Saturday, April 06, 2024

Second Coming

My hope at this time is not the second coming. My hope is in the Holy Spirit. I believe that Jesus will return at the end of the age, but he will not return until the church has completed its work, cooperating with the Holy Spirit. He will not return to rescue a church that is failing. Many Christians are currently hoping that Jesus will return soon, but that is actually an escapist hope. It is a hope that Jesus will return and do what we can’t be bothered doing.

This type of hope is part of what is wrong with the church. Instead of doing what God is telling us to do, we would prefer that Jesus do it for us, either by returning, or by doing it for us by sending revival. An old lady that I once knew said that prophecies about revival are the hope of the lazy. I think she was right.

My hope is greater than the second coming. My hope is that the Holy Spirit will bring in the Kingdom of God by working through his body here on earth. That is a far greater task and will produce a far more beautiful kingdom than the ugly, brutal kingdom prophesied by those who hope for Jesus’ return.

I am absolutely certain that the Holy Spirit will do what he has promised to do, but it will take some time, because he will not force people to change. He is patient, but he will eventually get he work done.

Friday, April 05, 2024

US Commercial Real Estate

The US commercial real estate sector is under considerable stress. Will it become the next subprime?

  • Despite every effort, downtown businesses have not been able to get all their workers back because they liked foregoing the long commute.

  • Commercial real estate valuations are falling and properties are difficult to sell.

  • The number of properties with negative equity is increasing.

  • Commercial real estate delinquency rates have already jumped to 6 1/2 percent—up 30 percent in a matter of months. Rates of distress in office loans just hit 11 percent.

  • $929 billion of commercial real estate debt is coming due before the end of the year. That’s up 28 percent from the previous year.

  • National Bureau of Economic Research has estimated that up to 385 American banks could fail over commercial real estate loans alone.

  • The FDIC is essentially guaranteeing more than $20 trillion in deposits with just more than $100 billion in reserves.

Thursday, April 04, 2024

US Debt - Warning

Some disturbing financial information is coming out of the United States.

US budget deficits are having a huge effect on US debt levels.

  • The federal budget deficit, one source of increasing debt, is tracking at $1.7 trillion for 2024.

  • Federal debt has been recently increasing by $1 trillion every 100 days.

  • At the current pace, US federal debt will surpass $35 trillion by the end of April, and reach $40 trillion some time in 2025.

  • Projections indicate that federal debt could reach $60 trillion by 2034.

  • After hitting 1 trillion in late 2023, interest expense on US debt has risen to 1.1 trillion.

  • If debt continues to grow and interest rates continue at the current level, annual interest costs could rise to 1.6 trillion by the end of the year.

  • In 1970 the figure stood at $378 billion of public debt outstanding, which represented 34.9% of GDP.

  • On the eve of the 2008 crisis, U.S. federal debt to GDP was around 64 percent, the same level as in 1995. This allowed some flexibility. As of the most recent quarter, the ratio of debt to GDP is now nearly double that, at 122 percent. On this measure, the United States is now among the top 10 most indebted countries in the world.

Wednesday, April 03, 2024

Update on Digital Currencies

A few weeks ago, I published an article about money called Money Developments. Readers who want an update on what is happening around the world with digital currencies should read this article called On the Brink of Change: The Digitization of Money by Efrat Fenigson, an independent journalist.

I will give a few interesting quotes as a taste.

Stablecoins could be the way in which the US is further globalizing the dollar, spreading its adoption directly to the world’s general public in order to continue increasing its debt and encourage uptake and usage of the dollar”, says Mark Goodwin. He suggests that the politician’s outcry of de-dollarization and the weakening of the dollar are a distraction from perpetuating the dollar as the world’s reserve currency.

“While CBDCs are what people are becoming fearful and aware of, it may just be the red herring, and the real strategy of the US dollar's survival is highly regulated stablecoins (such as Tether), which can easily be programmable, even more than CBDCs, as well as seized, regulated and controlled indirectly by governments. 100 billion dollars in treasuries were already purchased by Tether, its subsidiaries and owners. Tether is positioned alongside the top 20 nation states buying debt from the US, with around one tenth of China or Japan that have a trillion dollars debt to the US”.

One to watch.
Ripple, a digital payment network and transaction protocol that owns the cryptocurrency XRP, is considered one of the most popular cryptocurrencies, and is strategically positioning itself at the heart of government financial innovation, aiming to be the cornerstone of future CBDCs. The company is in talks with about twenty governments around the world to develop their CBDCs using Ripple's technology. In May 2023, Ripple launched a dedicated CBDC platform to assist central banks, governments and financial institutions around the world in issuing CBDCs and stablecoins. To date, Ripple has partnered with six governments for CBDC pilot projects.

Promoting its platform as an infrastructure for a CBDC, Ripple advocates for government regulation of cryptocurrencies, and tries to position itself as the preferred solution for CBDC projects. Its claim to fame of being the ideal CBDC partner for governments is the combination of speed, efficiency, a sustainable and "green" blockchain network that uses little energy (compared to the Bitcoin network), and interoperability - the ability to communicate and work with CBDC solutions in other countries on the Ripple infrastructure.

In my article, I noted that governments do not have the skills to develop the technical infrastructure needed to support a digital currency. It had not occurred to me that large corporates would see this as a gap to move into and exploit, but I should have expected it. A large corporate could shift technology between countries to reduce the cost of CBDCs. Ripple is the first to have a go, but others will follow. Giving large multinational corporations authority to develop and maintain the computing infrastructure needed to operate a CBDC could create risks for economic security and privacy.

