 gallons of gas. Gas has gone from $.33 to as much as $4.00. Typically the purchasing power of silver and gold remains constant so we can see that the increase in production costs of gasoline as well as the price at the pump show what has happened to the dollar. Can you say DEVALUATION AND INFLATION?
Joy Bischoff Says:
5 May 2008 at 10:11 am.
Good point, Sharon. Thanks.
There was one more thing I wanted to add to my thoughts above but didn’t want to make my blog any longer. I believe from the prophecies I have studied, that we will be having ups and downs through the coming years. World conditions aren’t going to collapse and never recover. There will be periods of hardship and then times of greater stabilization. Our children will have opportunities to have some normalcy, to get an education and have a family. We just need to develop good sea legs to take the ebb and flow of the waves as they come. The most important thing to remember is that the times of great trial is also the opportunity to be closest to the Lord and feel His loving influence.
Angela Rogin Says:
5 May 2008 at 10:24 am.
I hope you are right Joy. I would like to think my nieces and nephews can still have a life. I do agree with the situation with the bail out. Dead weight can’t be carried, it will pull everything else down with it eventually. I also don’t like the fact that they are saying things are good when in the real world it is getting so much harder.
Jan W. Says:
5 May 2008 at 12:09 pm.
Wall Street is getting bailed out at our expense. It will eventually damage the dollar terribly to flood the market with so many dollars. The people are paying for it because the dollar doesn’t buy as much as it use to. I read an article where the head of OPEC said that oil is getting so expensive because the dollar is not worth as much against the oil. I know OPEC is also very greedy but it makes sense that the real value of the dollar is how it stacks upagainst the things you can buy. I was thinking it was doing better because of the euro until this blog explained that is because the euro is losing its value to. That makes perfect sense. In the long run, what really matters is what we can buy with it and that is the bad news. Wall Street doesn’t have to worry for now because we bailed them out and they are so rich they don’t care about paying more for gas and food.
Matt Says:
5 May 2008 at 12:33 pm.
I decided to post this here instead of on the news thread because it fits with this discussion. Reality is that our money isn’t buying what it use to. It use to be backed by gold but the new reality is that it is backed by oil and that is how it should be measured. In case some people say no way, food prices are keeping up with oil. It’s all one vicious circle. I agree with Joy that if we pretend things are fine then we won’t handle our finances the same as otherwise. Rose colored classes are okay to a certain extent but they would be so dark you couldn’t see right to believe that everything is fine and we don’t have to be careful with our money.
New York oil price crosses 120 dollars for first time
Oil prices crossed 120 dollars a barrel here Monday following fresh unrest in Nigeria, Africa’s largest oil producer.
New York’s main oil futures contract, light sweet crude for June delivery, briefly hit 120.20 dollars, before slipping back at 1520 GMT to 120 dollars, a gain of 3.68 dollars from the closing price on Friday.
The price surge came on supply jitters from Nigeria and geopolitical tension in Iran, analysts said.
http://www.breitbart.com/article.php?id=080505155615.a4coj6jx&show_article=1
M.G. Says:
5 May 2008 at 2:06 pm.
I go back and forth on this. What you are all saying makes sense but I think we are programmed now a days to want approval by agreeing with the mainstream thought. So if everyone is saying things are better, maybe we are able to overlook people losing thier homes and so many companies going under, high prices, and we can ignore all that so we feel good about agreeing with the prevailing thought. All is well so don’t say it isn’t.
The other side of the coin in that it helps to look at the bright side. Being positive helps everything.
Benjamin Says:
5 May 2008 at 2:13 pm.
The MSM isn’t a reflection of mainstream thought any more than Hollywood is. Seventy two percent of the US public right now thinks the economy is seriously off and things are not going well at all. I think most people are too smart to see a bailout of Wall Street as a bail out of common Americans. I don’t find most people here dark and depressing. They look at the news and try to cut through the bull to see the truth but they also have positive messages. Like the Sunday blogs for instance are very uplifting. Here on comments Joy says that she thinks things won’t just crash and stay horrible until the end. That is a message of hope to a people who are familiar with the Book of Revelation, Daniel, Ezekial, Isaiah, Matt 24 and lots more.
T. Fan Says:
5 May 2008 at 2:21 pm.
Benjamin, what you wrote made me think of a story in the Old Testament about the Israelite king who gets really upset because all the prophets of Baal only prophesy good things to him. He complains because the prophet of the Lord always prophesies evil things. Finally when he really needed to know the truth and wasn’t interested in sugar coating, he ordered the prophet of the Lord to go ahead and tell him the truth because he knows he won’t lie. He still didn’t like that prophet and resented the way he was but he wanted truth.
That’s what people who come here want, I think. I know I do. Of course people say it is only our opinion but I believe there is truth to be found both in the Bible and in the Constitution. I’m not saying the Constitution is scripture, but it is truth based on scripture.
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