Monday, December 31, 2012

Creating your Next Enemy

Nations that rely on military power tend to create their next enemy. The United States has been doing this with Iran for a long time.

The scriptures teach that Iran (backed by a spiritual power called the Prince of Persia) will become a major stumbling block for the Western Empire (Dan 8). This seemed to be unbelievable, back in the 1960s, because Iran was tin pot nation of very little account. In every interaction with Iran since those times, the United States has taken actions that strengthened the hands of the Prince of Persia. Here are some examples.

  • In 1947 Iran became a democracy. However, the British and Americans did not like the policies of elected Prime Minister Mohammed Mosaddeq, so in 1953 the CIA and MI6 organised a coup to topple him.

  • The Shah of Iran put in place by the Americans and British proved to be a cruel dictator. The secret police (SAVAK) killed hundreds of people and far more were imprisoned and tortured. America support allowed the Shah to destroy all opposition political parties opening the way for the Islamic revolution.

  • The United States provide military equipment and trained the Iranian military forces, turning it in a significant military power.

  • When the Shah was finally kicked out, following a mass Islamic Revolution in 1978. The United States responded to the loss of their man, by freezing billions of Iranian assets. Some of these are still frozen, although the United States has given up any hoping of restoring the Shah.

  • In 1980, Saddam Hussein invaded Iran with US military and reconnaissance support. In those days, Saddam was an American client, so further sanctions were imposed against Iran.

  • When it looked like the Iraqis might be defeated, the United States applied further sanctions against Iran in 1984 and 1987

  • The sanctions against Iran were not removed when the war ended. Instead further trade sanctions were introduced during the 1990s. These harm the ordinary people far more than the people in power, which increases the hatred for the US.

  • In 1988, the United States missile cruiser Vincennes shot down a civilian airbus operated by Air Iran over the Strait of Hormuz. All 290 passengers and crew were killed, including 66 children, but the United States has never apologised.

  • In 2003, George Bush invaded Iraq as part of his War on Terror. This destroyed Sunni power in Iraq. This event more than other has strengthened the hand of Iran in the Middle East, as Iraq is now ruled by a government that is sympathetic to Iran.

  • The United States has imposed further sanctions against Iran to prevent it from building a nuclear power station and enriching uranium, even though it is entitled to do so under Nuclear Proliferation Treaty, a treaty that the US has refused to sign.

  • The United has parked a couple of carrier groups in the Indian ocean, just off the coast of Iran. If another nation, did this off the coast of the United States it would perceived as a threat.

  • American congressmen love passing resolutions condemning Iran. These votes have little to do with diplomatic negotiations and are purely a tool for congressmen to prove to their electors that they are tough on the ememies of America. It is almost as if they know that the Bible says that Iran will become their empire's stumbling block, and are trying to take preemptive action.

Each of these actions has increased the hostility and mistrust towards the American government. Most of them have strengthened the power of hard-line leaders in Iran. When a nation is being bullied by a powerful enemy, it is easy for unscrupulous leaders to keep their people under control.

In 1978, I wrote the following words in the Gore Ensign, a local newspaper.
Daniel saw a ruler in Iran, who would become great and do just as he pleases… More interesting still, Daniel says that no nation would be able to "rescue from his power"… He saw the ruler of expanding his power to the west, the north and the south. To the West of Iran is the nation of Iraq, and to the south is the state of Saudi Arabia. These nations could fall under Iranian power by an expansion of the Islamic revolution or by military conquest… This would give the ruler of Iran control of one third of the Western world’s oil supplies.
This seemed to be impossible way back then. However, the mistakes of successive American presidents seem to be making it a reality. Iran already has a strong influence to the north in Syria and Lebanon. That should not be possible, because they belong to the Sunni stream of Islam, but US policies have forced these traditional enemies together. Iran now has a strong influence in Iraq to the west.

Although Saudi Arabia has a significant Shiite minority, the US has armed it to the teeth. This huge stash of American weapons will be handy when the Saudi Arabian domino falls in the direction of Iran. Just like the weapons American had supplied to the Shah of Iran, because he was their man.

The United States policy on Iran will eventually backfire. It is assisting Iran by imposing sanctions that restrict exports of oil and gas. It is forcing Iran to retain its oil and gas, when other Middle Eastern nations are running down their reserves. This is doing them a favour, because it forcing Iran to save oil and gas for the future when it will be more valuable. When oil is a really scarce resource, Iran will be more powerful, because it will be holding greater reserves at a time when they are increasing in economic and strategic value.

Daniel saw the Prince of Persia (a spiritual entity) moving toward the west, the north and the south.
I watched the ram as it charged toward the west and the north and the south. No animal could stand against it, and none could rescue from its power. It did as it pleased and became great (Dan 8:4)
Iran has already had success in the North and West. It has won the struggle for Iraq. Syria is not that relevant, because it has no oil. The US and the UK are trying to make a big deal of Syria, and portray it as a defeat for Iran but that is because they are trying to make the best of bad job in Iraq.

The next big deal is the Prince of Persia pushing to the south towards the Gulf monarchies and Saudi Arabia. This is where we should be looking, if we want to understand events in the Middle East.

Wednesday, December 26, 2012

Authority Struggle

Jesus ministry from beginning to end was a struggle over authority. The good news of the kingdom of God upset the kings, governors, priests and nobles who exercised authority in Israel. These authorities understood the nature of kingdoms, so they knew what was going on. They realised that the appearance of this new kingdom would bring a shift in with authority in Israel. If the government of God gained authority, they would lose authority, power and privilege. The authorities understood that they had to oppose this new kingdom, so when Jesus was teaching, he was frequently challenged about his authority. His trial before Pilate, turned into an argument over authority.

When Jesus was born in Bethlehem, Herod recognised the threat, as soon as the wise men announced that a new king had been born. The threat to his authority was so serious that he massacred all the boys born in Bethlehem.

Herod was furious, and he gave orders to kill all the boys in Bethlehem and its vicinity who were two years old (Matt 2:16).
Jesus was just a baby, but he was dangerous to Herod, because he represented a challenge to his authority. Herod used ruthless power to eliminate him while he could, but he failed.

Jesus challenge to authority goes on, and those with authority still try to destroy it, sometimes with the sword, and often with word and beliefs.

Monday, December 24, 2012

Christmas King

Luke records the words of the angel Gabriel to Mary. He told her who Jesus would be and what he would do in Luke 1:29-37. Here are his key themes.

  • He will be great
  • He will be the Son of the Most High
  • God will give him the throne of his Father David
  • He will feign over the house of Jacob forever
  • His kingdom will never end.
  • He will be called the Son of God.
We tend to focus on his being the Son of God. That is important.
However king ship is equally important. If our understanding of Christmas to God becoming a baby, then we only have half the picture. God sent a new king to earth whose kingdom would grow and last forever.

King Herod understood the impact that a new king would have, and was afraid. That is why he took such murderous action.

The wise men understood the importance of the new king and travelled across the world to honour him.

Do we have the same understanding?

Sunday, December 23, 2012

Whose Shoulder?

For to us a child is born,
to us a son is given,
and the government will be on his shoulders.
Of the increase of his government and peace
there will be no end.
He will reign … over his kingdom,
establishing and upholding it
with justice and righteousness
from that time on and forever.
The zeal of the LORD Almighty
will accomplish this (Is 9:6-7).
This is simple. Jesus has been born. He will be the government
from that time forward and forever.

So why does Barack Obama think that he should be the government?
or David Cameron, or Vladimir Putin?

Herod understood this prophecy.
He knew that his government was a goner,
so he tried to kill Jesus.

Satan understood the threat.
That is why he came up with clever deception that
This prophecy is not for now,
but for later,
This is why he pretends that his government is for now;
Jesus government comes at the end of the age.
You could trust Satan to thrust his shoulder in.

The government is on Jesus shoulders
He will govern with justice and righteousness.
and his government will never stop increasing.
The Zeal of the Lord will do it.

Saturday, December 22, 2012

Grace to Works

The incarnation of Jesus is a wonderful gift from God to man.

I do not know the history of Christmas gift giving, but I am willing to concede that it began as a way of celebrating God gracious gift.

Unfortunately, celebrating the things that God has done, by doing what he has done can become a slippery slope, where we end up trying to be god. The best way to celebrate God’s grace is to graciously receive it.

Humans have an amazing ability to turn God’s grace in human works.

That seems to have happened with Christmas gift giving. Peer pressure and television advertising has turned Christmas giving into a massive obligation. Poor people feel obliged to buy lavish gifts that they cannot afford for their children, family and friends. Christmas adds to the burden of poverty.

For those who have plenty, Christmas giving becomes a time consuming chore that removes peace and robs us of the time to think about what Jesus has done.

This world does not need more giving as a twisted response to grace. It needs more receiving of what God has given.

It also needs more Zacchaeus giving that transfers unrighteous wealth from the rich to the poor.