Privacy is related to anonymity.

In a discussion at the European Union Council in 2023, Christine Lagarde emphasizes a point: the digital euro will not be anonymous. Privacy will exist in the system, but not anonymity. Let’s break this up in a different way: for the banks, the key to surveillance and control is identification. The bank must know who the citizen is and verify their identity, in order to exercise law enforcement or regulations, through technological restrictions. Lagarde's claim that the technology will allow privacy but not anonymity is unfounded: apparently the central bank considers itself and the financial service providers some kind of god, since in front of them the citizen will be identified, and therefore it is not clear what kind of privacy can exist, without anonymity.

Sunday, March 31, 2024

Good News

The good news is that Jesus totally and fully dealt with sin and defeated evil when he died on the cross.
He was raised from the dead and ascended into the spiritual realms where he was crowned as King of Kings and Lord of Lords.
He released the Holy Spirit to work in the world and clean up the dreadful mess caused by sin and evil.

Friday, March 29, 2024

The Cross

God forgave all our sins.
He redeemed us from death and sickness and gave us life.
In Jesus, he cancelled the charge that condemns us
by nailing it to the cross.
Jesus has disarmed the powers and authorities that control us
by triumphing over them on the cross.

Tuesday, March 19, 2024

Hope

I don’t have much hope in the church as it exists in New Zealand at the current time. I observe an unwillingness to change and do things differently that has become entrenched over many years. God will not force the church to change. He has been urging change for many years, but no one is listening.

The reality is that a church that is unwilling to change cannot be revived. It actually needs a radical reformation, but there are no leaders working towards that. I have described a few of the changes that need to take place in Twelve Big Ones.

The truth is that if a real revival came to New Zealand right now, the church would not be capable of discipling thousands of the new believers so many would eventually be lost. If 100,000 people chose to follow Jesus in Christchurch this year, the church would know what to do with them. God will not send revival now while it is too risky.

When people pray for revival, they don't think about what they will need to differently. They think about what they expect God to do, and perhaps what they expect other people to do. That is an ingredient for nothing happening.

I have heard people prophesying that God will send revival to New Zealand for fifty years, and these prophecies have failed. Prophesies about what God is going to do are pointless because he will not force himself on his church. We actually need more prophecies telling the church how it should change, but unfortunately, those are not so popular.

Friday, March 15, 2024

Money Developments (5c) Compulsory Change

The nature of money and banking would change dramatically if the government made it compulsory for people and businesses to use the CBDC for all transactions requiring payment of money. Such a change would be really concerning for everyone, as it would give the government much greater control over the buying and selling of both people and businesses. It would represent a significant loss of freedom.

If people and businesses were forced to use the CBDC for all transactions, the existing retail banks would probably fight hard to prevent it from happening, as it would be a serious constraint on their business. They would lose several very profitable activities. I am not sure how effective these institutions would be in preventing the government from making the change if it was determined.

Implanted Microchips
If a smartphone app is used to initiate CBDC transactions, security will be important. Processes for identification using fingerprints, voice prints, face recognition or iris scanning are already operational. These should provide sufficient security for a CBDC. Some Christians are suggesting that a microchip under the skin on the wrist or forehead will be introduced to increase the security of the CBDC, but this does not seem to be necessary, given that existing methods of security are effective.

The problem with an implanted microchip is that it could be accessed without authorisation. If a microchip can be read by an ATM or a terminal in a retail shop, criminals would be able to develop scanners that would be able to read the information on the microchip. They would also be able to write to the microchip and change the information on it. So having an implanted microchip would be less secure than using a smartphone.

If a person was kidnapped by criminals, the microchip under their skin could easily be removed by force. It is not hard to imagine groups of thugs mugging people and holding them down while they cut out their microchip so they could use it to make transactions.

An implanted microchip is a fairly useless technology. Without a power supply, its computing activity would be very limited, and its hardware would quickly get out of date. A chip under the skin cannot have a display screen or keypad for data entry. It would not be able to link to a mobile or wireless network, so it would be useless for communication or computing activities.

The flood of Christian books warning of the dangers of a microchip under the skin for financial transactions were written back in the days before smartphones when a microchip under the skin seemed like the only realistic way to make digital transactions. Now that most people have smartphones and they are accustomed to keeping them secure, a chip under the skin is unnecessary.

Government Control
Modern governments claim the right to control every aspect of life if they think they can do good. They claim the right to freeze the assets of people, companies and nations if they don’t approve their activities. They also claim the right to prevent people and businesses from buying or selling if they do not approve of their activities. This power is usually enforced through instructions to the banking system. Banks are dependent on the government for their license to operate, so they usually comply with government requirements.

A CBDC would make government control easier to achieve because they would only have to work through one agency. However, they are already able to achieve control through their influence on the banking system as a whole, so their ability to control would not be greatly enhanced if a CBDC was introduced. However, it could make their monitoring and control easier if they enforced the use of the CBDC for all payments.

The limits on government will always be legal, not capability. A CBDC would just make it easier to do things that governments mostly already have the legal authority to do.

Modern governments believe they have a responsibility to manage everyone’s behaviour, and they have a variety of technologies to control people effectively. Whatever their money system, modern governments have the power to prevent people from buying and selling. There are risks to digital transactions, but there are risks with all aspects of life. Holding wads of notes would provide very little protection.

