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Six Current Economic Myths And Realities

Tyler Durden's picture




 

Submitted by Patrick Barron via Mises Canada,

The following are six of the most prevalent economic myths that appear time and again in the mainstream media.  I will give a brief description of each and a brief description of the economic reality, as seen from an Austrian perspective.

Myth #1: Increased money leads to economic prosperity.

This Keynesian myth postulates that increasing aggregate demand through increasing the money supply will lead to more spending, higher employment, increased production, and a higher overall standard of living.

The reality is that an increase in money leads to malinvestment. The time structure of production is thrown into disequilibrium by encouraging investment in projects more remotely removed in time from final consumption.  There are insufficient resources in the economy for the profitable completion of all projects, since individual time preference is unchanged, meaning that there is no increase in savings.  When prices rise, due to this unchanged time preference, these projects will be liquidated, revealing the loss of capital.  Production will be lower than otherwise.  Unemployment will increase while workers adapt to economic reality.

Myth #2: Manipulating interest rates leads to economic prosperity.

This is a corollary of Myth #1 but deserves its own discussion.  In the Keynesian view lower interest rates always are beneficial; therefore, it is the proper role of the monetary authorities to drive down the interest rate via open market operations.

The reality is that interest rates are a product of the market, reflecting the interplay of the demand for loanable funds and the availability of loanable funds.  Historically high or low interest rates can have multiple causes, none of which are prima facie good or bad.  For example, rates can be high because entrepreneurs have highly profitable opportunities due to reduced regulation or a breakthrough in technology.  If time preference is unchanged and, therefore, savings is unchanged, the interest rate rises and allocates the scarce savings to the most highly desired ends.  Or, interest rates can be low due to a change in time preference that leads to increased savings.  If entrepreneurial opportunities are unchanged, interest rates will fall.  Likewise, demand for loans can be high while savings is high or vice versa.  Manipulating the interest rate truly is an act of fantasy by the monetary authorities, who believe that they can know the impact of billions of ever changing decisions affecting the supply of money and demand for money.

Myth #3: Lowering the foreign exchange rate of the currency, to give more local currency in exchange for foreign currency, will lead to an export driven economic recovery.

The reality is that no country can force another to subsidize its economy by manipulating its exchange rate.  Giving more local currency subsidizes foreign buyers in the near term, but it creates higher prices in the domestic economy later.  Early receivers of the new money–exporters, their employees, their suppliers, etc.–benefit by a transfer of wealth from later receivers of the new money.  But as the price level rises from the increase in the domestic money supply, the benefit to foreign buyers evaporates.  Then the exporters demand that the monetary authorities conduct another round of exchange rate interventions.  The big winners are foreign buyers.  Intermediate winners are exporters, but their advantage ends eventually.  The losers are non-exporters, especially retired people.

Myth #4: Money expansion will not cause higher prices.

Currently the U.S. government is engaged in a propaganda campaign to convince us that it can both monetize the government’s debt and engage in quantitative easing without causing a rising price level.

The reality is that there is no escaping the fundamentals of economic law in the monetary sphere.  Ludwig von Mises and many excellent Austrian economists since, such as Murray N. Rothbard, have explained that the relationship between an increase in money and an increase in the price level is not a mechanical one.  Nevertheless, even Mises explained that the basis of all monetary theory is the “Quantity Theory of Money”, that states that there is a positive relationship between the money supply and the price level.  In other words, more money eventually leads to higher prices and vice versa.  What causes all the confusion is that the price level actually can fall even when the money supply expands, if all of the new money plus some of the existing money stock are hoarded.  Mises call this the first stage of the three stages of inflation.  The public expects prices to remain the same or even fall, so they do not increase their spending even when the money supply expands. Eventually, though, the public comes to understand that the money supply will keep increasing and that prices will not return to some previous golden age.  At this point the public will begin to increase spending to buy at lower prices today rather than higher prices tomorrow.  The price level will rise even if the money supply shrinks, because the public spends previously hoarded money faster.  This is Mises’ phase two of inflation.  In the final stage money loses its value, as the public spends it as fast as possible.  This is Mises’ stage three, the “crackup boom”.

