Evangelism

In my previous post, I asked about methods of evangelism that readers had confidence in. The most common response suggested building relationships with people. One reader said, “at least in our culture, people are longing for truthful relationships”.

I agree that this will work well in the modern world. However, relationships take time, so this is not a quick option.

I nearly said “relationship evangelism”, but I remembered a friend who hates that term. He said that if Christians are making friends with people just so they can share the gospel with them, it is not true friendship. Especially if they drop the friend if they have not received the gospel within an appropriate time.

We should make friends with unbelievers because they are children of God made in his image, not with any other agenda. If we are demonstrating the love of Jesus, we should be prepared to continue being a friend of the person, even if they never choose to follow Jesus. And if they do choose to follow him, we should continue the friendship, rather than neglecting them to pursue another victim. Friendship must be a way of life, not a method of evangelism.

Evangelistic Methods

Turning the spiritual tide in New Zealand will require serious sharing of the gospel of Jesus. A revival of faith will need a catalyst of evangelism. However, I have to wonder if the church has the effective methods of evangelism that will be effective in the modern world.

Jesus used to main methods of evangelism.

• Healing a sick person and preaching the good news with the crowd that gathered to watch.

• Sending a pair of disciples into a village to share the good news with the people living there.

These methods see to have gone out of favour.

The methods of evangelism that used to be effective for the church no longer seem to work.

• Large evangelistic rallies like those conducted by Billy Graham. It is hard to see this method being successful in the NZ culture.

• Door-to-door evangelism used to be popular, but it is no longer used, because it is difficult to find people at home. Even travelling sales people have given up.

• Having an altar call at the end of a sermon at church service still works, but it will only reach that segment of the population that is willing to go to a church meeting.

• The Alpha Course works for some churches, but it only seems to be effective for some types of people.

• Some pastors are pushing work-place evangelism, but this is not always practical, because managers or owners have control over what happens on their premises. People are not always free to talk about religion at the end.

This list does not inspire confidence for the future. What have I missed? If you have a method of evangelism that is effective for you in the modern world, please describe it in a comment below.

Hit Harm and Run Tactic

We need to understand the tricks of the spiritual powers of evil. They like us to think that they mostly work by an evil spirit possessing a person and controlling them, but that tactic is relatively rare. The reality that there is a finite number of evil spirits. With the human population of the earth growing into the billions, possession of a single individual is an inefficient tactic. The spiritual powers of evil no longer have the numbers to allow a legion of spirits to control one man. Consequently, evil spirits engage far more with a Hit, Harm and Run tactic.

Imagine a young girl who is bullied and beaten by her father. Every time he strikes her, an evil spirit says to the girl, “You deserve this treatment because you are a bad person of no value to anyone.” We hear words clearly when we are fearful, so the words penetrate deeply into her memory. Once the evil spirit has said this half a dozen times, the words have stained her heart and gained a stronghold in her memory.

The evil spirit can then move onto harass another person, leaving its harm behind to keep on dragging her down. Every time she is abused by her father, the door to her memory that was opened by the trauma opens up and she hears the words again, even though the evil spirit is moved on.

When she has grown and escaped her father’s control, every time she faces distress or trauma, she still hears the lies of the evil spirit coming up from her memory. “You are no good. Bad stuff will happen to you because you deserve it. You are of no value”. She is scarred for life.

This is how the Hit, Harm, and Run tactic most commonly used by evil spirits works. They are the cause of the problem, but there is no point in casting the evil spirit out, because it left years ago. She needs the Holy Spirit to rip out the lies that have become part of who she is and replace them with the truth as God sees her.

The Hit, Harm and Run tactic also causes physical attacks. An evil spirit was able to attack a woman’s spine and leave her physically crippled. Jesus laid his hands on her to heal her rather than casting out the evil spirit because it had probably already gone when it had done enough harm to cripple her (Luke 13:11-13).

An evil spirit can attack a few cells in a person's body and set off a cancerous growth. The evil spirit does not need to continue attacking the person, because the cancer continues growing on its own accord. Casting out an evil spirit does not cure the cancer, because the evil spirit has already moved on. The person needs someone carrying the gift of healing to pray for their body to be restored.

Evil Spirits can just as easily attack a person's brain and destroy neural pathways that should be joined and those incorrectly join those that should be separated. These little twists often cause people to see the world and themselves in a negative light that destroys their relationships with others and causes them to harm themselves.

Again, casting out the evil spirit is pointless, because it moved on long ago. What the person needs is for the Holy Spirit or his angels to remove the junk that the evil spirit has left behind and restore the brain to working in the way that God designed it to function. We need to learn how to help him to do this work by prayer.

Dry Bones

Ezekiel saw a valley full of dry bones (Ezek 37). After he prophesied, they were joined and raised to become a mighty army. Ezekiel’s vision is frequently quoted as a picture of the revival, but we often miss the key point.

When Ezekiel prophesied, the bones came together and tendons and flesh appeared. The bones were joined together and skin covered them. The breath of the Spirit could not come until the bones had to come together, bone to bone in a body. When Ezekiel prophesied again, the breath came into the bones and they stood up and became a mighty army.

A body is not built by throwing some bones in a basket. To become a mighty body empowered by the Spirit, the bones must be joined together. Each bone must be joined to at least two others by muscles and tendons. The correct bones must be joined in the right place. A body becomes dysfunctional and dry, if just one bone is missing, or is joined to the wrong bone.

Being Church Where We Live p.24.

Business Socialism

The predominant species of socialism these days is business socialism, and conservatives are strangely silent about it. In the last few decades, businesses have captured the political process and milked it fairly effectively. The biggest dole out to bludgers of taxpayer largess have gone to finance companies and participants in the banking system. They were the first to get into this game. These businesses have made huge mistakes over the last few decades, but they are protected from the consequences by a myriad of laws, regulations and hand-outs.

Now with the Covid crisis, many other businesses have become used to handouts from the government, especially those in the tourism industry.

If a person on the unemployment benefit does not turn up for a job interview, they get their benefit docked for several weeks. If a business fails, limited liability kicks in and assets in the family trust are protected.