This full series can be read on Substack in an article called Money Developments

Wednesday, March 13, 2024

Money Developments (5b) Problems for Central Bank Digital Currencies

Developing, implementing and maintaining a digital currency presents central banks with several problems. The following are just some of the issues that need to be considered and remediated.

  • Hacking and tampering – If the CBDC increases in popularity, huge amounts of important data will have to be managed and kept secure by the central bank. Hackers and thieves will be tempted to penetrate the system to steal funds or manipulate the accounts of people they dislike. Keeping the system secure will be costly for the central bank.

  • Monetary policy transmission mechanism – Modern central banks attempt to control the supply of money available in their economy. Most do this by controlling interest rates. Experts are concerned that the growth of CBDCs will restrict the transmission mechanism for monetary policy.

  • Interoperability with existing payment networks, including commercial bank and e-money networks and ATM machines. – Money is important for the operation of an economy. If the CBDC becomes the dominant currency, the central bank will be responsible for ensuring interoperability with all the other computer systems that use money transactions. This interoperability is currently maintained by banks and other private businesses. A central bank might not want to take this responsibility over from them.

  • Money laws and regulations, including data protection laws – if a CBDC is introduced, the central bank must ensure that all laws about money and credit will continue to function effectively. This might be a big task.

  • Resilience – The design of all aspects of the CBDC system will need to exceed the established resiliency and security standards of financial market infrastructures. It will need to provide instant transaction settlement around the clock all year long and be able to recover quickly from any disruption.

  • Scalable – CBDC systems will need to be developed with scalability in mind and be able to handle rapidly increasing volumes of transactions without running into operational difficulties.

  • Upgradable – A CBDC system will have to be easily upgradable to take account of developments in the software and hardware used by the various computer systems that need to interact with it. The system would need to be future-proofed to handle all technological developments. It will need to be upgraded continually. Most central banks do not have the skills to do this.

  • Two-tier system – Most central banks will adopt a two-tier approach in which they maintain the central system, but leave many other functions to other businesses. This might be a more practical solution, but the central bank will need to maintain relationships with a range of private-sector intermediaries.

  • Privacy – When developing a CBDC, the central bank will comply with all the existing standards for protecting privacy and the use of personal data.

  • Capital Flow Management – Many governments choose to control capital flows in and out of the country. These measures are mostly operated by the banks that organise international payments and receipts. If the CBDC can be used for international transactions, the central bank will need to build software constraints into the CBDC system to implement the government’s capital flow management measures. This may be quite complicated to achieve.

Credit Creation
If the role of the CBDC accounts at the central bank is extended to paying interest on deposits and making loans to businesses and households (mortgages), the situation changes significantly. Under the existing monetary system, commercial banks create money by giving loans to their customers. They can do this because the money they loan is eventually deposited in an account within the banking system. I describe how this “money creation” process operates in Credit Creation.

If the central bank gets involved in lending and borrowing by paying interest on deposits and lending money to businesses and households, they will get the ability to create credit in the same ways as commercial banks are currently doing it. If the central bank makes a loan to a customer (business or personal) the money will eventually be paid into the recipient's account at the commercial bank. They end up with a loan and a matching deposit, which balance each other.

The only limit on credit creation by the central bank would be supply and demand at the prevailing interest rate. Modern central banks control interest rates, so they would be able to manage interest rates and the volume of loans to achieve their goals.

Tuesday, March 12, 2024

Money Developments (5a) Central Bank Digital Currencies

Many central banks are worried that changes in the use of money will make it more difficult for them to control the money supply in their nation. In response to these developments, they are establishing central bank digital currencies (CBDC).

Most CBDCs will be established by allowing people and businesses to open an account at the central bank (for example, the Reserve Bank of New Zealand here, or the Bank of England in the UK). People could get their wages or salary paid into this account. Using a digital wallet of some kind, they can also use the digital currency to make or receive payments when buying or selling, in the same way as they now use debit or credit cards.

The digital wallet could be an electronic card or other portable token, but these would not be very secure. Most people and businesses would be more likely to use an app on a smartphone to make economic transactions with money in their digital account at the central bank of their nation. They mostly know how to keep their phones secure, so this should be safe.

At this stage, it is unclear how great the demand for central bank digital currencies will be. From what I have read, the experts in the central banks developing these currencies are not sure that people and businesses will use the digital currency they create. Many will prefer to continue using the payment services and bank accounts provided by their existing retail bank. There might be a lack of trust in a service provided by the government. (I note from the discussion papers issued by the Reserve Bank of New Zealand that they don’t seem to be very enthusiastic about a CBDC. They seem to be uncertain if there would be widespread take-up).

Some nations are establishing a CBDC to facilitate international transactions for people who are travelling, or businesses trading with businesses in other countries. If a CBDC makes international transactions simpler and cheaper than the service offered by existing banks and credit card companies, they are more likely to switch to using it.

CBDCs are the fastest and easiest way for nations wanting to use their own currencies when conducting international trade to operate currency swaps. These swaps will become more important because they eliminate the need to hold reserves of currencies that a nation uses for trade.