Myth #5: More, better, and more vigorously enforced regulations can prevent loan and investment losses.

The politicians and their regulatory agencies believe that prior monetary crises were caused by a combination of stupidity, greed, and criminality by bankers and sellers of investments.

The reality is that no army of regulators armed with the most modern analytical tools and the most powerful means of regulatory enforcement can prevent malinvestment from money supply expansion.  The monetary expansion encourages longer term projects for which the cost of money is a major factor in forecasting success.  But without an increase in real savings, insufficient resources will ensure that many of these projects will never earn a profit and must be liquidated.  Bank and investor losses are inescapable.

Myth #6: Government can prevent hyperinflation.

This is a corollary of Myth #4.  If our monetary masters believe that money expansion will not cause higher prices, then they believe that they can prevent hyperinflation; i.e., the total destruction of the monetary unit as a universal medium of exchange.

The reality is that hyperinflation is cause by a loss of confidence in the money unit, which the monetary authorities may be incapable of preventing.  Once the panic starts, the demand by the public to hold money falls to zero.  Prices skyrocket.  Even if the monetary authorities got religion at this point and froze the money supply, the panic will run its course.  No one will want to be the last holding worthless paper.  More likely, though, the monetary authorities will aid and abet the panic, even if unwittingly, due to political pressure to increase payments to powerful domestic constituencies, such as retirees, the military, the public safety sector, government contractors, etc.  This was the case in Revolutionary France, Weimar Germany, and modern day Zimbabwe.  The mindset of today’s money masters seems little more advanced.

Conclusion

I encourage Austrian economists to point out these common myths whenever encountered.  I have had success writing letters-to-the-editor of major newspapers.  Their editors often seem genuinely pleased to receive a polite letter pointing out the Austrian view.  Perhaps it is simply  a case of controversy selling newspapers.  Furthermore, much business writing often has imbedded Keynesian assumptions that drive the narrative toward government intervention.  Most business reporters have no economic training, so Austrians should politely point out these errors, too.

 

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Wed, 07/30/2014 - 11:19 | 5022724 PlusTic
PlusTic's picture

fukk off troll...pls meet me somewhere for an mma sparring session...i feel the need to fukk someone up!

Wed, 07/30/2014 - 11:41 | 5022807 Bananamerican
Bananamerican's picture

War is not the answer shitkicker

Wed, 07/30/2014 - 12:22 | 5022969 Tall Tom
Tall Tom's picture

At times it is. I reserve my right to self defense.

 

"The best defense is a good offense."  ~ Don Coryell, Coach, NFL Football Team San Diego Chargers

Wed, 07/30/2014 - 14:01 | 5023401 Jab Cross Hook
Jab Cross Hook's picture

"The best offenses are taxpayer-subsidized."
-- Dean Spanos, Chargers owner

Wed, 07/30/2014 - 14:11 | 5023452 A Nanny Moose
A Nanny Moose's picture

Nobody dies playing football...unless something goes horribly wrong.

...and there's no crying in baseball.

Wed, 07/30/2014 - 12:33 | 5023015 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Titrate the steroid dosage down or that will fuck you up more than you can fuck someone else up, PlusTic.

Roid rage is real. Read up on it before yoy fuck up your central nervous system [CNS/Brain]

Wed, 07/30/2014 - 14:06 | 5023428 MrButtoMcFarty
MrButtoMcFarty's picture

mma sparring session.....is that what the kids call a rubntug these days???

Wed, 07/30/2014 - 11:32 | 5022751 Thomas Aquinas
Thomas Aquinas's picture

Catholic economics is the answer.

http://mtm.ufsc.br/~mcarvalho/DISTRIBUTISM.pdf

Government should just create and spend money into the economy and be a very small organisaton. The charge of interest should be illegal. We don't want government managing the economy at all. Leave people to themselves and all will run better.

Neither do we need complicated economic theories.

Wed, 07/30/2014 - 11:38 | 5022794 NidStyles
NidStyles's picture

So government should not manage the economy according to you, but they should be the ones issuing the currency though? 