Monday, December 17, 2012

Sandel and Value

A few months ago, I read What Money can’t Buy by Michael J Sandel. He is a good communicator and I have really enjoyed some of lectures on justice on TV. This book is worth reading, because it show western culture in a different light.

In this book, he argues that markets are valuable for organising productive activity, but his concerned that market are seeping into aspects of life, where they do not belong. He wants a debate about the role and reach of markets. He wants decisions about which goods should be bought and sold. The aim should be a market economy, not a market society.

The problem with this is that it is not clear who would make the decision about what can be bought and sold. I presume that he assumes that governments can do this, but this will not work. Decisions about what can be sold are made by the person who chooses to sell. Decisions about what will be bought are make the people doing the buying. Unless they are doing something immoral, it is hard to see how they can be prevented.

The examples that he give are interesting. I think they show how hollow western culture has become. The answer is not more laws, but better values and more virtue.

Sandel speaks about market values, and suggests that they corrupt some good things. He says that when some things are sold, their value is contaminated. The problem here is that he assumes a concept of objective value. He does not realise that values are subjective. This is a core principle of economics. Different people place different value on the same things. This is why trade is possible. A sale of a good takes place, because the person buying values it more than the person selling it.

The price at which a particular good is sold in a market does not tell us its value. It does not tell us how most people value it. It does not tell us what value the buyer and seller put on it. All we know is that the buyer valued it more than the price and the seller valued it less than the price. But we do not know by how much.

Human valuations are subjective. The only person who can express objective values is God, because he is the only one who is unchanging.

Saturday, December 15, 2012

Spirit Control

Some politicians are calling for gun-control, but tha tis not the core issue. Governor Dannel Malloy got closer to the mark, when he said, "Evil visited this community today". Gun-control is not the solution, because the problem is spirit-control.

A couple of weeks ago, Gene Redlin listed seven spirits that have come into the American house and made themselves at home. He was right about the spirits, but I believe that he missed the big one: the warring violent spirit. Although, it would be more correct to say that this one has been travelling and came back with seven warring violent friends.

This spirit permeates American life: from the federal government, to international relations, through culture and entertainment, and onto life on the street. It has been there a long time, but it is now more entrenched. Unfortunately, the American people are so familiar with this spirit that they do not notice it, except when it breaks out into a school or shopping mall.

Diminishing Marginal Utility

One of the core ideas of economics is diminishing marginal utility. The basic ideal is that the more you get of something the less pleasure you get from it.

The first car is marvellous. If you have two, it can be handy. Getting a third is not much advantage. A tenth auto would be almost a nuisance.

Sweets are another example. The first two or three are great. The next half dozen are nice. But the hundredth sweet does not give much pleasure.

The same applies to Christmas gifts. One gift is hugely better than no gift. Getting a second gift is great. After the fifth gift, the novelty wears off. When you receive the tenth gift, it is a bit boring.

Diminishing marginal utility says that the more that you purchase of a good, the less benefit you derive from purchasing more unit of it.

Concentrating all our gift giving on Christmas day diminishes the value of the gifts. When a child gets fifteen gifts on the same day, the pleasure from many of them is lost, because diminishing marginal utility sets in. If our gift giving was spread across the year, children would get more enjoyment from it.

Christmas is poor value for money.

Friday, December 14, 2012

Praying Sickness

If a Christian who is sick asks me to pray for them, I often wonder what they are requesting. There are several possibilities.

They think that I can persuade God heal them, because they cannot. This is odd. If the person who is sick cannot persuade God, why do they think that I can?
Maybe they think that God works on a democratic principle, and will only act when a significant number of people are making the request. That is odd, too.

They might consider that their sickness is an attack from something so big that they cannot handle it on their own. This makes sense. If they sickness is an attack from evil spiritual forces, the sick person may not some help to deal with it. The problem is that I do not have the power to deal with spiritual powers. Only the Holy Spirit can do that. What I can bring is spiritual authority. The Holy Spirit needs human authority to release his authority against evil.

This leaves another question hanging. Why would I have authority in this situation? I will only have authority in the sick person’s life, if they have given it to me. If they are a brother or sisters in the same body, and we have submitted to each other for spiritual protection and to encourage each other in the Lord, I will have some authority (see Power Pairs).

If the sick person is just a casual acquaintance, I will have no authority in their life, so I am not in a place to resist evil with them.

This why the Bible says that sick Christians should go to their elders (James 5). The sick person should have freely submitted to their elders, so the elders will have authority in the sick person’s life, that enables them to resist the evil powers causing the sickness. The elders cannot persuade God to do anything, but they can resist the evil thing that has intruded into the sick person’s life.

Submission and authority work together to produce spiritual protection (not control).

There is more on this theme in my book on healing.

Wednesday, December 12, 2012


When it comes to gifts a common saying says,

It's the thought that counts.
If that is true, and it is thought that counts, the gift must be unnecessary.

Saturday, December 08, 2012

Find Your Calling

Every Christians needs to know their calling. You calling may not be the same as your occupation. Your calling is what God created you to be and do. If you are uncertain about your calling, you will find this Q Ideas Talk by Pete Richardson helpful.

Pete summarises the challenge in this long sentence.

Calling is the intersection of talents and heart passion
being applied to a specific part of God’s broken world
to restore and bring visible signs of God’s very real kingdom
alive through his community and people
in different sectors of the earth.

The Kingdom is on the move. God needs hour calling full owned, surrendered, activated and applied. A calling is worth living for, and its worth dying for.

Friday, December 07, 2012

Cross Behaviour

When Jesus went to the cross, he was doing what his Father had done before him. He was making himself helpless in the hand of men who had the power to harm him. That is what the father did when he gave dominion and authority over the earth that he created to humans. He made himself vulnerable to humans who had the freedom to rebel against him. He was committing himself to sustaining the creation, even if his creatures shut him out of it. He made them free to be atheists, while living the life that he created. This was cross behaviour. The Father made him powerless before with the people he had created.

If we do not understand this, we will not understand how God is working to achieve his purposes on earth. See God’s Big Strategy.

Once humans had shut him out of the world, he could not return without their permission. He had to wait for a thousand years before he got his first chance with Enoch. The Holy Spirit was speaking to humans throughout that time, be they just ignored him.

Enoch was different. He listened to the Spirit and prophesied, which opened the way for Noah, who brought God back into the frame.

Thursday, December 06, 2012

Intergenerational Transfers

Earlier this week I published a couple of posts on the economic problems caused by short-term risk-averse capital. Intergenerational transfers are a related problem. They were easier in the past when life expectancy was much shorter. Death took care of the problem, because most cultures had inheritance laws, under which the family property passed to the oldest child, usually a son (youngest child in some cultures). The inheriting child was expected to look after his parents in their old age, and take care of other members their family. This process for transferring capital assets from one generation to the next has been broken down by heavy taxation and increasing life expectancies.

Young people no take out loans to pay for their education. They get deeply into debt at a very young age. They get further indebted when they purchase a house. They have very little real savings, so they purchase their house with a mortgage to the bank that is often ninety to a hundred percent of the value of the house. This worked very well for most of the last half century while governments were inflating their currencies and property rose rapidly and inexorably. With the mortgage fixed in nominal dollars and prices rising rapidly, the mortgage was wiped out by time.

At the same time, older people were expected to save for their retirement. Once their children have left home and their education and housing debts had been wiped out by inflation, they have to push money into the financial system to build up funds to support themselves during retirement. This has been hard work because, inflation fights against them. They receive interest on their capital, but it is quickly wiped away by inflation.

Although these processes take place independently, the financial system combines them into a massive international generational transfer machine. Young people need money to pay for their education and homes. The banking system lends them the money that they need. Older people need to save up money for the retirement. They hold their savings in the financial system. The financial system becomes a machine that takes the savings of the parent’s generation and recycles it to their children’s generation. Inflation assists the process by wiping out the debts of the younger indebted generation and eating away at the wealth of the parents.

The financiers make money at both ends of pipe. While young people are waiting for inflation to wipe away their debt, they pay a huge amount of interest, often more than the value of their house. The parents want high interest and low risk, so they save their money in the banks that fund house mortgages, or other financial institutions that buy mortgage-backed securities from banks. They get an interest rate that is sometimes less than the inflation rate, so they are paying at their end of the pipe too.

The big beneficiary of this flow from one generation to another is the financial system. It charges fees at every point on the pipe, and those on the inside grab huge salaries and bonuses.

The global financial crisis that struck in 2007 broke the pipe. At the parents end of the pipe, money that was saved for the future suddenly disappeared into a black hole of risk. People who thought their future was secure, suddenly found that it was scary. At the other end of the pipe, house prices that were supped to rise forever plummeted. Mortgages that were supposed to be withering away, suddenly grew to be worth more than the house.

We clearly need a better process for transferring capital from one generation to the next. Paying the banking system to make the transfer is costly and sometimes robs everyone, except those inside the system.