Payment Service Only
Most central banks seem to be planning to limit their CBDC offering to a payments service. They are not planning to provide all the other services that are typically offered by retail banks. The transactions account they are offering will be like a cheque account that does not pay interest, but can be used to make payments to other people and businesses. Most central banks do not intend to get into competition with retail banks by offering to pay interest on deposits. If they offered interest returns that are greater than those offered by retail banks, the flow of money into the CBDC would increase significantly.

Most of the accounts at the central bank will not provide overdrafts, mortgage-based loans, business loans, seasonal finance or insurance services. This means that most people and businesses will have to maintain their relationship with their existing retail bank. That would change dramatically if the central bank offered loans that are cheaper and easier to access than those offered by retail banks.

If there is uncertainty about the stability of a retail bank, causing depositors to fear a bank run, they might believe that their money is safer as a CBDC in their account at the central bank. However, if the government is guaranteeing deposits in the retail banks, then this advantage might not exist.

I will look at the problems with CBDCs in my next post

Saturday, March 09, 2024

Money Developments (4) Cryptocurrencies

A big development over the last few decades is the emergency of cryptocurrencies. The main feature of these is that they are created without any involvement of a government, so they cannot be traced or controlled by governments. The best-known cryptocurrency is Bitcoin. It uses a technology called Blockchain to record transactions.

Bitcoin is a digital currency that operates free of any central control or the oversight of banks or governments. Instead, it relies on peer-to-peer software and cryptography. A public ledger records all Bitcoin transactions, and copies of it are held on computers around the world. Anyone with a spare computer can set up one of these servers, known as a node. Every transaction is publicly broadcast to the network. Consensus on who owns which coins is reached cryptographically across these nodes rather than relying on a central source of trust like a bank.

In much the same way you would keep traditional coins in a physical wallet, virtual currencies are held in digital wallets and can be accessed from client software or a range of online and hardware tools. A private Bitcoin key is a 64-character string of letters and numbers. It might look something like this: E9873D79C6D87DC0FB6A5778633389F4462313303DA61F20BD67FC233AA. Most of us could not remember a number like that, so would have to record it in some way. Owners of Bitcoin addresses are not explicitly identified, but all transactions are public.

A cryptocurrency like Bitcoin has numerous benefits.

  • Financial transfers between two accounts are fast.
  • International transfers are a lot cheaper than using banks.
  • The Bitcoin ledger is public; anybody can store it on a computer.
  • Bitcoin is pseudonymous because funds are not tied to real-world entities but to Bitcoin addresses.
  • Bitcoin is decentralized, so it does not have a central controlling authority.
  • The Bitcoin network is peer-to-peer, so it does not have central servers that can be hacked.
  • Anybody can send a transaction to the network without needing any approval; the network merely confirms that the transaction is legitimate. 
  • Buying and selling is as simple as scanning a QR code and sending an email.
  • The additions to the ledger are maintained through competition. 
  • The issuance of new bitcoins is decentralized via an electronic mining process.
There are some problems with cryptocurrencies.
  • Users of a cryptocurrency must keep their address key secret. If they lose it, it cannot be recovered. If someone steals it, they have access to all their victims’ Bitcoin. Tools are available for storing an address key, but the process depends on users being diligent.

  • A growing economy needs a growing supply of currency. The electronic process for generating new Bitcoin mimics the process for mining gold. New bitcoins are generated in a process that those who do the most work get the most new bitcoins.

  • The process for generating new Bitcoin is very energy intensive.

  • The changing relationship between supply and demand for Bitcoin caused the price to increase dramatically when it was first introduced. Many people saw it as an investment that could produce rapid returns. These people did very well in the early days, but more recently, the value of Bitcoin has dropped significantly.

  • Many people have invested in companies promising to make cryptocurrency easier to use. Unfortunately, these companies have carried all the usual risks, because they are usually controlled by a few people, eliminating the distributed security provided by the cryptocurrency. Many investors have got into financial trouble and lost their wealth. The best-known example is perhaps FTX, which operated a cryptocurrency exchange and crypto hedge fund. It eventually went bankrupt.

  • Price fluctuations can be a problem for some uses. A stablecoin is a type of cryptocurrency where the value of the digital asset is supposed to be pegged to a reference asset such as the US dollar. They have been developed to provide stability, long-term purchasing power and the predictability of a fiat currency along with the benefits of cryptocurrencies. Unfortunately, many companies that have developed a product and called it a stablecoin have crashed to zero due to inadequate design, inadequate collateral or bad management. The stablecoin with the highest market capitalization value is Tether, which is pegged to the U.S. dollar as its fiat-backed currency.

If Christians are worried about being persecuted by their government and losing their ability to buy and sell (I am not currently in that situation), cryptocurrency is a practical option. However, they should be careful about a couple of the problems.
  • Christians holding a cryptocurrency for security reasons should not expect to make massive returns. If they are holding to ensure they can buy and sell when they want to, this should not matter to them. The value of their account will go up and down, but they will have the benefit of always being able to spend it when they choose. This problem is unavoidable, as notes and coins also lose value with inflation.

  • Christians should probably buy the cryptocurrency themselves rather than relying on companies that buy them on their behalf. These companies are only as good as the people who run them, so they cannot provide real security. If Christians purchase a stablecoin to gain the benefit of price stability, they should monitor its financial viability very carefully.

Friday, March 08, 2024

Money Developments (3) Private Payment Methods

In the last few decades, a range of new tools for making payments when buying products have been developed. These have changed the way that we buy and sell. Many of these options allow people to borrow money to pay for their purchases.