The garden-variety socialism uses political power to shift resources towers the poor and weak. Business socialism using political influence to shift resources and legal privilege towards business.

Enemy of Freedom

In an article at First Things, Ross Douthart explains something that Christians need to understand in this season.

The question of the nature of freedom is, I believe, crucial to a proper understanding of Christianity’s decline, because secularism has always opposed Christianity in the name of freedom. In taking on the mantle of freedom, secularism has turned Christianity’s own claim of being a gospel of liberation against Christianity.

In late antiquity, Christianity was the cause of truth, justice, and freedom. The Christian gospel was defeating superstition, oppression, and vice.

Christian reform movements throughout the ages would recall the same -dynamic: seeing themselves as championing truth, justice, and freedom against superstition, oppression, and enthrallment.

The Protestant Reformation saw itself precisely as the cause of truth and freedom against ignorance, superstition, and oppression.

The Enlightenment began as a movement among believing Christians, but with time its more radical proponents came to see themselves as championing reason against Christian pretensions of revelation.

Now the script has flipped.

The spirit of Christian reform is turned against Christianity itself. Now Christianity is ignorance, superstition, and oppression, while secular reason is the cause of truth and liberation.

This change is the result of excessive use of salvation by law.

See Season Change.

Supermarkets

Inflation has taken off and people are feeling the pain of rising prices. The two places where they experience this pain the most are when they fill up their car with petrol and when they go to the supermarket to buy their groceries.

Here in New Zealand, two big supermarket chains dominate the market. One is a cooperative with most of its supermarkets being owner-operated (Foodstuffs) and the other is a subsidiary of an Australian chain. Critics have learned the word duopoly and are blaming the supermarket chains for rising prices. Some are claiming that the supermarkets are making excessive profits at the expense of their customers.

I am quite happy with the service that the supermarkets provide. I am amazed that all the things that I need for daily life are ready to purchase when I need them.

• If I want to go to see a doctor, I have to make an appointment, often days in advance. The same is true if I want to have my car serviced. In contrast, I can go to a supermarket any time day or night and purchase what I want.

• The supermarkets offer their customers an amazing array of choices. If I go into the breakfast cereal, there are a dozen different brands to choose from. And within each brand, there are numerous types and flavours of cereal available. The situation is the same for most of the products that I might want to buy. I am not limited to a few choices that someone decides would be good for me, but can choose which brand and type of product I want. Having all the choices available on display for customers to choose from is a real benefit, except for those who hate making decisions.

• Looking at the food products that are available, I see products that have come from all over the world. I don’t have to organise the delivery of products from the other side of the world, because the supermarket has done the ordering and organised the delivery before I have even realised that I want the product.

• Supermarkets make sure that the food and grocery products that people want are always available when they want them. Even when supply chain disruption occurs, most of the products that I want are available when I want them. We just take this for granted, but a huge amount of organisation goes on behind the scenes to make it happen.

  I remember a few days after the Christchurch earthquake when we had no water and electricity at our house. We went to a nearby supermarket and at the back found three big pallets of bottled water. We were delighted to get some drinking water, but I was amazed to see the amount of stock available at a time and wondered how it had got there when many of the transport links into the city were still disrupted. I presume that the supermarket chains had stocks of drinking water in their warehouses that they were able to bring out.

  New Zealand is a small island nation, a long way from everywhere, so most of the groceries that we buy have to be brought in by ship. Not only does this make them more expensive, but it makes the logistics more difficult to organize.

• If I make an order online, the supermarket will gather up my groceries and have them available when I want to pick them up. Alternatively, I can get them delivered to my home if that is more convenient.

• People can buy many of the food and grocery products from other more specialist providers, but it would take a huge amount of time and effort going around them all. Most people don’t have spare time for this, so being able to purchase everything needed at one site is a huge benefit.

• Some commentators are suggesting that we need a state-owned grocery wholesale operation that all supermarkets could go to for their stock. I doubt that government bureaucrats with “no skin in the game” would ensure that the products we need are always available in the way that the same way as the supermarket chains do.

I don’t know if the supermarket owners are making excessive profits, but the following factors need to be taken into account before making a judgment.

• Managing a supermarket/supermarket chain is an incredibly difficult task. Managers have to order goods from all over the nation and many other parts of the world and ensure that they are delivered when they are needed. They manage delivery chains across the nation. They have to ensure that their store is open seven days a week and most hours of the day, with staff there to serve customers when they choose to come. They have to ensure that the shelves are stocked at times when their customers won’t be inconvenienced.

• I would not want to be the owner or manager of a supermarket. These people have to manage a large number of staff and organise logistics to keep food and groceries available when people want them. They have to respond quickly to changing consumer preferences and changes in the most efficient supplier.

• Many of the products that supermarkets stock are perishable or have a short shelf life. If the supermarkets over-order, they can easily be left with unsaleable product that they have already paid for. Excessive losses can quickly cut into their profits.

• The managers of supermarkets and their various departments tend to be recruited from inside the organisation. You don’t hear of them being recruited from the finance sector, because supermarket operation is a very specialised set of skills.

• Not many supermarket owners get to be on the “rich list” so I presume that there are easier paths for people who really want to get wealthy.

• I know that some supermarkets are not profitable. In our city, one shut down a few years ago, after being rebuilt just a few years earlier, because it ran at a loss. I presume that the owners lost a significant amount of money. Like all businesses, the profit of supermarkets will vary according to the site and level of competition faced.

• Loyalty to supermarket brands tend to be quite weak. Most consumers have a choice between several supermarkets near where they live, so owners that are not on the top of their game can lose customers quickly.

• I hope that supermarkets that I purchase from are making good profits because I want them to continue investing so that they are resilient for the future. I want them to be well organised if the disruptions to supply chains that the world is currently experiencing become worse.

• Over the last decade, property developers and property speculators have made enormous profits without providing any service at all. These are the excessive profits that concern me far more, because they are unrighteous wealth. The owners of supermarkets might have made excessive profits, but they have had to work hard to get them. They will have to continue working even harder in an unsettled and inflationary climate to remain profitable.