Deeper attitudinal problems are created by this approach. Young people learn to live with high levels of debt at a very young age. They were encouraged into property speculation as the best way to build up assets. This creates bad attitudes to work, debt and risk. Wealth comes by speculation, not be hard work, entrepreneurial risk-taking and thrift. The older generation are encouraged to live for the short-term. Put together enough short-term savings in low-risk investments to keep you going for a few more years, and you can consume everything you earn. There is no incentive to build for the long term.

God is concerned about families and households.

I am the God of your father, the God of Abraham, the God of Isaac and the God of Jacob (Ex 3:6).
Exodus is not saying that God likes these three guys. He saw them creating a spiritual and material inheritance that was passed on from one generation to the next. Jacob should have built on what Isaac had established, Isaac inherited spiritual gifts, wisdom and wealth from his father Abraham. This is not each generation looking out for itself. This is each generation building on what the previous generation has done to do greater things for God.

We must start thinking this way. Instead of children building their own wealth through speculation and leverage, they should be guarding and building their family inheritance. Instead of parents caring for themselves and consuming the rest, they should be building a spiritual and material inheritance that their family can build on in the future.

Christians should develop ways to make this intergenerational transfer that bypass the financial system, so that bankers cannot clip the ticket at every step along the way. When the banks manage the transfer of capital, the transfer of spiritual capital is weakened. The transfer should work the other way round. The transfer of spiritual capital is most important. The material transfer should follow the transfer of spritiual capital, so that the kingdom of God is built and God is glorified.

Tuesday, December 04, 2012

Short-term Risk-averse Capital - Solution

The solution to the glut of short-term risk-averse saving is matched lending and borrowing (see Sound Banking). If every bank has to match the terms of loans and deposits, behaviour would have to change. Demand for longer-term loans will continue to be large, whereas demand for shorter-term loans will decline. The supply of short-term deposits will be greater than the supply of long-term deposits. Borrowers will not be able to change their behaviour much, because the best capital investments are longer term, so interest rates will have to adjust to clear the market. Interest rates on long-term deposits will rise and rates on short-term deposits will fall.

Interest rates on deposits less than two years might drop to zero, as there would not be much demand for loans of these terms, except for consumer borrowing. However, as the Kingdom of God grows, contentment will increase, so the demand for consumer loans will decline too. The interest rate on deposits on call might be negative. The lender would have to pay a fee to buy the transactions services provided by the bank.

This change in interest rates would shift savers away from short-term deposits towards those with longer terms. To get acceptable interest rates, depositors would have to agree too much longer terms for their fixed deposits. Terms for five to ten years might become the norm, if the rates on short term deposits are close to zero.

Deposits will be pooled, so that the risk of an individual loan defaulting is shared across many depositors. However, some risk cannot be avoided. Pooling can cover the risk of failure by a few businesses, but it cannot deal with risk of widespread default during a serious collapse of the economy.

If lenders understand that loans always involve some risk, some might decide to purchase equity or shares instead. This will enable them to capture a greater share of the return on their contribution to businesses activity.

Equity is better for the business. It used to be argued that it does not matter whether a business is funded by equity or debt, but the GFC showed that is wrong. Debt has two serious problems for businesses. First a debt has a fixed date on which it is due. Even if it is not a convenient for the business, the debt has to be repaid on that date. Equity does not have a due date. It may decline in value during difficult times, but it does not have to be repaid by the owner at an inconvenient.

The other problem with debt is that it is fixed in nominal dollars. If the value of the assets purchased has declined in value, the borrower may have to put up extra security. The business would not be able sell the asset to repay the loan, so they will have to put other money to get out of debt. In contrast, the value of equity adjusts with the state of the business and the economy.

A shift from debt funding to equity funding would increase the stability of the economy.

Whether savers decide to buy equity or increase the terms of their bank deposits, their change in behaviour will create a much larger pool of long-term risk-informed capital to sustain productive investment in capital goods. That would be good for the economy.

Monday, December 03, 2012

Short-term Risk-averse Capital

The modern banking system allows unmatched lending and borrowing. The reason for this is that lenders and borrowers have different needs. Depositors want high returns with low risk and flexibility. They prefer to deposit on call or a short-term fixed deposit, so they can withdraw their funds, if their situation changes or the economy weakens.

Borrowers need low interest rates, continuity and certainty. They will be using the borrowed money to purchase productive assets or real estate, which cannot be sold quickly, so they will not be in a position to repay back a loan earlier than expected, if that is required. They will often want to roll over the loan when it is due, rather than repay it.

Banks manage these different needs by recording unmatched loans on their balance sheets, and charging a margin between the interest on short-term deposits and the rate on long-term loans. This margin compensates them for the capital they have to hold to cover the liquidity and default risks created by the mismatch between lenders and borrowers.

However, resolving this mismatch on the banks’ balance sheet makes the banking system unstable. I have explained how this solution is immoral in Deposits and Loans. However, the balance sheet solution creates another problem for the economy. Most of the savings by households end up in short-term deposits, because savers want low risk. This provides banks with a glut of short-term risk-averse capital, which is of very little use to the economy.

The growth and efficiency of an economy depends on investment in productive capital assets, such as information technology, plant, equipment and factories. These are long-term investments, which often take a number of years before they bring a return to the investor. A factory may need to operate for ten to fifteen years to be efficient. These investments can only be undertaken, if equivalent savings are made available elsewhere in the economy (ignoring overseas funding). Banks undertake an important role by intermediating between households and businesses to channel savings into investment in capital goods. see Capital.

The problem is that most of the deposits held by banks are short-term and risk-averse. The depositors want to be able to get their money back at any time, but that is not what the economy needs. Investment in capital goods that will make us more productive can be quite risky. Not all projects will succeed, and some will fail. They will mostly be long-term ventures. A large pool of short-term risk-averse capital does not support the type long-term investment in capital that an economy needs.

Economists assume that savings are available to fund investment in capital goods, but they are not. Most savings are locked up in short-term risk-averse deposits. Banks responded to depositors preference for short-term risk-averse by channelling these savings into mortgages and real estate, because they were considered to be low risk (as house prices always go up). This means that the glut of short-term savings tends to feed real estate price booms, which makes the economy unstable.

The risk adversity of lenders actually increases economic risk, if their savings are used to fund real estate speculation. Whereas the flexibility of short-term deposits makes lenders feel secure, it increases risk for the economy by encouraging real estate bubbles and creates liquidity risk that will eventually come back to bite those who want security.

The reality is that risk cannot be avoided. All economic activity is risky. Banks offering depositors high interest rates on short-term deposits (with government guarantees) create an illusion of low risk that is unreal. Depositors think their money is safe, but they are participating in an unstable system that is weakened the economy that they are trusting for their future security. A more realistic attitude to risk is essential.

Saturday, December 01, 2012

Savings and Investment

The Old Testament prohibits interest on loans to the poor, because they are a form of charity (Ex 22:24; Lev 25: 35-37). The poor person will have to use the money borrowed for consumption goods so there will be no profit, which can be used to pay interest. This prohibition on interest was erroneously extended by Christians to business loans (Matt 25:27). Interest on commercial loans for use in trade or business is not forbidden.

The legitimacy of interest is an important principle to establish because interest is essential to economic growth. Economic growth can only take place if the economy’s capital (stock of productive plant and equipment) is built up. This can only happen if someone in the economy saves, and interest is essential for saving to occur.

Consider a subsistence fisherman. He has no equipment, but he catches enough fish with his bare hands to survive, by working most of the day. He could improve his fishing by making some nets or a boat, but while he was doing this he would not have time to fish so he would go hungry. If he can save a little bit of fish each day, he can build up a stock of fish. Then he can live on saved fish while he builds a net and boat. With the net and boat (his capital) he can catch enough fish to live on in half a day. This means that he will only need to fish every second day. He can use the other day to make better equipment or other things that will improve his lifestyle. Or he could fish every day, and trade the surplus with other people for other things that he needs. Getting some capital equipment improves the quality of his life. However to obtain the capital equipment, he had to make some saving first. The reward for saving was the stream of extra income he was able to produce with his capital. This is the equivalent of interest.

The same principle applies in any economy. If all money is spent on consumption goods, there will be no money available to buy capital goods. For money to be available to buy capital goods some people have to forgo consumption. They can either buy capital goods themselves and start a business, or they can deposit the money in a bank. The bank can lend the money to a business to buy capital goods. The reward for forgoing consumption is the profit that the business makes, or the interest that will be earned on the savings account.

If it is not possible to pay interest on a loan, there will be no incentive to save. The only people who would save are those who can start business themselves. Most others would just consume all they earn. The resulting shortage of capital would limit the growth that takes place in the economy.

The price of capital goods will adjust so that their supply is equal to the value of savings available for purchasing them. For example if people decide to save more, some of the consumer goods being produced will no longer be required. The price of consumer goods will fall. This will encourage producers to produce capital goods. These can be purchased with loans that will be made available through the additional deposits in savings accounts.