  • Credit Cards are the best-established and most widely accepted method for making payments by carrying a small plastic card. Many people are content to pay a fee to their credit card company for the benefit of paying for goods and services all over the world. Credit cards allow people to buy on credit, but their interest charges are high.

  • PayPal is a multinational financial technology company that operates an online payments system in a large number of countries. It provides an electronic alternative to traditional paper methods such as checks and money orders. The company operates as a payment processor for online vendors, auction sites and many other commercial users, for which it charges a fee.

  • Smartphones are already being used for buying and selling using NFC (Near-field Communication) or QR codes in many parts of Asia and Africa. In China, most people don’t have credit cards, so phone payments are more common. WeChat Pay has become a part of daily life.

    With WeChat Pay enabled on a mobile phone, users can make transaction payments anywhere. It is supported almost everywhere, such as in ordering taxis, supermarkets, and hospitals. In the largest cities, residents pay, on average, 80% of their monthly expenditures through mobile payment services, while in smaller cities, residents use these means for 90% of their monthly expenditures.

    In Africa, the use of smartphones for buying and selling is growing rapidly. It is making it easier for people to operate businesses and start new ones. M-PESA is Africa's most successful mobile money service. Making payments with a smartphone is far more secure than carrying around wads of cash, so it is facilitating economic development. For example, Somalia is an impoverished, war-torn country, yet 70% of adult Somalis use mobile money services regularly.

    Most of the mobile payment systems in Africa and Asia are operated by companies. Of course, governments can intervene and prevent people from trading if they choose, regardless of what payment method is used. They can also confiscate cash if they choose.

  • GooglePay and ApplePay are payment systems operated by two of the largest multinational information technology companies in the world. People are using them to make payments from their bank accounts or credit card accounts with their phones, often with NFC technology.

Thursday, March 07, 2024

Money Developments (2b) Cash and Security

Cash does not provide people with security from a hostile government, as it still has to be withdrawn from a bank or ATM, and the government can easily put a stop to that for a particular person. The only alternative would be to stash away a large volume of notes and use them as needed, but that is risky because they can be stolen, or destroyed by flood or fire. And of course, inflation slowly erodes the value of stored cash over the long term.

Whatever the form of the money system, modern governments have the power to prevent people from buying and selling. Holding cash provides very little protection. If people really want to store money for their support while living under a hostile government (I don’t see the need at this stage), a cryptocurrency like Bitcoin is probably the safest option because accounts are decentralised, and transactions can be made without anyone knowing and without leaving any paper or digital record of the transaction. However, it might be difficult to find businesses that will trade with a cryptocurrency.

A simpler option might be to store gold coins or gold jewellery, as they retain value, although the risk of theft remains. I read once about a person who travelled through Nazi Germany with a gold chain necklace hidden in their shoe. They used links from the chain to pay for things that they needed.

Jesus told his followers to seek his kingdom and find his security in it. He warned the people not to rely on money for their security.

Do not store up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal. But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves don’t break in and steal (Matt 6:19-20).
No wealth stored on earth is fully safe, regardless of the form in which it is stored. Cash can be stolen. Notes can get wet and mushy and be destroyed. The only safe place for storing wealth is in the kingdom of God. But only spiritual wealth can get in. Luke’s account of Jesus’ teaching makes the promise clearer.
Seek his kingdom, and these things will be given to you as well. Do not be afraid, little flock, for your Father has been pleased to give you the kingdom. Sell your possessions and give to the poor. Provide purses for yourselves that will not wear out, a treasure in heaven that will never fail, where no thief comes near and no moth destroys (Luke 12:31-33).
The safest place to be in a crisis is part of what Jesus calls a “little flock”, ie a community of people who are committed to following Jesus by serving each other and providing support for each other.

A fellowship of believers can support each other by giving and sharing during a season when the government is persecuting those who stand for Jesus. Their love for each other will be a purse that does not wear out. In Jesus’ kingdom, they will find treasure that will never fail. No powerful, political thief will be able to rob them of the security that they love one another as Jesus commanded.

Wednesday, March 06, 2024

Money Developments (2a) Declining Use of Cash

Some Christians are concerned that the decline in the use of cash represents the emergence of a cashless society in preparation for the Mark of the Beast. However, the decline of cash is a normal societal change that occurs when technology changes and new needs develop. Cash is disappearing in the same way that cheques have already disappeared. The reason is that they are inefficient and tend to be insecure, so the change is sensible.

  • People have stopped using cash. Young people here never use it all. I rarely carry cash. Carrying around wads of cash is risky because it is easy to steal, and notes are almost impossible to trace. Buying with a smartphone is simpler.

  • Retailers are not interested in selling their products for cash. Maintaining a stock of cash in every till to facilitate payment of change is inefficient. Paying out change encourages mistakes and pilfering by staff. Taking cash to the bank deposit is risky. Getting out coins in bulk to provide change is also an unnecessary risk. Storing cash overnight is a problem for many small businesses. The choice is to leave it in an unsupervised store or take it home. Neither is ideal. In view of these concerns, it is not surprising that businesses are avoiding cash, just as they stopped taking cheques long ago.