The price inflation that people are currently experiencing is real and painful. The supermarkets are an easy target, but I am not sure that they are the main culprit.

Adjective

God’s people should be careful about adopting fashionable adjectives.

A number of years ago, “prophetic” was the trendy adjective, as in prophetic leadership conference, prophetic evangelism, etc.

Subsequently, “apostolic” became the trendy adjective, as in apostolic anything, eg apostolic reformation, apostolic church.

More recently, “kingdom” is the adjective that is being used everywhere, as in kingdom economics, kingdom government, kingdom etc.

We need to be careful that we do not devalue these words by just attaching them to any idea that we think is trendy.

"Kingdom" is not an adjective that can be applied to any church programme.

“Kingdom” is a noun. We need a vision of a different kingdom.

• The Kingdom of God is a different government.
• The Kingdom of God is a transformed society.
• The Kingdom of God is a different way of living.

Using “kingdom” as an adjective attached to what the church does turns the Kingdom of God into a contentless concept.

In my book Government of God, I explain how the Kingdom of God can become something real.

Looking Back

Apostles exercise authority looking back.

Paul and his colleagues founded many churches by preaching the gospel in a new town, and then moving on to repeat the process once elders had emerged who could care for the new church.

The elders in each of these churches had a strong link with Paul. They were either his spiritual children or spiritual grandchildren. Therefore, they respect him and acknowledged his wisdom. They had been submitted to him when he was an elder and they were new Christians, so they would still respect him, although he had moved on and they have become elders.

The authority of an apostle comes out of relationships. Paul demonstrated this type of authority in his letters. He was able to give direction to the churches because he had a relationship with the people in them. He was the apostle who had established their church. He knew them well and they trusted him.

This authority is completely different from the worldly pyramid model. It does not depend on legal power or position. In contrast, the authority of a bishop comes with an appointment to a position in a legal organisation.

We should note that the Twelve Apostles of Jesus were not a select group, with a special role; they were just the first of many apostles who were sent out to start new churches.

Paul’s Demise

Paul was an amazingly successful apostle. He planted churches all over Asia Minor and Greece. He provided oversight of the churches he had established, looking backward to those who had developed relationships with him. He wrote numerous letters to these churches, which became the core of the New Testament, overshadowed only by the gospels.

Paul seemed to understand the full implications of the gospel better than anyone in the first generation of Christians and was able to communicate it effectively to both Jews and Gentiles. John is the only other who reached the same level of understanding.

Given his role in the early church and his skills in sharing the gospel and advancing the Kingdom of God, it seems odd that God allowed him to be taken out of play so early in his ministry. It appears that he was killed in Rome when he still had other missionary journeys to undertake. Why did God allow his most effective operator to be taken out?

I suspect that there was a real risk that people in the fledging church wanted to make Paul into an archbishop or mini-pope. Given his skills and knowledge of the gospel, many people would want him to become the leader and manager of their church. This is a role that Paul always resisted. He moved on quickly once a church was established and was always looking to move to fresh pastures where the gospel had not been heard. This ensured that there was plenty of space for new elders to rise up in his place in the churches he left behind. Paul's approach ensured the quick development of new leadership.

Paul was not interested in becoming a senior pastor of a megachurch. (Peter seemed to have been interested in being the senior pastor of the Jerusalem church, but he discovered that he had neither the personality nor the appetite for the role).

My guess is that the reason the Holy Spirit allowed Paul to be imprisoned was that his ministry had been so effective that he was in danger of becoming an archbishop or mini-pope. He had planted numerous churches. The believers in those churches look up to him as their leader. He was skilled at resolving theological disputes. If he had continued in his ministry as it was, he was in danger of being raised up to a place that God did not want him to be, and where he did not want to be.

An apostle must keep moving on, or they will be quickly be turned into a bishop, CEO, or Big Man, depending on the culture. Paul understood this well. He was an amazingly talented person, but the kept pressing on to new places, so the churches he established could not make him into the "leader" of a group of churches.

Once Paul was imprisoned, and eventually killed, the young church had to stand on their own feet and rely on the Holy Spirit. The numerous people who had travelled and worked with Paul had to step up and preach the gospel and share the truth. Others would have to take the gospel to Spain. That is how the Holy Spirit prefers to work. He prefers working through a multitude of ordinary people to relying on a few superstars.

This is something we should remember in this season when big-name leaders of megachurches are falling from grace.

Peter and Paul

A common idea amongst Christians is that Peter was the apostle to the Jews and Paul the apostle to the Gentiles. This idea is given some credibility by Pauls’s account in Galatians of his encounter with the men in Jerusalem who were esteemed as something by the people, although Paul was not particularly impressed. Paul notes that they recognised that Paul had been "entrusted to take the uncircumcised to the Gentiles, just as Peter has taken it to the circumcised".

He who worked effectively in Peter for the apostleship to the circumcised also worked effectively in me toward the Gentiles (Gal 2:8).

We should be careful about reading too much into this passage. Paul only says that the Holy Spirit was working within him and Peter when they were sent out as apostles, he to the Gentiles and Peter to the Jews. Anything more than this is a human construction. Paul does not call himself the Apostle to the Gentiles. He does not acknowledge that Peter was the Apostle to the Jews.

There are several problems with the idea that Paul was the Apostle to the Gentiles and Peter was the apostle to the Jews.

• This idea assumes that God works through a couple of big men, whereas the NT plan is for the Holy Spirit to work through thousands of people. The word apostle is used far more in the New Testament as a verb than a noun, although most English translations do not reflect this. For example, Luke 10:1 describes Jesus appointing “seventy-two others, and apostled them in pairs ahead of Him".

  The role of an apostle was not limited to an elite group. Jesus’ strategy was based on groups of people being sent out (apostled) to the world. He needs millions of apostles taking the gospel into the world to bring in the Kingdom of God.

• Jesus had told his apostles clearly that they should start in Jerusalem and then go out into all the world (Acts 1:8; Mat 28:10). His apostles should go to the Jews first and then go to the Gentiles.