The interest rate should also rise and fall to clear these markets.  When these markets are distorted, problems arise. See savings and investments.

Thursday, November 29, 2012

Adair Turner on Finance

The Future of Finance and The Theory That Underpins It is a talk given by Adair Turner at the London School of Economics. It is available on a podcast here. It is a bit technical at time, but is worth a listen for those who want to understand the GFC.

Turner described the problems with the modern banking system very clearly, which is unusual for an insider. They usually pretend that the system is better than it is. Unfortunately, although he understands the problem well, Turner believes that the problems with the system can be managed. I think he is wrong. A more radical solution will be required.

Banks facilitate unmatched intermediation between lenders and borrowers. Lenders and borrower can obtain credit and debt contracts for different terms, risk and return. This mismatch is managed through the bank's balance sheet. On the liabilities side of the balance are short-term deposits. On the assets side are long-term loans, often twenty to thirty year mortgages. This creates a huge risk, as the bank ends up with many short-term debt contracts, which it could not honour, if all the depositors wanted to withdraw their funds at the same time. Banks depend on the central bank to act as a lender of last resort whenever this happens.

In addition to this liquidity risk, banks also carry the default risk. If a borrower default, the depositors still expect to get their money back. A bank needs sufficient capital to cover this default risk.

In the UK, business lending and borrowing net out. This means that most savings by households go in residential and commercial mortgages. This can create a self-reinforcing credit/asset price cycle. When real estate prices rise, banks are willing to lend more to mortgage holders. More mortgage money allows household to bid up prices. This self-reinforcing cycle creates frequent housing booms.

I describe a better solution to the liquidity problems of banks at Deposits and Loans and Money

Wednesday, November 28, 2012

Chicago Plan Revisited

Jaromir Benes and Michael Kumhof of the IMF have released a working paper called The Chicago Plan Revisited. They advocate government control of the money supply, which is dangerous, but they make a couple of interesting points along the way.

  1. They emphasise the benefits of separating the money and credit functions of the banking system. In the modern banking system, these two roles are intertwined. This causes immense problems. I explain a better way to separate the payments process from loan brokerage in the Money System.

  2. Benes and Kumhof explain the instability of modern debt-based money system. Bank liabilities are money that can be created and destroyed at a moment’s notice. This allows the banking system to engineer rapid lending booms and contractions. They advocate money that is government equity. In the Community Banks, I advocate money that represents the equity of the people.

Monday, November 26, 2012

Why Nations Fail

I have just read Why Nations Fail by Daron Acemogulu and James Robinson. The authors are looking for a grand idea.

We need a theory of why some nations are prosperous while other fail and are poor. The theory needs to delineate both the facts that create and retard prosperity and their historical origins.

They select institutions as the decisive bit idea. They divide nations according to whether their institutions are extractive or inclusive.

Our theory has attempted to achieve this by operating on two levels. The first is the distinction between extractive and inclusive economic and political institutions. The second is our explanation for why inclusive institution emerged in some part of the world and not in others. While the first level of our theory is about an institutional interpretation of history, the second level is about how history shaped institutional trajectories of nations.

Central to our theory is the link between inclusive economic and political institutions and prosperity. Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic grow than extractive economic institutions that are structured to extract resources from the many by the few and that fail to protect property rights or provide incentives for economic activity. Inclusive economic institutions are in turn supported by, and support inclusive political institutions, that is, those that distribute political power widely in a pluralistic manner and are able to achieve some amount of political centralisation so as to establish law and order, the foundations of secure property right, and inclusive market economy. Similarly extractive economic institutions are synergistically linked to extractive political institutions, which concentrate power in the hands of a few, who will then have incentives to maintain and develop extractive economic institutions for their benefit and use resources they obtain to cement their hold on power

The synergies between extractive economic and political institutions create a vicious circle, where extractive institutions, one in place, tend to persist. Similarly, there is a virtuous circle associated with inclusive economic and political institutions.
Aemogulu and Robinson cover broad swathes of history and discuss many nations to support their theory.

The institutional approach has real merit. Sound institutions are really important, so the book is really worth reading. However, one explanation is never enough. There are counter examples that do not really fit with their theory.

One example is China. The growth in the Chinese economy over the last two decades has been amazing. Several hundred million people have gone from poverty to prosperity in a very short time. Nothing like it has occurred in the world before. However, China has corrupt institutions and the rule of law is absent. The institutional theory does not explain the rapid economic grow in China.

New Zealand is another example that does not fit the theory very well. The country has a very well established legal system, and international surveys suggest it is one the best place in the world to do business, yet economic growth here has been sluggish.

At the beginning of the book, Aemogulu and Robinson discount two alternative theories that have been put forward.

Geography is the first theory that is discarded. Despite their arguments, geography does seem to be an important factor. Britain had plenty of accessible coal and iron ore, and was favourably situated for the trade winds from America. The United States has abundant mineral resources and a huge navigable river system going through the middle of the continent. These factors contributed to economic development. For New Zealand, thousands of miles from the next large market are a disadvantage. Geography is important, even if it is not the decisive factor.

They also reject culture as a determinant of economic development. Probably too quickly. A Confucian culture has a strong influence in China. It is one reason for the strong economic growth, despite the lack of stable institutions.

I believe that Christianity is an important factor for economic development too.
Christian faith produces honesty, trust, confidence in the future, thrift and service, which are all important for economic development. The distorted gospel that has been preached in Africa is an obstacle to development there.

In practice, this means that there is not one factor that can explain all economic development. A combination of factors is needed for long-term economic development to emerge. Institutions are important, but other factors may be important as well.

Wednesday, November 21, 2012

Unintended Consequences

I have just read Unintended Consequences by Edward Conard. He was the managing director of Bain Capital, the company established by Mitt Romney and his mates. He makes some interesting points about the causes of the Global Financial Crisis.

Part of the problem was that the United States and the rest of the world had a surplus of risk-averse, short-term capital.

Risk averse short short-term capital will only fund investment, if equity underwrites the risk. The United States and the rest of the world have a shortage of equity and risk taking rather than a shortage of capital more broadly.

Low-income households are far more disposed to consume than to invest. They tend to sell assets to increase consumption.

What little the middle class saves largely funds their personal housing. Housing investment does little to increase growth, productivity, employment and wages. Middle class saving over an above housing largely provides risk-averse short-term saving. They demand capital preservation and the right to withdraw their saving and consume them at any time. This type of capital underwrites too little risk to grow the economy.

Economic activity is proportional to risk taking. The willingness to take a risk drives both investment and consumption.

Investments to produce innovation are risky, and often produce no value at all. When they work, innovation create enormous increase and in value and subsequent economy activity.

Equity investors have the right to whatever profit is left over in a business after everyone else has been paid. Unlike equity investors, short-term debt holder demand capital preservation and the right to withdraw and consume their savings at any time. Because of these demands, short-term debt may fund investment, but only if equity holder underwrite the investment risk. Short-term debt bears too little risk to grow the economy. The amount of equity and its tolerance for risk grows the economy.

This difference in risk tolerance has a significant impact on the capital available to underwrite risk. The deferred consumption of the middle-class consumers largely yields risk-averse debt. These investors refuse to underwrite risk. Instead, they demand government guarantees as a condition for making their savings available for investment. These guarantees include government-issued treasuries, municipal bonds, and the debt of government-sponsored entitles like Fannie Mae and Freddie Mac as well as Federal Deposit Insurance. With an abundance of risk-averse debt flowing in to the United States from the trade deficit, additional risk-averse domestic debt is of marginal value to growth of our economy.

There is plenty of risk-averse capital to fund increased investment. So much so , that an abundance of investors willing to buy debt contributed to the growth of sub-prime mortgages and the erosion of credit standards that triggered the financial crisis. What was needed was more equity.

Traditionally, economists define saving as the accumulation of deferred consumption, because saving defined in that way are straightforward to measure. But savers largely lend deferred consumption as short-term debt. Successful risk taking that creates innovation large creates equity, not the accumulation of deferred consumption.

Government guarantees—the promise to cover losses with future tax increases, if necessary―encourage risk-averse offshore investment in the United States via government guaranteed debt.

Monday, November 19, 2012

Submitting to Caesar

Jesus warned to his listeners about submitting to political power.

Render to Caesar the things that are Caesar’s, and to God the things that are God’s (Luke 20:25).
Christians have made this complicated, but it is not. Everything on earth belongs to God. Nothing belongs to Caesar. So, Jesus was saying subtlety that we owe nothing to Caesar. I have written on this before in Voluntary Taxation.

I have just gained another insight on this passage. The coin bearing Caesar’s image represents the Roman political and economic system. The Pharisees and teachers of the law were all wrapped up in that system. They had gained their positions and wealth through collaboration with the Romans. They were dependent on Caesar’s money system for all their transactions.

Given that they were wrapped up in Caesar’s system, they could not object to paying taxes to the Romans.