  • Retail banks are not interested in handling cash. They have to clean notes and sort out damaged ones and return them to the central bank. Holding large reserves of cash to meet uncertain demand for notes and coins is inefficient and unprofitable because it does not earn interest. Operating ATMs is a significant security risk as they are vulnerable to ram raids and scammers. Loading ATMs is expensive because strong security is needed when cash is being shifted around. Banks get no payment for providing an ATM service, so it is not surprising that they are trying to reduce both the number of sites where cash is available and the amount of cash that people can withdraw.

There are three big users of cash in the modern economy.
  • Criminals doing drug deals and funding other illegal activities. It is interesting that the largest volume of notes on issue is $100 notes. These are preferred by criminals.

  • People active in the black economy, who avoid GST by paying tradespeople and others with cash, or buying cars and other expensive products with cash.

  • People keeping a stash of money for a rainy day. It is interesting that there are still $500 million worth of £10 pound notes and $150 of £100 notes on issue, even though New Zealand switched to a decimal currency more than fifty years ago. I presume that many of these pound notes have been stashed and lost.

Here in New Zealand, I see no evidence that the Reserve Bank is pushing a cashless approach. The value of notes in circulation has actually increased, particularly in the larger denominations. The central bank earns good money through the seignorage it gets when issuing notes and coins. In the case of notes, it is almost money for nothing, so the bank is unlikely to push a cashless society.

The reality is that the Reserve Bank would have a great deal of difficulty in gathering up all the notes and coins in circulation if they wanted to do so. Cancelling their status as legal tender would create a great deal of anger, so it would be unlikely to take that action. Rather, the bank is more likely to wait for the use of notes and coins to continue to decline.

Tuesday, March 05, 2024

Money Developments (1) Digital Money

Because they misunderstand Revelation 13, many Christians become concerned when they read about changes to currencies and the emergence of a cashless economy. They don’t seem to realise that persecution of Christians does not begin with the Mark of the Beast and is not limited to it. The New Testament explains that persecution is normal for Christians (1 Peter 4:12). Actually, the lack of persecution of Christians in the West over during the last century is what is abnormal, perhaps due to our lack of zeal.

As society changes and new technologies emerge and are accepted, changes naturally follow in the way that people use money. This gradual economic change is normal. At this time, several big developments are changing the nature of currencies and the way people buy and sell. These changes are related and happening at the same time, so we need to think about each one in a coherent way to understand how they will affect us. The five big changes that are happening are:

  • Banking is digital.
  • Cash (notes and coins) are disappearing quite quickly.
  • Private payment tools have been developed.
  • Cryptocurrencies that are not controlled by governments have emerged.
  • Central banks are planning to offer digital currencies.
These changes are related, but I will examine each separately.

1. Digital Money
Fifty years ago, all bank records were on paper. When you entered a bank to withdraw cash, you went to the ledger counter first, and a person checked your identity and your account and recorded the transaction. You then went to a teller with the stamped form, and they handed over your money. That has now changed.

These days, all bank records are digital. The money in our savings and cheque accounts is recorded as digital records on the bank's computer systems. If you go up to a bank teller, they complete transactions by accessing these digital records through a computer terminal. There are no bars of gold backing this money that we have put in our bank account. The payment of wages or salary is recorded as a digital transaction. Likewise, the money that we use to buy food, pay the rent and buy things is a digital record on a bank’s computer. This means that we are already using digital currency.

Banks no longer keep paper records of our accounts and transactions, although they can be printed out if necessary. This change brings risk. Digital records can be hacked by criminals, whereas paper records are hard to change. More seriously, a powerful electromagnetic pulse from the sun or a military weapon might wipe out a bank's electronic records. I am not sure if they have plans to deal with this problem, but it would be an enormous disaster if it occurred.

Cheques
The disappearance of cheques was the last step in the move away from paper transactions. They are quite inefficient because the paper cheque has to be transported from the bank of the person banking it to the bank of the person who had issued it. Here in New Zealand, many retailers will no longer accept a cheque, and many people rarely use them. I can’t remember the last time that I wrote a cheque.

Monday, March 04, 2024

Economic Confusion

Our leaders seem to be confused about the state of the New Zealand economy.

The Prime Minister says the economy is fragile, but he has the policies to turn the economy around. He says that too many people are unemployed and that he will get them working again. His Finance Minister wants to introduce tax cuts so that household can afford to increase their consumption.

The Governor of the Reserve Bank of NZ says that the economy is still over-heated, causing inflation, so interest rates will have to remain high for a longer to cool it down. He says that unemployment will have to increase. He says that household consumption will need to be reduced to remove inflationary pressure.

The only certainty is confusion.

Monday, February 26, 2024

Political Power is the Problem

When I was young, I still had faith in political power. I believed that God’s people could use political power to establish his Kingdom on earth. I studied economics, political science and theology to learn how political power could be used to advance God’s purposes on earth.

What always worried me was the contradiction between human freedom and political power. The problem is that political power forces people to do things that they don’t want to do. At first, I assumed that it was fine to force people to do things provided that the things they are being forced to do are good.

The problem with this approach is that people have different ideas about what is good, and power cuts both ways. If it is acceptable for Christians to force people to do things that they do not want to do, then we must be fine if other groups who gain political power to force us to do things that we don’t want to do.

I tried to resolve this dilemma by relying on democracy to provide legitimacy. I decided that if Christians could gain a majority in a free election, they could legitimately use the power gained to force their values on the rest of society. I accepted that Christians would have to preach the gospel and win the hearts of the majority before they could use political power to establish the Kingdom of God on earth.