  Paul was never exclusively an apostle to the Gentiles. He followed Jesus’ instructions and in each new city went to the Jews first. Only when they rejected his approach did he go to the Gentiles.

  Peter’s approach was similar, although he was sometimes reluctant to go to the Gentiles. When the Holy Spirit tried to get Peter to go to the Gentiles in Caesarea (Acts 10) he dug in his toes, but he eventually went He never limited his ministry to just to the Jews.

Peter and Paul both operated as apostles, along with numerous others. They both operated amongst Jews and Gentiles. The idea that they had separate spheres of authority, one as the apostle to the Jews and the other as the apostle to the Gentiles is not true.

What is true is that in the beginning, many newer Christians hang around in Jerusalem where the Holy Spirit has been poured out and the Peter and John were based. They should have been taking the gospel back to the places that they had come from. God eventually sent persecution to get them moving in the way he needed.

See Governmental Apostles.

Inflation (4) Different Situations

Rapid price increases can have two main causes.

1. Monetary Policy
   Inflation of the money supply by a banking system supported by a central bank can create excessive demand for goods and services or assets. The most recent example is the massive growth in the money supply created by the US Federal Reserve and assisted by central banks around the world, which has caused a massive increase in the price of financial assets, especially share markets.

   In New Zealand, the monetary expansion has fed into a boom in house prices and rapid escalation of costs in the construction sector. Rapid growth in the number of houses being built has caused shortages of building materials and personnel shortages that have fed into a massive increase in prices.

   Tightening monetary policy is now taking the heat out of the property market (just as it is popping the share price bubble in the US) so we can expect inflation in the construction sector to ease, although residential dwellings will continue to be expensive.

2. Economic Conditions
   Another cause of price increases is a change in economic conditions that brings a change in relative prices. Some prices rise fast, while others fall. In a free market, the prices of things that people want more of, or which have become scarce, tend to rise. The prices of things that people want less of tend to fall.

   The market rewards businesses that are producing things that people need more of by raising prices to increase their profitability. Businesses that are producing goods and services for which there is declining demand are punished by falling prices that eat into their profits. Some of the least viable of these businesses will actually fail. This process is how the market shifts productive capital to where it is needed most.

   We are currently facing a massive economic shift caused by war and the economic sanctions imposed by the United States. The result will be a shortage of basic food and energy that pushes up prices for these goods. Businesses and countries that produce energy products and grow grain are being rewarded with increasing prices which will increase their profitability. Countries that rely on imported energy and grain products are facing seriously price increases for essential goods that are needed throughout their economy.

   This big economic shift is making countries like New Zealand less well off. The mechanism by which this loss of prosperity is transmitted through the economy is a massive increase in prices. Oil-based products are used throughout the economy so increases in energy prices will push up the cost of everything that is produced, transported and consumed. Increased grain prices will push up the cost of many food products.

   The consequence of these changes is that our incomes will not go as far as they did in the past. Most people will all be worse off. Groups with economic power will try to get compensation for their lost prosperity by demanding an increase in income, but most will not have that privilege. Rises in the prices of food will affect everyone, but those who spend a large share of their income on food will experience the worst pain. People who are poor will be affected the most by increases in the price of food.

New Zealand is an agricultural country, but most of the food we produce is meat and milk for consumers who are well off. The prices of these products will hold up, but they will not compensate for the big increases in the price of imported grain-based foods and the increased cost of energy products.

The key role of central banks is to control price inflation., but their only policy tool is the interest rate, which they adjust to control the supply of money. This tool works for the first type of inflation listed above, although it does produce pain.

However, the tools of the central banks are totally ineffective against price increases that are caused by a serious economic shift like the war and sanctions that the world is currently experiencing. Adjusting targe interest rates cannot produce more oil or more grain.

Still in the Building?

Christian America has been stirred by the decision of the leaders of Vineyard Anaheim to secede from Vineyard USA. This decision was shocking because John Wimber was heavily involved in establishing Vineyard Anaheim, and many people see it as the mother of the Vineyard movement.

Geoff Holsclaw who is a professor at Northern Seminary and a pastor at Vineyard Grand Rapids asked and answered the following question.

Has Vineyard USA lost its “anointing”? Has God’s anointing passed to those of the Toronto Blessing, to the Kansas City Prophets, or to Bethel Redding, and The New Apostolic Reformation? (Yes, I have heard this privately...many times).

His full answer is here, but his conclusion is,

I’m certain the anointing of God’s Spirit has not left the building.

I value Geoff’s teaching, but I not sure that he is totally correct.

I decided to follow Jesus in 1974 when I studying at University (I was a late starter). After a year of seeking to follow him, I felt that I was not progressing quickly enough. I talked with a friend, and she suggested that I read the book of Acts, to see if I could discover what made the early Christians different from me. I followed her advice, and the answer to her question was obvious.

The difference was the presence of the fulness of the Holy Spirit. After claiming Luke 11:9-13, I was baptised in the Holy Spirit sitting in my bed one Saturday morning while my wife was at work. I was given a heavenly language, which has continued to refresh me until this day.

In the season that followed, we saw some amazing things. (This occurred during the Charismatic Renewal in New Zealand). The Holy Spirit seemed to be doing amazing things everywhere. This was real steak, not sizzle. People were not falling down (that did not come to until the Toronto Blessing took off twenty years later). People were being healed and delivered.

Sadly, a few years on, the activity of the Holy Spirit seemed to go into decline. Some people believe that they can almost mark the date this happened. We dealt with this decline by assuming that the Holy Spirit moves in seasons. We assumed that the season where the Holy Spirit was moving freely had come to an end, but another season of similar blessing would come again in the future.

Now, more than forty years later, I realise that we were fooling ourselves. The season of blessing did not end because the Holy Spirit lost interest or decided to pause things for a while.

I believe now that we were responsible for the end of our season of blessing. The season ended because we grieved the Holy Spirit. Looking back, I understand that we tried to take the blessing of the Holy Spirit and use it to renew the church. The problem was that the Holy Spirit was wanting to do something radically different. He wanted to transform the church to prepare it for the next season when he would establish the Kingdom of God on earth during a season of trouble on earth. We refused to heed his call to change because we believed that we could enjoy the blessing of the Spirit within the existing church structures.