I can not be the only one seeing that contradiction here.

Wed, 07/30/2014 - 13:19 | 5023229 N2OJoe
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Was it really so bad back in the day when they had private banks issuing competing currencies, and if one was bad you just dumped it and found a better one?

Wed, 07/30/2014 - 14:20 | 5023500 Professorlocknload
Professorlocknload's picture

Or back in the day a buck was still silver?

Wed, 07/30/2014 - 14:22 | 5023506 Professorlocknload
Professorlocknload's picture

'Ol Gresham had a theory 'bout that.

Wed, 07/30/2014 - 14:27 | 5023529 Nels
Nels's picture

You aren't the only one.  The ideas that we have politicians running the money supply sanely was known to be false in 1789, which is why the constitution prescribes "No state shall ... make anything but gold and silver coin a tender in payment of debts;"

The other silly idea that government will stay small if the politicians have the power to print big.  That's never happened.

Wed, 07/30/2014 - 22:31 | 5025759 JeffB
JeffB's picture

I think you should point out that the Catholic Church does not teach nor back "distributism".

I think a more accurate description would be something like:

Some Catholics, applying Catholic teaching as they see it, feel that distributism is better than socialism or "unrestricted capitalism".

---

Maybe they're right, and maybe they're wrong, but it isn't Catholic teaching that we should all endorse distributism.

 

Wed, 07/30/2014 - 11:26 | 5022754 SickDollar
SickDollar's picture

 the Entire world system is a myth/show

"only in their dreams can men be truly free. 'Twas always thus, and always thus will be."

 

 

Wed, 07/30/2014 - 11:27 | 5022758 espirit
espirit's picture

Myth #7 - Exporting inflation to boost GDP is sustainable.

Wed, 07/30/2014 - 11:29 | 5022766 RockRiver
RockRiver's picture

My last pay check was $9500 working 12 hours a week online.

 

Sounds like you had a rough year.....

Wed, 07/30/2014 - 11:34 | 5022783 kaiserhoff
kaiserhoff's picture

Zimbabwe Dollars.

Wed, 07/30/2014 - 11:30 | 5022771 RiskyBidness
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Myth #8 - Yellen with discontinue the Glory Hole today!!

Wed, 07/30/2014 - 11:39 | 5022799 Comte d'herblay
Comte d'herblay's picture

Only six?

That's a rather limited, uncreative way of looking at the situation. 

Wed, 07/30/2014 - 11:47 | 5022826 hairball48
hairball48's picture

Nawww :)

The Mises Institute and the Austrians rule imo.

He just listed 6 because the talking heads in the main stream media can't handle more than six. Most would be doing good to understand any ONE of those points.

:)

Wed, 07/30/2014 - 13:24 | 5023243 dontgoforit
dontgoforit's picture

When the roll the die it's the highest number thay come up with.

Wed, 07/30/2014 - 11:43 | 5022814 gatorengineer
gatorengineer's picture

Not so sure on number 4, inflation while far higher than what the giverment reports has not been in proportion to the inflation of the money supply....YET

Wed, 07/30/2014 - 11:48 | 5022836 hairball48
hairball48's picture

A lot of that "cash" went into Fed held reserves and not into the real economy. Wait till that unwinds.

Wed, 07/30/2014 - 22:53 | 5025842 JeffB
JeffB's picture

One thing that has changed since von Mises' day is the ability of the Fed to pay interest on deposits for banks keeping their money at the Fed. That required a change in the law, which occurred only several years ago. Now the Fed can print the money, give it to their buddies, but then in effect pull money back out of the economic system by having it sit idle in those accounts at the Fed.

I think that helps them buy time and gives them more control over the money supply and so on, at least in the short to mid-term. I can't imagine that being a magic bullet for them other than perhaps a way to feed the money to their bankster buddies, while pulling that money back out of the economy, keeping down the inflation rate, by not loaning that newly 'printed' money back out to the general populace.

I think that just allows them one more bubble to play around with, but with the additional consequences that come with bubbles, of course.