Christians belong to the Kingdom of God. Caesar’s system has nothing to do with God’s kingdom. As the Kingdom of God, we should develop alternative economic system. Giving and sharing will be much more important. Christians might need to develop and alternative money system.

When we go into the world, we are like tourists visiting another country. A tourist might have to pay value added tax, but they do not pay income tax, because they do not belong to the country that they are visiting.

Christians may have to pay taxes to worldly governments, because they need to be in the world for their witness. But they do not owe taxes to the world system. If they do think they owe them, then they are probably too wrapped up in the world system.

Friday, November 16, 2012

Writing in the Dust

Why did Jesus write on the ground. This is a question that has puzzled many commentators. I think the answer is simple.

The teachers of the law and the pharisees had brought a woman caught in adultery before Jesus.

They made her stand before the group and said to Jesus, “Teacher, this woman was caught in the act of adultery, In the Law Moses commanded us to stone such women. Now what do you say” (John 8:4-5)?
They were testing Jesus, so his response is really important. Many commentators assume that Jesus rejected the requirements of the law of Moses and replaced them with forgiveness and mercy. That would be surprising, because Jesus had already said that had not come to abolish the law, and that not one jot or tittle would pass away while heaven and earth continued to exist (Matt 5:17-20).

The truth is that Jesus applied the law correctly in this situation.
If a man commits adultery with another man’s wife—with the wife of his neighbour—both the adulterer and the adulteress are to be put to death (Lev 20:10).
If a man is found sleeping with another man’s wife, both the man who slept with her and the woman must die. You must purge the evil from Israel (Deut 22:21).
These laws demonstrate the seriousness of adultery. The family is the basic unit in society, so adultery is treason against society. It is an evil that must be purged from society, or it will be destroyed.

However, the law has more to say about how the penalty for adultery should be applied. Firstly, a person can only be convicted of a crime if there are three witnesses to it.
One witness is not enough to convict anyone accused of any crime or offense they may have committed. A matter must be established by the testimony of two or three witnesses (Deut 19:15).
The Pharisees and teachers of the law understood this, so they stood the woman in front of the crowd and claimed as proof that she had been caught in the act.

Jesus knew that the law had another requirement. The witnesses must not have committed the crime they are testifying against. Adulterers cannot testify against adulterers. A witness who has committed the same crime is a false witness (Deut 5 :20) Jesus reminded the teachers and pharisees of this requirement, when he said,
Let any one of you who is without sin be the first to throw a stone at her (John 8:7).
This was not a new idea, it was a requirement of the law of Moses.

After saying these words, Jesus then continued writing on the ground. Commentators have speculated on what words he wrote that caused the crowd to slowly disperse, but they have missed the point. Jesus did not write any words. If he had, they would have been recorded. He wrote in the dust on the ground, because he wanted the people gathered to know where he was looking. Jesus was the only man in the crowd, who was not looking at the woman, and he wanted them to know that.

This woman had been “caught in adultery, in the very act”. Women in those times wore a single garment. They did not have fancy lingerie. So she would have removed her garment when she was caught in the adulterous act. When they dragged her out of the house and placed her in front of Jesus she would have been standing naked. This was part of their proof that she had been caught in adultery.

I presume she was an attractive woman, or she would not have been in this situation, so every man in the crowd would have been ogling at her. Except Jesus who was looking at the ground. When they noticed that Jesus was not looking at her, they would remember that Jesus had taught on the nature of adultery.
I tell you that anyone who looks at a woman lustfully has already committed adultery with her in his heart (Matt 5:28).
As they looked at her, and noticed Jesus had not, they would realised that they had committed adultery where they were standing. They disqualified themselves as witnesses, because they were guilty of the crime that they were accusing her of committing. There was nothing for them to do, but to leave in case Jesus revealed their sin.

When they had all gone, Jesus looked at her. He was the only man on earth who could do that without sinning. However, he had not witnessed her sin, (although he had witnessed the sin of the men who accused her), so he could not condemn her. He told her to leave, and to stop sinning.

There was no witness, who was not guilty of the same sin, so the woman could not be put to death. Therefore, Jesus fulfilled the requirements of the law of Moses, he did not set them aside.

Jesus did more than that. He demonstrated that the adultery laws could not be applied. Given the nature of human hearts, it would be impossible for three men to observe a man and a woman completing an act of adultery without committing the same sin by lusting after the woman. If they did not do it at this time, they would have done so previously. Therefore, there could never be innocent independent witnesses to testify against the adulterers. Adultery was an unenforceable crime.

This was not new. Moses understood this. Jesus had already explained that Moses did not enforce the laws against adultery.
Moses permitted you to divorce your wives because your hearts were hard (Matt 19:8).
Moses did not apply the death penalty for adultery, because he understood human hearts and knew that he could not get three independent, innocent witnesses. Instead he allowed divorce as a pragmatic solution to the problem Jesus did not change Moses’ standard.
I tell you that anyone who divorces his wife, except for sexual immorality, and marries another woman commits adultery (Matt 19:9).
Jesus did not abolish the law that required the death penalty for adultery. He left it on the books, to demonstrate God’s abhorrence for adultery. It is a serious evil that undermines society from the inside out. Jesus also confirmed that this law should not be enforced, because human hearts are not up to it.

Jesus demonstrated how judgment and mercy meet. He did not undermine the law, but he ensured that the women received mercy.

See Crime and Punishment for more.

Wednesday, November 07, 2012

Restoration of the Prophetic

I picked up something interesting from James Maloney. He was speaking about Isaiah 53, and explaining that everything that happened to Jesus, achieved something for us. He was pierced for our transgression. By his wounds we are healed. I knew this, but he went one step further. He says that Jesus face was punched and disfigured to restore the prophetic. He referred to Is 52:14-15.

His appearance was so disfigured beyond that of any human being
and his form marred beyond human likeness—
so he will sprinkle many nations,
and kings will shut their mouths because of him.
For what they were not told, they will see,
and what they have not heard, they will understand.
Jesus face was so disfigured that he looked ugly. The gospels explain how this had happened. Jesus had been taken before the Jewish Sanhedrin. They accused him of blasphemy and condemned him to death. Mark records what happened next.
They blindfolded him, struck him with their fists, and said, “Prophesy!” (Mark 14:65).
Then they spat in His face and beat Him with their fists; and others slapped Him, and said, “Prophesy to us, you Christ (Matt 26:67-68).
The Jewish leaders blindfolded beat his face with their fists. They also challenged him to prophesy. This ironic because the voice of prophecy had been silent in Israel for hundreds of year. Jesus had already restored the prophetic. He had prophesied against the Jewish leaders (Matt 23,24), but they had rejected his prophecy. They had now condemned him to death, which is what Jesus said they do in his prophecy (Matt 23:37).

The Jewish leaders disfigured Jesus while challenging him to prophesy. God saw it differently. Jesus face was disfigured, so that the prophetic ministry could be restored and prophets could stand before the face of God and speak his word to the people. Jesus was blindfolded, so prophets could see. Isaiah described the fulfilment in the verses quoted above.
Things that have not been written down will be seen.
Things that have not been heard will be understood.
This is the role of the prophetic ministry that was restored by Jesus. The Holy Spirit was poured out on the day of Pentecost and the gift of prophecy and the ministry of the prophet were put into action again.

There is something else that James did not mention. Isaiah gives a warning to kings.
Kings will shut their mouths because of him.
When the prophetic ministry is restored, kings and political leaders will be silent. In the modern world, political leaders have the voice that tells people what to think and what is right and wrong. When the Kingdom of God comes, kings and politicians will lose their place. The prophets have an important role in revealing the Kingdom of God and silencing all kings but Jesus.

The next verse describes the role of the prophet.
Who has believed our message
and to whom has the arm of the LORD been revealed (Is 53:1).
The stretching forth of God’s arm is revealed to his prophets. They proclaim his message to the powers of the world, but mostly they are not believed.

Tuesday, November 06, 2012

James Maloney

Last week we went to a meeting where James Maloney was speaking. He operates in a gift of faith and a gift of discernment. Towards the end of the meeting, asked people to go forward for prayer of healing. About a third of those present joined the line. These were people from some of the best and most alive churches in the city.

Seeing this made me sad and angry at the same time. These people believe the gospel. They believe that healing is part of salvation. They have experienced the Holy Spirit working in their lives. Those standing in line looked desperate, because they have not received what the gospel promises.

These faithful Christians looked harassed, like sheep without a shepherd. It make be wonder what is going on in their churches. What are the pastors and elders doing.

Is anyone among you sick? Let them call the elders of the church (James 5:14).
The Bible says that Christians who are sick should go to their elders. It does not say to wait for a visiting preacher from the United States. It does not say to wait in a healing line and hope. Something is seriously wrong.

My reading of James 5:14 is that elders are responsible for dealing with sickness in their church. My book on Healing provides insights for elders and pastors who want to get serious about dealing with the sickness in the church. It does not have all the answers, but it does have insights that will be helpful to those who take this challenge seriously.