The Holy Spirit cannot achieve his goals with a church that is led by big-name leaders and conducts its activities in buildings where the people of the world cannot see what he is doing. The Holy Spirit wants a church that is led by teams of elders with balanced giftings. He wants a church that is active in the places where people live. Until the church is willing to change in the way that the Holy Spirit is asking, we will continue to grieve him.

The Holy Spirit has not left the building, but it is not his happy place.

Freedom (6) Basic Freedoms

In their book called The Dawn of Everything, David Graeber and David Wengrow give a different description of freedom. They suggest that in primitive societies, three basic freedoms were important.

• freedom to move
• freedom to disobey
• freedom to create or transform social relationships.

They described these freedoms in this way.

The freedom to abandon one’s community, knowing one will be welcomed in faraway lands; the freedom to shift back and forth between social structures depending on the time of year; the freedom to disobey authorities without consequence – all appear to have been simply assumed among our distant ancestors, even if most people find them inconceivable today (p 132).

The English word “free” ultimately derives from a Germanic term meaning ‘friend’ – since, unlike free people, slaves cannot have friends because they cannot make commitments or promises. The freedom to make promises is about the most basic and minimal element of our third freedom, much as physically running away from a difficult situation is the most basic element of the first.

One might ask, how could that most basic element of all human freedoms, the freedom to make promises and commitments and thus build relationships, be turned into its very opposite: into peonage, serfdom or permanent slavery? It happens, we’d suggest precisely because promises become impersonal, transferable – in a nutshell, bureaucratized (p. 426).

The freedom to ignore people who want to control others was basic.

The real puzzle is not when chiefs, or even kings and queens, first appeared, but rather when it was no longer possible simply to laugh them out of court (p.133).

In contrast, the moral basis of a nation like the United States is largely formal freedoms, mostly defined in relation to the state.

American citizens have the right to travel wherever they like - provided, of course, they have the money for transport and accommodation. They are free from ever having to obey the arbitrary orders of superiors-unless, of course, they have to get a job (p.131).

These thre basic freedoms are worth pondering.

Previous posts here

Paper Gold

Paper gold has been a profitable activity for the US and the UK, but it could be problematic. Much of the gold owned by central banks all over the world is currently stored in vaults owned by the Federal Reserve and the Bank of England. These countries have been covering their storage costs and earning a profit by allowing the vaults storing their gold to engage in a variety of lease and swap agreements. The US Government has encouraged the growth of gold derivatives to absorb demand and suppress gold relative to the dollar.

Under the IMF’s accounting procedures, leased and swapped gold balances are recorded as if they were still under a central bank’s ownership and control, despite bullion being transferred to another party in unallocated accounts. This is morally wrong, because two entities cannot own the same asset at the same time.

The US and the UK have been undermining confidence in this process by confiscating gold reserves that they were storing for Venezuela, Libya, Afghanistan and Russia. Central banks with their gold reserves vaulted at Western central banks will now be pondering whether their reserves would continue to be safe if they upset US political leaders. Requests for repatriation of bullion are bound to follow.

Some countries that have made profits from their gold reserves will be unlikely to renew swap and lease agreements and will instead demand reallocation of their bullion into earmarked accounts. This could drain liquidity from bullion markets. A rising gold price will then be bound to ensue.

Inflation (3) Central Banks

Inflation is always a monetary phenomenon. Prices of goods and assets go up and down relative to each other due to changes in supply and demand, but an overall increase in the price level has to be funded by the central bank increasing the supply of money.

Since the GFC in 2008/9, the Federal Reserve has massively expanded the money supply, first by keeping interest rates low (near zero) and second by quantitative easing. The Fed brought roughly 3.5 trillion assets between 2008 and 2014 (mostly Treasuries). It has never been able to roll this quantitative easing back and now holds $9 trillion on its balance sheet. Central banks throughout the western world followed this example.

Inflation of a currency does not always feed through evenly. When central banks massively inflated their money supply during the golden season, the inflation did not push through to consumer goods, due to the enormous supply of consumer goods manufactured in China. Instead, it flowed into a massive increase in the prices of financial assets, particularly share prices. The boom in share prices increased the wealth of the wealth in a big way. Ordinary people did not complain too much because cheap consumer goods deadened their economic pain.

Lack of inflation allowed central banks to keep interest rates low for over a decade, which enabled households and businesses to increase their borrowing. Governments also borrowed heavily to deal with Covid. The consequence of low-interest rates is that households, businesses and governments are now all heavily indebted.

A major outcome of getting inflation under control in the 1990s was that price stability became the target for central banks all around the world. This policy emphasis assisted the development of a trading system based on the US dollar. The guarantee of price stability made it safe for businesses and foreign governments to keep their foreign reserves in US Treasuries because they would not be eaten away by inflation. China took advantage of this situation to hold large reserves in US Treasuries. Foreigners currently own $US33 trillion of US financial securities and short-term assets. Unfortunately, inflation is now roaring back into the world economy again, undermining the guarantee of price stability.

The constraints on price inflation have now come off and consumers all over the world are facing serious inflation that is eroding their living standards. Normally, when inflation gets out of control, central banks tighten the money supply by increasing interest rates to dampen demand and take the heat out of their economy. In the current situation, rolling back quantitative easing by selling treasuries and the other assets that central banks have purchased would be part of the solution.

Increased interest rates are considered to be the standard cure for price inflation, but the Federal Reserve and central banks around the western world face a serious dilemma, as the traditional medicine could be quite painful.

• Near-zero interest rates allowed governments to rapidly expand their debt without facing any extra interest burden. If central banks push up interest rates, governments will have to find money to cover their interest bill. They will not be able to borrow so easily, so their budgets will have to be more constrained, at a time when there are growing demands for more government spending.

• Interest is a significant cost for all businesses, so an increase in interest rates will up the cost of production for them, at a time when they are already struggling to deal with the increased costs described in the previous post.