The victory of the gospel has not happened, and it is just as well because that failure has proved the weakness in my approach. Christians are now a minority in many democracies. They don’t like it when other groups use the political power that they have gained to impose their standards on us. What is sauce for the goose is sauce of the gander. If we believe that it is acceptable for Christians to impose their standards on society if they win power in an election, then it is acceptable for other groups that gain power to do the same, even if their values are hostile to God.

It gradually became clear to me that political power is a two-edged sword. If it is legitimate for it to be used to advance the Kingdom of God, it can just as easily be used to oppose it and to harm followers of Jesus. I eventually came to the conclusion that if we are serious about the Kingdom of God and the gospel that sets people free, we have to give up seeking political power. That is a step that most Christians are reluctant to take, but it is absolutely essential if we are serious about bringing in the Kingdom in God’s way.

Once I renounced political power, I quickly understood that Jesus refused to use political power to advance the Kingdom of God.

Jesus said to them, “The kings of the Gentiles lord it over them; and those who exercise authority over them call themselves Benefactors. But you are not to be like that (Luke 22:25-26).
Jesus said, “My kingdom is not of this world. If it were, my servants would fight to prevent my arrest by the Jewish leaders. But now my kingdom is from another place” (John 18:36).
Jesus refused to use political power to advance God’s work.

Once I realised that Jesus rejected political power, I came to understand that the spiritual powers of evil have used political power to increase their authority on earth. By attacking, manipulating and controlling political leaders, they gain far more power than they can get by possessing an individual person. Political spirits and government spirits have used political authority to leverage their power on earth, despite their terrible defeat on the cross. Those who try to use political power to do good unwittingly submit to the spiritual powers that control the political position they are seeking to use to accomplish good. Evil cannot be used to accomplish good.

To be honest, renouncing political power seemed like a backward step because I had assumed that political power would be essential for bringing in the Kingdom of God. At first, I was quite depressed about the situation. It seemed like the Kingdom of God was an impossible dream in this season. But I did not give up. I began studying the scripture to see if it was possible for God to bring in his kingdom without relying on political power and military force.

When I studied this issue seriously, I discovered that God had already given Moses a system of government that does not rely on force and coercion. The system instituted through him had no executive power and no compulsory taxation. There was no capability provided for enforcing the decisions. There was no permanent military force that could support government power. The entire system was voluntary. It is radically different from every modern political system.

I described Moses' system of local judges applying his law and voluntary military leaders protecting their community in a book called Government of God. It explains how Kingdom Communities can function without political power. They can voluntarily provide all the services that human governments promise, but fail to deliver. The book describes how the Kingdom of God can expand by the multiplication of voluntary kingdom communities.

Once I understood the problems of political power, my understanding of the nature of economics changed dramatically. The policies of modern economists cannot advance the Kingdom of God because they need to be imposed from the top by human governments with the power to make people do the right thing. I began seeking a politics-free economics.

I discovered the Instructions for Economic Life that God gave to Moses. I also found that Jesus had validated these instructions in his teaching about economics. God’s instructions for a community of people to develop an economy that can function effectively without the need for political power and coercion is described in my book called God’s Economy. The advance of the gospel by the power of the Spirit should produce a radically different society and economy. The most significant change is that there will be no human government to enforce economic policies. Economic and social change will come as more and more people choose to follow Jesus.

One of the biggest obstacles to the Kingdom of God is that most Christians still believe in political power. They disagree about how it should be used, but they believe that getting the right people into political power and changing laws in the right way is the key to advancing the Kingdom of God. This false belief has enabled the spiritual powers of evil to exercise power on earth way beyond their use-by-date, and the kingdom has not got any closer. If we are serious about the Kingdom of God, we must renounce political power.

Saturday, February 24, 2024

Richard Beck - Liberal Democracy Does Not Work (2)

Richard Beck explains that Liberal Democracy works against the gospel. It cannot be used to advance the Kingdom of God, as many Christians assume.

Witnessing these impacts of liberalism upon our pursuit of the common good and the church, many on the Christian right demand that the church "take back" the nation... The crudest versions of this are illiberal calls for "Christian nationalism"... More sophisticated political theologians on the Christian right, horrified by the specter of illiberalism, attempt to articulate visions where faithful Christians can influence, shape, and direct the liberal nation state...

And yet, even the most sophisticated political theology cannot alleviate the inherent tensions here. Liberalism is connected to democracy. Consequently, any policy a political theologian might recommend, or a Christian voting block might pass, will face another Election Day, over and over again. Democratic politics will persistently destabilize any Christian-informed vision of the good.

Which is why you have to give Christian nationalists some credit for their honesty. Christian nationalists know illiberalism is the only way to move a nation state consistently toward a value-laden vision of the good. That good has to be imposed upon the people. Otherwise, they'll vote you out of office or overturn your policy at the ballot box. Liberalism will always dilute every robust Christian political project.

Liberalism is corrosive to religious faith and a Christian-informed vision of the common good. And yet, the only way to redress these effects is illiberalism, imposing religious values upon an unwilling populous. Christianity and liberal democracy don't exist comfortably side by side. The relationship between them is tense and conflictual.

Simply put, a Christian nation will be an illiberal nation. And a liberal nation will never be a Christian nation. So pick your poison.

Fortunately, there is a third alternative. The Kingdom of God will not be established by political power, but by people moved by the Holy Spirit freely choosing to obey God. I explain how this works in my book called Government of God.