Monday, November 05, 2012

The Corporation

The corporation has a long history, but it is only one method for organising for business. Limited liability laws have given the corporate model of organisation a huge advantage that has allowed it to dominate all others.

When limited liability laws disappear, we will need to find new and better ways for organising business. Cooperatives, trusts, and even contracting networks will become much more important. Christians should be at the forefront of this activity, because we should be experts on freedom and relationships.

Sunday, November 04, 2012

Wright and McKnight (5)

The Holy Spirit is the kingdom builder. Of course, that answer raises another difficult question. If the Holy Spirit has all the power of God and none of the restrictions of being human, why has he been so unsuccessful in his ministry?

In my book Times and Seasons, I bring these questions and answers together to explain how the cross and the Spirit work together to bring the Kingdom of God come to fulfilment. I am a big picture guy who could not cope with the life of footnotes, so I switched from theology to economics, where the concerns and questions seemed to be much bigger (wrongly). My style is more polemic than McKnight and Wright and is intended for a lay audience, but I attempt to put all these things together.

The Holy Spirit is the Kingdom Builder, but his power has been constrained because Israel is missing from the body of Christ. The church has not achieved its full potential, because of the ream is missing. The truncated church has been unable to give the Holy Spirit the authority that he needs to operate freely in the world. The result has been a limited kingdom.

The next step in God’s plan is to graft Israel back into the vine. When that happens, the Church will have a new completeness. When the team is complete, the Holy Spirit will have much greater authority to work in the world. He will be free for the first time to do what needs to be done to bring Kingdom of God to a much greater fullness. Jesus will not just be a King of heaven, but will receive widespread recognition as Lord of Lords on earth.

The Old Testament promises highlighted by McKnight and Wright will come to fruition. The Kingdom of God will achieve the much greater fullness that Israel was promised by the prophets. Wright acknowledged that too much prophecy about the Kingdom has been pushed out to after the parousia. That is right. Times and Seasons explains how they can be brought back into the present and how they become a reality on earth (and not just into theological ideal.

Messrs Wright and McKnight say that the coming of Jesus was the climax of the story of Israel. I do not understand how they can make that statement and not go on to discuss the future of Israel, particularly in books about the Kingdom of God. Jesus said some fairly stanch words to the people of Israel in Matt 23 and 24, but in the midst of that he promised hope for the future (Matt 23:29). This suggests that the story of Israel goes on beyond Jesus ministry on earth. If the story of Israel is important, and I agree that it is important for understanding, the Kingdom of God, then some discussion about the future of Israel seems to be essential. This lack is a serious gap in their books.

There is another important implication. The grafting back of Israel (whether spiritual or physical) brings blessing to the world. I presume that that blessing means greater fulfilment of the Kingdom of God. This means that the Kingdom of God is constrained during the times of the Gentiles. When the team is complete, the Holy Spirit will have much greater authority to work in the world. He will be free for the first time to do what needs to be done to bring Kingdom of God to a much greater fullness. He will do that without reverting back to the ugly Kingdom that Jews of Jesus time dreamed about. This must be part of the good news of the Kingdom.

Saturday, November 03, 2012

Wright and McKnight (4)

As a Kingdom nut from way back, I like the way that Tom Wright brings the cross and the Kingdom together. I have never been able to see the point of pushing them into opposition. However, I was surprised out how little emphasis he gave to the Holy Spirit, although he is seems to be an equally important part of the gospel. He simply says “And that theology of the Spirit is, of course, what the New Testament supplies, on page after page”, but leaves it at that.

Wright finds the cross and the kingdom together on every page of the gospels, but mostly ignores the increased activity of the Holy Spirit that runs along side. For example, in Luke’s gospel, John was full of the Spirit from birth (1:15), the Holy Spirit came upon Mary (1:35), Elizabeth (1:41), Zechariah (1:67) Simeon(2:25), and Jesus (3.22; 4:1; 4:14). The Holy Spirit was present to heal (Luke 5:17). Luke ends the gospel with the disciples being told to wait for the promised Holy Spirit. He begins the book of Acts with a repeat of the command to wait for the Sprit. The entire book is the story of the Holy Spirit and should more correctly be called the Acts of the Holy Spirit.

John the Baptist promised that Jesus would baptise his people in the Holy Spirit. All the gospels record the Holy Spirit coming on Jesus at the beginning of his ministry. During his ministry, Jesus rejected religious and political power, but embraces the power of the Spirit to heal the sick and cast out demons. The gospel writers repeatedly say that the Kingdom is near. Matthew explains what it means. The Kingdom coming near is the Holy Spirit doing stuff among the people (Matt 12:28). John recorded that Jesus needed to go away, so he could sent the Holy Spirit to get the job done on earth.

When I read the gospels, I see the cross, the kingdom and the Holy Spirit. We need all three brought back together.

The gap raises a serious question about the nature of Jesus kingship. Jesus might be king, but he has gone back to heaven, so how can his kingdom come on earth, and be more than just a nice theological idea. When the king is not here, his kingdom can be ignored, no matter what status, he has back in heaven. The key is the Holy Spirit. He is the Kingdom Builder. When Jesus ascended out of the earth, he sent the Holy Spirit to establish his Kingdom on earth. To understand how the Kingdom comes we must understand the ministry of the Holy Spirit on earth. Wright says, “All this demands, of course, a strong theology of the Holy Spirit as the one who dwell in Jesus’s followers and enables them in turn to be kingdom-bringers…..” but does not develop this further. That is a pity.

The fullness of the Spirit is an essential part of the gospel that makes the coming of the Kingdom on earth possible. The good news is that Jesus is King and is sending the Holy Spirit to bring his Kingdom into being.

Friday, November 02, 2012

McKnight and Wright (3)

McKnight and Wright explain how the story of Israel was fulfilled in Jesus ministry. They do not deal with the role of Israel in the New Testament age. With his second speaker, Wright emphasises that God has returned to Israel in Jesus. He does not discuss the fact that after Jesus ascended out of Israel, Israel was sent into exile. Now some of Israel seems to have returned to the promised land, but God has not returned with them. How does this fit within in God’s plan.

This leaves some big questions. What is happening to Israel now? How will they be grafted back into the vine? When will that happen? What will be the impact on the Kingdom of God, and how will it bring blessing to the world. How does Israel come into the Kingdom of God, without reverting to the militaristic version of the Kingdom that Jesus rejected?

The McKnight and Wright account of the gospel does not answer these questions, although they are an important part of the story of Israel. The gospel was good news for Israel, not just good news for the world. The good news for Israel is more than just some land defended with nuclear weapons and F16 jets. To fully understand the gospel, we must understand how it is good news for Israel.

I explain how the gospel is good news for Israel in my book Times and Seasons, and it is good news for the whole world.

Thursday, November 01, 2012

Prophetic Ministry in NZ

My latest book is now available in New Zealand. It can be purchased for directly from Kingwatch Books for $NZ12.00 including free postage at Prophetic Ministry. Look for the New Zealand Only option.

McKnight and Wright (2)

I find the emphasis of McKnight and Wright that Jesus is the fulfilment of Israel’s story really helpful, but it does not provide a full explanation. An important question is left hanging. The big question is this. Why did God choose to work through Israel, if he knew it was going to fail to fulfil its calling, and that he would have to send his son to get the job done anyway.

The problem the gospels are resolving is the authority one. Who is in charge on earth. The Gospel message is that God will be back in charge again. Once we understand that the issue is authority on earth it becomes much clearer why the history of Israel is so important for the gospels.

I would couch the problem that the Gospels are resolving this way. When God created the earth, he delegated authority over it to humans, without recourse. When humans sinned, they handed authority over the earth to the forces of evil. We underestimate the significance of this authority shift. God was outlawed from his own world, by the people he created and empowered. He could only intervene in the world, if humans gave him permission, and not many did, because they were captivated by evil.

God chose Abraham and Israel, because he needed a people to give him authority to act on earth, and to provide him with a place where he could launch his plans to redeem the world, without the constant risk of being squeezed out, before he was finished. Abraham and his descendants provided him (intermittently) with the authority he needed. Israel provided a place from which he could expand out his work of restoration.

God needed a place where he could operate a bit more freely than he usually can. Israel was not ideal, but it provides something that he could work with (This is explained more fully at Gods Big Strategy). When Jesus came to earth as a baby, he came to a place where God had permission to intervene to support his life and ministry. Israel made the incarnation possible.

The church now gives God authority to operate on earth. I will explain the implications for Israel in the next post.

Wednesday, October 31, 2012

Mcknight and Wright

Earlier in the year, I read The King Jesus Gospel by Scot McKnight and When God Becomes King by NT Wright. I like the way that Wright and McKnight bring together the message of the cross and the Kingdom. McKnight tells the story against the background of the altar call gospel, whereas Wright frames it within the gaps in the creeds. Although, they come from different directions, they end up in a similar place with a renewed emphasis on the importance of the Kingdom of God. Wonderful stuff.