• Rising interest rates will put pressure on households with big mortgages and other types of debt. They will cut back their spending at a time when the world economy is only just starting to recover from the Covid shutdowns.

• If governments push up interest rates to control inflation, they will hurt both businesses and households when the recovery from the covid recession is still very weak.

• Another big problem is that the share price boom and rapid increases in property prices have been driven by a long period of low interest rates. If interest rates are increased sharply, financial markets could collapse with shocks spreading throughout the economy.

• The combination of high debt levels and raised interest rates will make it difficult for governments to spend their way out of any recession.

• Rising interest rates reduce bond values. Through QE, the European Central Bank (ECB) and the Bank of Japan have bond portfolios, which have already wiped out their equity, playing havoc with their balance sheets. Like many other central banks, the ECB is technically bankrupt and needs a massive, systematic recapitalisation, but there is no institutional pathway for a capital injection to occur.

• The United States has a couple of extra problems that will make it difficult for the Federal Reserve to deal with rising price inflation.

  • Every economy needs institutions that shift money from those who want to save to those who need to borrow. This is a relatively straightforward process that does not need a huge number of institutions. Through hyper-financialisation and securitisation of debt, the US banking system has built a massive superstructure of debt, derivatives and other dodgy financial instruments sitting on top of it, weighing it down. If too much pressure comes on one part of it, the entire system will become vulnerable to collapse.

  • If serious inflation continues, foreign governments will be unwilling to risk holding their reserves in US Treasuries. The Fed may need to raise interest rates to protect the US currency from depreciating.

  • Over the last few decades, the US has been able to cover its massive budget deficits by issuing debt. Continuous big budget deficits have been funded by selling US Treasuries to countries wanting to store their foreign currency reserves and to support trade denominated in US Dollars. As described in a previous post, countries are becoming less confident about the security of their US dollar assets, so increasing sales of US Treasuries are likely. The US budget deficit for 2022 is projected to be $US1.2 trillion, which will have to be borrowed. If this additional borrowing cannot be funded by foreign or US banks, the Fed may need to engage in further Quantitative Easing, which will feed into further inflation.

It is hard to know what central banks will do. Will they push up interest rates to restrain inflation, or will they let inflation go to protect their financial markets from pain? In the United States, you would presume that after a decade of quantitative easing, the capacity for further inflation of the money supply has been so exhausted. However, the willingness of politicians to inflate their currencies in order to maintain their political power should not be underestimated.

My guess is that politicians will go for the softer option and let inflation run, as they will be able to blame it on external players. They would have to take responsibility for any policy decisions that slowed the economy and politicians hate taking the blame. Of course, the outcome they don’t want to cause will probably happen anyway. So I expect to see inflation continuing to be a problem, with governments unwilling to take responsibility for taming it. This will be painful for people on fixed incomes and businesses that cannot deal with rapidly rising prices.

Inflation (2) Now

In a previous post, I describe the inflation that wracked the 1970s and early 1980s. Inflation is appearing again, but the situation is totally different now. This inflation is caused by a real increase in the cost of production and a consequent rise in the prices of consumer goods.

A number of factors are contributing to a significant rise in the costs of production.

• The United States has imposed tariffs on goods produced in China, ostensibly to protect industries that no longer exist, but mostly for political reasons. Other nations are beginning to impose tariffs and import duties. The problem is that a tariff war quickly becomes a vicious cycle of tit for tat that harms everyone by reducing specialisation and pushing up the costs of production. This will lead to an increase in the price of consumer goods all over the world.

• The United States has put sanctions on most of the world’s big oil producers: Iran, Venezuela and Russia. These trade restrictions will push up oil prices.

• Saudi Arabia is the other big producer of oil. It is ruled by a corrupt dictatorship, so at some point, the US will impose sanctions on it, if it is not blown up by a rebellion first. This would make the oil situation worse.

• Rising oil and gas prices are a serious problem because oil and gas are major inputs into the chemical industries that are essential for modern industrial economies. Their costs of production will rise.

• Natural gas is an important input into fertiliser production, so gas shortages will push up fertiliser prices. This will push up the price of crop-based foods (including most kinds of meat).

• A rise in the price of oil doesn’t just increase the price of fuel for commuters. It increases the cost of all transport, including sea, air, road and rail freight, which will increase the price of all goods, especially those that are imported. Truckers have to pay more for diesel fuel, which increases the prices of all delivered goods.

• Increased transport costs also make many forms of specialisation and trade less viable. They also push up the price of all consumer goods that need to be transported in some way.

• Rising oil prices even increase the cost of drilling for oil, by increasing the cost of things like fracking fluids.

• The United States is using economic sanctions to drive a wedge between the Eurasian countries (China and Russia) and the United States and Western Europe (I have explained this in more detail in Big Picture). Dividing the world market into separate domains in this way reduces opportunities for specialisation and efficiency, so costs and prices will inevitably rise on both sides of the divide.

• Real estate prices have increased rapidly over the last few years. This raises the cost of factories and warehouses, which will push up the price of manufactured goods.

• Rising land prices eventually feed to rising food prices.

• Rising interest rates will increase the cost of capital expenditure, which will eventually feed through to the price of final productions.

Most of these increases are real economic effects so the additional cost will have to be carried by someone. Unless they are reversed, which seems unlikely for political reasons, the world will face a permanent increase in prices, that will increase the cost of living for everyone. The cost will have to be borne by everyone but the impact will vary depending on each group’s political and economic power. Governments will probably adjust welfare benefits to compensate, but that will put extra pressure on their budgets.

Workers will want an increase in pay to cover the increase in their cost of living. Businesses will face a squeeze on their profits as they face an increase in the cost of their inputs, a bigger wage bill, and bigger interest payments, all at the same time. Unfortunately, the increased costs that the world economy is facing are real, so one or other of these groups will have to bear the cost.

Some people will be able to push up their wages, but unions are not as strong as they were, so many people will find their wages falling behind. In industries where labour is scarce, employees will be able to get compensated and the owners will have to carry the additional cost. Some businesses will not be able to put up prices, because they face too much pressure from competitors. Some will fail altogether because the increasing costs of production place a bigger squeeze on their profits.