Friday, February 23, 2024

Richard Beck - Liberal Democracy Does Not Work (1)

Richard Beck explains something important that few Christians understand. Christianity and liberal democracy cant exist comfortably side by side. The Kingdom of God cannot be established by democratic processes.

Liberal democracy adopts a neutral posture toward values, beliefs, and lifeways. In liberal democracy, so long as you don't harm your neighbor, you are free to believe anything you want and pursue happiness as you think best. In America the most visible example of this is the Establishment Clause of the First Amendment: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof."

In light of this posture, political theologians on the religious right have made strong and cogent arguments that liberal democracy has pernicious and corrosive effects upon religious belief. To be sure, freedom of religion is lauded, but faith is hard to grow in the soil of liberalism...

Specifically, the pursuit of flourishing for a nation, and among those within a nation, demands a teleological vision of the good. What determines a good human life? What makes for a good business? What is our vision of the common good? We need to ask and answer teleological questions about a host of pressing social issues. For example, are marriages good? Are families good? If so, should the state protect, promote and support these goods over against alternative lifeways?

Liberalism can't answer any of these questions. The state is neutral toward questions of "the good," leaving that up to its citizens to work out for themselves.

Basically, liberalism just creates "liberty." Which is a great and glorious good. And yet, without any shared vision of the common good, liberal democracies can't collectively "go anywhere" when it comes to human flourishing beyond maximizing liberty and increasing material prosperity...

These are the only two metrics of "progress" available to a liberal democracy. Neutral toward the values and virtues entailed in a teleological account of human flourishing, liberal democracy is constitutionally... unable to pursue any goods that fall outside of liberty and wealth. This evacuates the word "progress" of any moral or value-laden content. Our only "good" is freedom and money...

Further, this space created by liberal democracy has deleterious effects upon the spiritual formation of Christian believers.

Wednesday, February 21, 2024

Strategic Myopia

Gerry Nolan writes (condensed),

The neglect of NATO's internal decrepitude underscores a strategic myopia. It reflects a geopolitical theatre where the West, led by a flailing superpower, clings to the vestiges of influence through fiat might, even as its military edifice crumbles.

The spectacle of Britain's defense unraveling—ships mothballed before their time, a scant number of operational tanks, and an Army halved by medical downgrades—casts a long shadow over NATO's collective might. With such endemic debilitation at the heart of its second pillar, the alliance's capacity to project power or even sustain its logistical lifelines is cast into doubt... The irony of NATO's predicament is laid bare, with Britain's military disarray serving as a poignant emblem of the alliance's broader malaise... the manufacturing backbone of NATO's second most formidable army, the United Kingdom, is ensnared in a quagmire of incompetence and woke-induced paralysis... a facade of support propped up by nations struggling to muster their own martial strength.

This financial outpouring, juxtaposed against the backdrop of Britain's defense quandaries, prompts a deeper interrogation of the efficacy and aim of such support. With NATO grappling with its own existential challenges—dwindling arsenals, a beleaguered supply chain, and a military ethos under siege by the very ideologies it purports to defend—the allocation of such vast sums to Ukraine rings hollow. The heart of NATO itself, the US is staring down it’s own recruitment debacle, coupled with industrial capacity woes, with vast shortages of ammunition, amidst high demand (in Ukraine and Israel). It begs the question: To what end are these resources deployed when the foundations of the alliance itself are fraught with vulnerabilities and a creeping obsolescence?

As NATO stares into the abyss of its own making, the predicament of its once vaunted military powers—exemplified by Britain's decline—serves as a cautionary tale. The alliance's readiness to bankroll a conflict on the Eastern front, while its own arsenals and forces wane, speaks volumes of a strategic dissonance, a disjuncture between aspiration and capability. In this grand narrative of support for Ukraine, the tragic irony is that the very sinews of Western military might are fraying, leaving unanswered the poignant query: What can Ukraine, or indeed its patrons, hope to achieve... when the very sinew of their martial strength is atrophied by neglect and ideological schisms?

In the grand tapestry of our times, where geopolitical currents shift with the ferocity of a tempest, the narrative unfolding before us is not merely a story of conflict but a profound testament to the end of an era... the specter of NATO's disarray and Britain's military woes reverberate not as a clarion call of unyielding might but as the haunting dirge of a dominion facing its dusk. The staggering sum poured into the quagmire of Ukraine emerges not as the lifeline it was intended to be but as the last act of a strategy mired in delusion and denial. This is the West's final tantrum to cling to the shadows of a fading unipolar world, even as the dawn of multipolarity breaks.

The unfolding drama, set against the backdrop of Britain’s dwindling martial prowess and the internal contradictions tearing at NATO’s seams, paints a vivid picture of an alliance at odds with itself. This is not the steadfast coalition of lore, but a fragmented entity, grappling with its relevance in a world that no longer orbits around a single hegemonic power. A world no longer intimidated by the protection racket of NATO.

As we peer into the heart of this geopolitical earthquake, it becomes evident that the path forward demands not just a reevaluation of strategies but a fundamental reassessment of what constitutes true leadership on the global stage. The future beckons with the promise of a multipolar world order, one where cooperation supersedes confrontation, and mutual respect for sovereignty forms the cornerstone of international relations. In this new era, the true measure of strength lies not in the ability to dominate or intimidate but in the capacity to build bridges and forge a shared path toward collective security and prosperity.