They both emphasise that Jesus is the fulfilment of Israel’s story, but I get a bit nervous about the use the word “story”. Did something really happen in Israel. Did Abraham and Moses really exist, or are they just a post-modern metanarrative that the gospel writers used to frame their gospel. I am sufficiently pre-postmodern that I need the history of Israel to be real and mean something in terms of Gods plans and purposes.

I realise that it is churlish to say that a book has failed to answer important questions. An author cannot every question, and they are entitled to choose which questions they think are important and worthy of answer. Nevertheless, I am going to say that I think that three important things are missing from these two books. I will deal with these in the next three posts.

Monday, October 29, 2012

Dangerous Deception

Many prophetic people are concerned about President Obama’s morality, specifically his support for abortion and homosexual marriage (they do not seem to be so worried about his penchant for murder using unmanned drones, although this is related). While these are serious sins, they are surface sins and not the root cause of depravity, that prophets should be really worried about.

Many prophets are advocating a vote for morality by supporting Mitt Romney, as a lesser evil. There is a serious problem with this advice. Mitt Romney is an active Mormon. People who join the Mormon church are deceived. They are seeking the truth about Jesus, but they are blinded to it by a spirit of deception.

This is dangerous for the nation, because when people vote for a king/president, they are not just submitting to him, they are also submitting to the principalities and powers that control him. If Mitt Romney is elected to the presidency, the principalities and powers of deception will obtain a huge stronghold in the United States. This is dangerous for three reasons.

  1. Deception is hard to deal with. An immoral person knows what they are doing is wrong, so they can repent. A person who is being deceived does not know that what they are doing is wrong, so they cannot repent, until they are set free from deception.

  2. Once deception gains control of a nation, all kinds of evil can emerge. Deception allows evil to diversify and expand. At a political level, deception is really dangerous, because it opens the way for despotic government. 2 Thes 2:1-12 will not be fulfilled in this season, but it illustrates the principle, that deception opens the door to totalitarian government.

  3. God sends a spirit of deception on a nation, when it is ready for judgment, when it has gotten so bad, that it is beyond repentance. 1 Kings 22 is a good example. Ahab had done his worst. God sent a spirit of deception, to allow him to be lead to his destruction. Unfortunately for him, Miciah was the only who understand why this had happened. The court prophets urged him to action, inspired by a spirit of deception.

I hope that America does not vote for Romney, because if he wins and America comes under a spirit of deception, then it has gone much further toward judgement than I thought. (Note when America comes under judgment, it will not become weak. Rather when the Holy Spirit is squeezed out, it will become stronger and nastier. It will continue to be a great power, but will be force for evil rather than good.)

Some will respond by saying that Obama is deceived too. That is true, but it not his controlling spirit. For Romney, deception is the spirit that controls all others. His multiple policy changes, seemingly without any reference to the truth, are a sign of man controlled by deception.

I hope that the prophets urging support for Romney, because he is a lesser evil, are not the modern equivalents of the court prophets, who disagreed with Miciah. They were not evil people. They were brought to the palace for their spiritual gifts. They just go caught up in what was going on around them and were sucked deception. That could be happening again.

Red Horse in Ethiopia

To understand what is happening in the world, we must recognise that Red Horse of Revelation has been released. This horse represents military struggles between ethnic groups that will tear apart nations that were established during the age of nationalism in the 19th and 20th centuries.

Another country where the Red Horse is working is Ethiopia. Most western people think of Ethiopia as an ancient Christian culture. This is only partially true. The reality is that Ethiopia is the remnant of a colonial empire. Less than half of the population are Christian. The Amhara and Tigrayan mountain tribes who have controlled the country are only 30% of the population. The largest population group is the Oromo people who live in the lowland areas close to the sea. The Somalis of Ogaden and the Sidama are other significant tribal groups.

Since 1995, Ethiopia has been ruled by a ruthless dictator called Meles Zenawi. He killed off all potential opposition and suppressed all tribal groups. With his death, the various tribal groups will be released. If another strongman does not emerge, this tribal tension will lead to a war that tears the area a part. The Christian part of Ethiopia will be left in the mountainous regions cut off from the sea.

The United States has used Ethiopia as its local henchmen in the Horn of Africa. It has poured weapons into the country to support this role. When things fall apart, these weapons will increase the intensity of the struggle (big sword).

Note: the Red Horse is not a sign of the second coming of Jesus. Its role in God’s plan for history is described in Times and Seasons.

Saturday, October 27, 2012

Healing the Earth

I am probably getting ahead of myself here, but this stuff will be really important in the future.

The New Testament gospel is good news for the whole of creation. Up till the time of Jesus, it was subject to frustration.

For the creation was subjected to frustration, not by its own choice, but by the will of the one who subjected it (Rom 8:20).
The one who subjected it was the devil. He gained authority on earth when humans fell into sin, and gave him authority one earth. The damage that he did left the created world needing to be set free.
The creation itself will be liberated from its bondage to decay and brought into the freedom and glory of the children of God (Rom 8:21).
The creation needs to set free from bondage to decay. How will this happen? The answer is given in the same passage.
For the creation waits in eager expectation for the children of God to be revealed (Rom 8:19).
According to Romans, the restoration of the creation gets under way when the children of God are revealed on earth by coming to faith in Jesus. Up until the time of Jesus, it was in bondage to decay.
We know that the whole creation has been groaning as in the pains of childbirth right up to the present time (Rom 8:22).
The death, resurrection and ascension of Jesus was meant to end the groaning of creation. The gospel of Jesus is good news for humans. It was meant to be good news for creation, too.

The gift of healing is the key. If the Holy Spirit can heal human bodies, he can heal any creature on earth. If the Holy Spirit can heal any creature, he can heal everything in the physical creation.

We need to understand the damage done to the created world by the fall. God created a good world. He did not create a world where floods, earthquakes and droughts kill people. These things came into the world after the fall. When mankind sinned, Satan was freed to do his harm in God’s creation. He released harmful viruses, dangerous animals and destructive forces on earth. He turned peaceful animals into dangerous carnivores. He changed good plants into poisonous weeds. Animals, insects and plants changed into dangerous forms that had not existed when the world was good as God crated it. Bacteria and viruses the cause sickness and disease emerged and began to spread. All these things that marred God’s good earth were the work of the devil.

Jesus death and resurrection destroyed the power of sin and evil. The gospel and the Spirit are now his vehicle for rolling back the effects of sin and restoring creation to its full glory. As Paul noted, creation is now waiting in eager expectation for this to happen.

The earth will be restored in two ways.
  1. As the gospel spreads and the Kingdom advances, the forces of evil will be slowly and gradually squeeze out of the earth. Their ability work harm in creation will dissipate and disappear. This will bring huge relief to the earth.

  2. When the powers of evil are forced out of the earth, they will not clean up their mess before they leave. God’s people will have to actively restore the earth by tidying up behind them.

Some of the restoration of the earth will take place through normal “caring for the earth”, as people grow gardens, and farmers nurture the land they are using. However, some of the harm done on earth will need more active healing. Christians who have worked with the Spirit to heal the sick will turn their attention to the sickness of the created world. The gift of healing will be needed to heal the harm done to the earth by sin and evil. Here are some examples.

  • Land that is unproductive due to the curse of sin may need to be healed.

  • Land that is sick due to misuse of chemicals or excessive cropping may need to be healed.

  • Poisonous plants may need to be healed so they become edible.

  • Prolific weeds that swamp other useful plants may need to be healed to so they lose their tendency to dominate and destroy other plants.

  • Some highly nutritious and productive plants may need to be healed to become palatable.

  • Some volcanoes that are harming human life will need to be cast into the sea. Jesus explained how this could be done.

    Truly I tell you, if you have faith as small as a mustard seed, you can say to this mountain, ‘Move from here to there,’ and it will move. Nothing will be impossible for you (Matt 17:20).

  • Land that is subject to serious earthquakes will need to be healed.

  • Destructive weather patterns will need to be healed. Hurricanes and tornadoes will need to be calmed.

Dealing with these problems will require immense faith. God’s people will develop the faith that is need for this task by working with the Holy Spirit to heal the sick. This means that the gift of healing is much more important than many realise.

The time when these wonderful things will happened is described in Times and Seasons.

Thursday, October 25, 2012

Bogeyman Politics

The political world always seems to have a bogeyman that everyone picks on. Political leaders love to beat their chests and point the figure at the evil dictator.

Once it was Idi Amin. Then Muammar Gaddafi filled the bill. When Tony Blair brought him in from the cold, Slobodan Milosevic of Serbia stepped up to take his place. Once he had been deposed, Saddam Hussein became the leader that the world hates, although he had been an ally of the United States. Once he was gone, the politicians of the world needed a new bogeyman to ostracise. They tried President Ahmadinejad of Iran, but once they realised that his power is limited and that he will step down after the next election, they realised he could not fulfil the role, so Muammar Gaddafi was bought back in for another innings, but he did not last for long. Now President Bashar al-Assad of Syria is the evilest man in the world.