The economic and political pressure across the world will not be even. Some countries will fare better than others. Those that produce minerals and oil will do better, especially those who control easy-to-extract mineral and oil resources. Countries that rely on imported food will suffer the most.

The problem for the United States is that its crop production is heavily dependent on oil-based fertiliser and most of its cheap-to-extract oil has been used up. (The prices of fracking sand, fracking fluids and labour costs are rising relentlessly).

The economic and political changes currently underway will eliminate some productive capacity, so some people will be made worse off. In the 1990s, a massive increase in productive capacity across the world made everyone better off. In the same way, a worldwide decline in productive capacity will mean that many people miss out on something they were used to consuming.

A tit-for-tat struggle between business and labour could develop and create an ongoing inflationary cycle, as occurred in the 1970s, but more competitive markets will probably prevent it from happening. Central banks seem to have used up most of their capacity to inflate the economy, so they may not be in a position to fund a wage-price inflationary spiral.

I will cover the role of central banks in the next post.

Inflation (1)

All over the world, inflation is emerging as a serious economic problem. Some economic commentators are suggesting that we are seeing a return of the problem of stagflation that plagued the world during the 1970s and early 1980s. Fortunately, or perhaps unfortunately, I am old enough to remember the 1970s well, and the inflation we are seeing now is quite different from the problem that occurred back then.

The inflation during the 1970s was initially triggered by an oil shock (OPEC raised the price of oil from $5 dollars to $12 dollars a barrel), but it quickly became an institutional contest in which businesses and employees ratcheted up wages and prices. Businesses would put up prices because their costs were going up. Employees would demand an increase in wages to cover the rising cost of living (Unions were stronger in that season and would often strike to get the wage increases their members needed to maintain their standard of living).

This behaviour created a vicious cycle. Businesses would put up their prices. Unions would demand an increase in wages to compensate them for the rising cost of living. Businesses would put up their prices to cover the increased wages and other rising costs. Salary and wage earners would demand an increase in pay to compensate for the rising prices. The increases tended to get bigger and bigger and it seemed like this inflation could not be stopped. Of course, it was facilitated by lax monetary policy as politicians increased the money supply to help themselves get re-elected.

Most people did okay during this season, as they would get an increase in wages to compensate them for the increasing cost of living. I can remember a year when nearly everyone in New Zealand got a 15 percent wage increase. It seemed good, but we were no better off due to the rising prices of consumer goods.

Governments tended to adjust pensions and welfare benefits in line with the rising inflation. Interest rates were low during this period, so people who owned a house did really well because the rapid inflation of prices (including house prices) quickly wiped away the value of their mortgages. Of course, some people in vulnerable positions were not able to push their wages up, and they suffered declining real incomes. Some businesses were not able to push prices up quick enough to cover the rise in their costs and they folded.

The immediate cause of the inflation coming to an end was the appointment of Paul Volcker as Chair of the US Federal Reserve in 1979, a post he held for twelve years. Volcker squeezed the money supply by massively pushing up interest rates. This squeeze permeated around the world putting a dampener on interest rates everywhere. Tight monetary policy caused a serious recession, but it choked inflation out of the world economy. I can remember a period in the mid-1980s when interest rates on house mortgages reached 21 percent.

The more important cause of the long-term death of inflation was the increased globalisation of trade that began during the 1990s. Tariffs and import duties were removed all over the world, which allowed a massive increase in international trade. Increased trade increases the efficiency of production because it allows production to be shifted to the businesses and countries that can do it most efficiently. This increased inefficiency reduces the costs of production which led to declining prices for consumer goods.

Most of the people of the world benefited from the expansion of world trade. The people of China and South East Asia benefitted when industrial production was moved to their countries to take advantage of cheaper labour. Although they were paid less than the people they replaced, it was a big increase in income for them, and they gained access to a huge range of consumer goods. Of course, people in high wage economies suffered when they lost their well-paid work in industries that moved production to Asia. But even they benefited from the massive increase in the supply of cheap consumer goods from China.

It was the massive increase in international trade and the shift of industrial production to China that really killed the price inflation that plagued the 1970s and 1980s.

Inflation is appearing again, but the situation is totally different now. I will explain how in my next post.

Acts 1

Reading Acts 1, I am struck by the difference between what Jesus told the disciples to do, and what Peter got them to do. Jesus gave them a clear instruction.

Do not leave Jerusalem, but wait for the gift my Father promised, which you have heard me speak about. For in a few days, you will be baptised with Holy Spirit… You will receive power when the Holy Spirit comes on you; and you will be my witnesses (Acts 1:4,5,8).

Jesus gave a clear time frame. This promise would be finished within a few days. They would receive the fulness of the Spirit. Jesus had taught them that when the Spirit came, he would lead them into all truth. They would have a much clearer understanding of his will.

Peter did not wait for the Holy Spirit but instead organised a process to appoint someone to replace Judas. That seems odd, as Jesus had warned the disciples numerous times that Judas would betray him, but he had never told them that they should appoint someone to replace him. Jesus seemed to be happy with just eleven.

The disciples had two cast lots to decide which person to appoint (Acts 1:26). This was a legitimate method under the old covenant for discovering Gods’ will, but it would become redundant once the Holy Spirit was fully given. That was only a few days away, so wouldn’t it have been more sensible to wait until they had received the gift of the Spirit before making an important decision. Instead, Peter got them to use a method that would be outmoded under the new covenant.

The other interesting issue is why Peter wanted to fill up the number of Twelve apostles. Jesus had warned them not to take up positions of authority but to act as servants of the people. He warned that they would suffer for their loyalty to Jesus (Luke 22:14-30). When they selected a person to replace Judas, I wonder if they saw themselves as selecting someone to serve and suffer for Jesus. It seemed like they were more intent on preserving the privileged role of the twelve.

Peter thought it was important that the person selected had been with Jesus from the start (Acts 1:22, but he had already promised Thomas that many who had not seen the things he had seen would be blessed (John 20:29). Stephen, Philip and Paul had no trouble proclaiming the gospel, even though they had not been present at Jesus’ baptism.