None of these guys were very nice, and the world is better off without them all, but I am struck by the hypocrisy of it all. Hillary Clinton rants to the United Nations about the evil President Assad attacking his own citizens, but when the King of Bahrain attacks his citizens, she is strangely silent, because he provides America with a military base.

A dozen other American “allies” are no better, and many are worse than Bashar al-Assad. The Saudi Arabian kings and princes have never been elected. They are suppressing their own citizens and funding violent activity all over the world, but they are okay, because the West needs their oil. Many of the dictators of central Asia are worse, but the West does not want them slipping into the Chinese orbit.

William Haig, the British Foreign Secretary berates Bashar al-Assad of Syria in a voice that is a bizarre mixture of whining and pompous, but he ignores the fact that many of the problems in the Middle East arise the way that the British and the French chopped up the region after the first world war.

Presidents and Prime Ministers line up to point the finger at the evil dictator that the world has chosen to hate during the current season. This is just like Jesus’ parable of the pharisee and the tax collector.

Two men went up to the temple to pray, one a Pharisee and the other a tax collector. The Pharisee stood by himself and prayed: ‘God, I thank you that I am not like other people—robbers, evildoers, adulterers—or even like this tax collector. I fast twice a week and give a tenth of all I get.’ “But the tax collector stood at a distance. He would not even look up to heaven, but beat his breast and said, ‘God, have mercy on me, a sinner.’ “I tell you that this man, rather than the other, went home justified before God. For all those who exalt themselves will be humbled, and those who humble themselves will be exalted (Luke 18:9-14)
The Pharisee trivialised his own sin, by pointing up at the sin of someone who appeared to be worse. This is a common method for dealing with sin. Point the finger at someone who is worse than you, and your own sins suddenly seem less serious. Find someone bad enough and you will feel almost good.

This Pharisee method is popular with politicians, too.

Their problem is that deep down, most political leaders know that they are guilt of misusing power that does not truly belong to them. They make decision that they do not have a mandate to make. They have used their power for personal benefit. Without the cross of Jesus, they have no alternative but to use the Pharisee method. They make themselves feel better, by shifting the attention to someone who is much worse. That is why they always need a political bogeyman to point their fingers at. It does not matter who this person is, as long as there is a general consensus that they are really evil. This is why they politicians always agree on who is the bogeyman, even though they could not agree on many other things.

The more evil the bogeyman can be painted, the more justified the politicians feel.

As an aside, politicians have been able to take on the role of exposing evil, because prophets to the nations have been missing in church, or silent. Confusing prophetic and political roles dangerous. Prophets, judges and military leaders have different roles that must be kept separate. See Prophetic Ministry.

Wednesday, October 24, 2012

A different take...

... on the US presidential election.

If your remove the rack from Obama Barack’s, you get Ba Ma Ba, which is a conversation between a sheep and it lamb.

The Romney is a breed of sheep. They produce a lot of coarse wool suitable for carpets, but are dumber than most sheep breeds. Farmers here have had to cross the Romney with other breeds to increase their productivity and intelligence.

So the competition between the donkey and the elephant has changed into a contest between to sheep.

It does not matter which one wins the election, because during his term of office, events will occur that cause Americans to follow him like sheep to a place were they do not want to go.

Monday, October 22, 2012

Direct Attack

People living in a war zone learn how to live carefully. They always go out in a group, so they can defend themselves from any attack. Everyone is armed and trained to know what to do if they come under attack. Someone will always be on watch for a threat danger. When the warning is sounded, they all take up a different position designed to protect the entire group.

We are engaged in a spiritual war. Yet many Christians living in the West function as if they were living during peacetime. They go through life casually almost oblivious to the dangers from spiritual attack. They assume that because evil is manifesting blatantly, it is not operating. If they travel into a different culture, they become very aware of spiritual warfare because it is out in the open, but when they get home, they go into peacetime mode. This is dangerous, because it leaves them vulnerable to enemy attacks.

Blatant attack works well in more traditional cultures, because people a easily intimidated. In modern cultures, the enemy has to be more subtle. Attacks generally come in two ways. One form of attack is the deceptive thoughts that are intended to lead us into disobedience to God or to grieve the Holy Spirit. Jesus temptation is a good example of this kind of attack. He resisted by standing on God’s word. This method is not so effective among Christians who know right from wrong.

The other common form of attack is sickness. The forces of evil frequently use sickness to cripple mature Christians to prevent them from obey God and fulfilling their calling. This method of attack works well in the West, because the Christian often does not even realise that they are under attack. They just assume that they picked up an infection or a virus.

This gives the enemy a huge advantage, as it allows him to attack, without the person under attack realising what is happening. It is almost impossible to defend against an attack, if you do not realise that you are under attack.

The fourth chapter of my book called Healing explains how to deal with direct attack of sickness. My impression is that this danger is not well understood by Christians.

Saturday, October 20, 2012

God of the Gaps

In the nineteenth century, some Christians took what was called a “God of the Gaps” approach to science. They accepted that science could explain many things, so they limited God to things that science could not explain.

This did not work, for two reasons.

The first problem was that as science grew and explained more and more of what happened on earth, the gaps left for God to explain got smaller and smaller. Soon there no room left for God, and he was squeezed out of his universe.

The second problem is that if God is to be God, he must be the explanation of everything. A god who is limited to gaps is not really god.

Although this approach has mostly been discarded, many Christians have a God of the gaps approach to sickness and healing. They see most sickness as being caused by bacterial or viral infections or by genetic defects. These can be healed or controlled by antibiotics and other medicines.

When medicines fail or an incurable sickness strikes, they call on God for healing.. This is a God of the gaps approach. God is used for the things that modern medicine cannot heal.

Jesus took a different approach. He saw all sickness as having a spiritual cause. On a sabbath day when he was teaching in a synagogue, he encountered a woman who had been crippled for eighteen years. She had been bent over for so long that she could not straighten up. If we could do an MRI scan, she would be diagnosed osteoporosis of the spine. Exercise and physiotherapy would be prescribed. But Jesus saw a spiritual cause. He said, “Satan has kept her bound for eighteen years” (Luke 13:16). He was not saying that she did not have osteoporosis. He was explaining that there was a deeper cause, which need to be dealt with for her to be healed.

Then he put his hands on her,and immediately she straightened up and praised God (Luke 13:13).
If we assume that we only need prayer for dealing with the gaps that modern medicine cannot handle, we have not fully understood the gospel.

More at Healing

Friday, October 19, 2012

War Propaganda

The shooting of Malala Yousufzai by the Talaban was a terrible evil, so it is not surprising that their has been a huge wave of sympathy and outrage.

What is not nearly as distressing is the way that her life has been turned into war propaganda.

Hundreds, maybe thousands of girls have been wounded and killed in Afghanistan and the Pakistan borderlands since the American led invasion of Afghanistan by NATO forces. The girls who are killed and injured by American drones never get their faces onto our television screens. The girls who were were raped and killed by the warlords of the Northern Alliance, who are now NATO allies in Afghanistan government never their pictures into our newspapers. Girls who are injured during night raids do not get flown to the UK for treatment. Borjan, 12; Sardar Wali, 10; and Khan Bibi, 8, who are all from one family, who were hit by an American missile last Sunday, while collecting dung for fuel, did not get their photos in the New Times .They did not fit the needs of the propaganda machine that the modern media have become, and modern war needs.

The United States invaded Afghanistan to destroy Al Qaida. Once Bin Laden was killed and Al Qaida had been scattered all over the world, a new justification for the war was needed. The next objective was regime change, but once Hamid Karzai and his crony warlords from the Northern Alliance are entrenched in power that objective is no longer realistic, despite many of them being murderers and drug dealers. Hillary Clinton has transformed the war into a mission to liberate the women of Afghanistan and get girls into education. A pretty young women who wants to be educated is the perfect poster girl for that cause.

So its fine to feel sympathy for Malala Yousufzai, but understand that your sympathy is selective, because it is being manipulated.

There is no doubt that the women of Afghanistan are terribly oppressed. A deep change in attitudes and behaviours is essential for the future of the people of Afghanistan. Getting girls, and boys well educated is one of the most important needs. What has been lost in the propaganda is the fact that that war is not a good method for changing attitudes and behaviours. During a war, ruthless men rise to the top, while the women and girls suffer, terribly. War is a man’s game. Losing a battle will not make Afghanistan men treat their wives and daughters better.

The nations of the West once had a powerful method for changing attitudes and behaviours. The proclamation of the gospel in the power of the Spirit can change human hearts and set free people that are oppressed by their culture. The people of the West now seem to have more faith in war than in the gospel for changing hearts and transform cultures.

There is a deep irony here. Islam has a lousy gospel, so it has always had to use military force and warfare to spread its influence. Christianity has a marvellous gospel that is backed by the Holy Spirit, so it spreads best by love and sacrifice. It does not need to use military force to spread. That difference seems to being forgotten.