And it seems that the Holy Spirit had already moved on. He was not limited to working with twelve people, as Jesus was, because he was a man. By that time, there were 120 believers gathering together to wait for the Holy Spirit and to pray (Acts 1:15). They all received the fulness of the Spirit a day or two later on the day of Pentecost. I am sure that the Holy Spirit sent (apostled) many of them out into the world to share the gospel and build the Kingdom of God. By the time of Acts 15:2, the church in Jerusalem was being led by "apostles and elders”.

Peter’s concern about maintaining the twelve was really a bit redundant, although Simon the Zealot still needed some to work with him in place of Judas (Matt 10:4, See Power Pairs). It seems that the tendency for an elite to guard a position of privilege for themselves was there right from the beginning.

Big Picture (2) Economic Shift

At the same time as this massive geopolitical realignment is taking place, a massive economic shift is occurring in parallel.

• During the last thirty years, the shift of industrial production to low-wage economies, such as China and Eastern Europe, has produced an endless supply of cheap consumer goods that has flooded the entire world.

• Cheaper consumer goods have allowed most people to maintain their living standards despite a sharp drop in real wages.

• Lower production costs have eliminated inflation, allowing central banks to keep interest rates low.

• Low interest rates have fuelled a boom in prices of assets, such as housing and shares, which has massively increased the wealth of the rich at a time when the poor are struggling.

• Low interest rates have made it easy for households and governments to borrow, so debt ratios are now much higher than normal.

• The globalisation of trade through container shipping and electronic communications has allowed a massive increase in the division of labour as work has been moved to where it can be done most efficiently. This has released a huge increase in productivity which has also contributed to lower prices for consumer goods (not higher wages for employees).

The golden season is coming to an end.

• The people in low-wage countries are moving into the middle classes, so options for cheap production are disappearing.

• National interest and sanctions are undermining the division of labour as nations attempt to become more self-sufficient. This will reduce efficiency and push up prices.

• Inflation is becoming a problem all over the world, and it will get worse.

• Governments usually control inflation by raising interest rates, but in the current environment, that will likely cause a recession in economies struggling to recover from covid.

• Raising interest rates will push up the cost of government borrowing, exacerbating fiscal problems.

• The combination of high debt levels and raised interest rates will make it difficult for governments to spend their way out of any recession.

Sanctions Push
The United States is speeding this economic transition by imposing economic sanctions on Russia and China. During the last three decades, the world benefited from the removal of tariffs and free international trade, but sanctions are doing the same job as tariffs did in the past to restrict trade. If these sanctions are kept in place, the world will be divided into two trade blocs: US/EU and Eurasia. The decline in free trade and the collapse of the division of labour will make most nations worse off as goods become more expensive to produce.

The United States has pushed Russia into an alliance with China. Many nations in the Middle East are being pushed in the same direction. The Eurasian continent is going to become an economic powerhouse by combining the benefits of Russian minerals and oil with Chinese industrial production (The Soviet Union did not have the benefit of Chinese productivity). A permanent trade barrier is being raised between the United States and its clients and the nations of the Eurasian continent.

The nations of Western Europe are going to be caught in the middle. They will have to decide between submitting to the United States dictates and their need to import from Russia and China the minerals and energy necessary for its industrial production and the consumer goods that people need to maintain their lifestyles during a season of serious inflation.

Nations in Africa and South Asia are also caught in this struggle. They will be pressured to choose sides, but most will remain neutral. Very few will give their full support to the United States.

Israel will continue to be an ally of the United States because it relies on its military, economic and political support in its struggle to destroy the Palestinian people. It will become the last bastion of United States power and influence on the edge of Eurasia. The surrounding nations will tend to be ambivalent to the United States and unwilling to submit to its dictates. (Egypt will realise that it needs Russian wheat more than it needs American weapons).

International Reserve Currency
Since the emergence of the Breton Woods financial system at the end of the second world war, world trade has been denominated in US dollars. Most nations held their foreign currency reserves in US dollars because they can be used quickly to buy goods anywhere in the world. An unexpected outcome of this need for US dollar reserves was substantial demand for US Treasuries that has allowed successive United States governments to run budget deficits without any serious consequences. The current value of outstanding treasuries is upside of $20 trillion dollars. This debt will probably never be repaid, so it has been a massive free lunch.

This advantage allowed the United States to spend money on overseas wars without having to worry about paying for them, because they knew that the nations of the world would buy any debt instruments issued to cover the costs. Indirectly, the nations of the world paid for American invasions into their regions.

This privileged position is now coming to an end as nations stop trusting in the United States’ integrity and the reliability of its currency.

• In recent years, many nations have diversified their foreign reserves into other strong currencies.

• The widespread adoption of floating exchange rates has reduced the need to hold foreign reserves to protect a currency peg.

• Saudi Arabia has had an agreement with the United States since the late 1950s that it would only sell oil for US dollars in exchange for a security guarantee. This petro-dollar agreement significantly strengthened the role of the US dollar as a reserve currency. That agreement has now been broken due to United States hostility, and the Saudis are now negotiating to sell oil to China for Yuan.

• The development of cryptocurrencies and digital currencies are providing alternative secure options for governments to store their reserves.

• The United States has been shooting itself in the foot by freezing the reserves of nations like Russia and Afghanistan and pushing them out of the SWIFT system for international banking transactions. (The United States has just stolen $9 billion of Afghani reserves because it lost a war. It encouraged the UK to steel Venuzuela’s gold). It is unwittingly giving out the message that a nation’s reserves held in the US dollar might not be safe, if the current United States government gets a snitch against it.

As the role of the US dollar as the international reserve currency evaporates, the free lunch is coming off the menu, so in the future, the United States will have to pay its bills rather than just issue debt paper.

Outcome
The United States economy has been massively inflated over the last couple of decades. The various problems listed above could be the trigger that causes an implosion. This would seriously undermine the ability of the United States to project political, economic power in the geopolitical domain.

These economic headwinds will make life on earth more uncertain than we have been accustomed to.