Of course those "reserves of depository institutions' have jumped through the roof. (The Fed's other trillion dollar problem).

That money held on deposit at the Fed isn't counted in the money supply, because it is temporarily(?) out of circulation. But despite that fact, the money supply in circulation has still skyrocketed as well.

Monetary Base

 

Wed, 07/30/2014 - 11:47 | 5022821 JR
JR's picture

Virginia's 1924 law against homosexual marriage has been overturned by two judges, in effect making a law that the people must allow gay marriages. Additionally, Virginians had voted 57% to 43% in 2006 to amend their Constitution to ban same-sex marriage.

Americans have been cut from their representation. Ironically, this is what’s also happening with Americans and their economy.

A funny thing happened to the Congress; on the way to representing the people in its legislative function; it was bought and paid for by the Federal Reserve System which enabled sufficient cash for congressional projects and campaigns for re-election.

A people deprived of representation face a tyrannical government that can issue edicts like boom-time GDP reports in the face of severe hardship.

State legislators and the Congress deprived of their law-making function gives the Fed the authority to make the laws that virtually strip away economic truth and free enterprise from America’s economy, effectively overturning America’s market system, holding down earned interest rates while pumping inflation and allocating bailout and stimulus largesse for its wired members.

And reporting rising GDP in the face of recession.

This is why, as ZH reported yesterday: “With 77 million Americans having debt past due and the average household owing more than $15,000 in credit card debt, it appears the Fed's supposed plan to 'help Main Street' is not working so well. As the following chart from NewEdge's Brad Wishak shows, despite Fed Funds at practically zero, US credit card variable interest rates continue to rise - now at their highest since July 2001.”

The Fed picks the winners and losers and then controls the message.

As a result no critical issue facing Americans will be dealt with by either the Congress or the president of the United States.

The Congress has turned over everything to the banking and Israeli lobbyists, cutting off any kind of representative government. So when state after state passes bans on homosexual marriage, for example, those decisions by citizens expressing their wish for government, will be overturned by the system’s handpicked judges.

When the courts, sometimes one judge, sometimes two out of three, began to overturn these bans, the Congress did absolutely nothing because it owes its allegiance not o the people but to its paymasters – the bankers and AIPAC. And now, Harry Reid and Obama can fill the courts with their court operatives on a mere simple majority vote.

http://queenbee-insidethehive.blogspot.com/2014/07/virginia-gay-marriage-ban-thrown-out-by.html

Wed, 07/30/2014 - 11:55 | 5022864 hairball48
hairball48's picture

I tend to agree. And it's no accident that the Education Establishment ignores teaching anything about the Constitution and Bill of Rights and why it was written the way it was.

When was the last time anyone heard a discussion of the 10th Amendment?

Wed, 07/30/2014 - 14:06 | 5023427 Professorlocknload
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Agree, but the 10th should have begun and ended with "Congress Shall Make no Law" period.

Wed, 07/30/2014 - 12:46 | 5023073 lunaticfringe
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Excellent comment although it seems misplaced here. The point being, that we are no longer represented by this government. The government only represents the wealthy.

As the late great TJ once said, that time to refresh the tree of liberty with the blood of patriots and tyrants, grows closer.

Wed, 07/30/2014 - 14:40 | 5023594 A Nanny Moose
A Nanny Moose's picture

The intent of government is never to represent "the people" This is and impossibility. Government is just the most popular/powerful criminal gang in a geographic region, with a monopoly on the initiation of force.

Wed, 07/30/2014 - 11:49 | 5022827 Thomas Aquinas
Thomas Aquinas's picture

Capitalism is simply an economic system of slavery, whereby the holders of capital unjustly extract a rising share from forced labour that generates products that largely we don't even need to live a happy life.

Liquidate the banking sytem, which is based on fraud and assign to each citizen their own piece of land. Then there will be prosperity for all.

Wed, 07/30/2014 - 11:51 | 5022844 hairball48
hairball48's picture

Not true about "capitalism", if you mean true "free market capitalism".

What we have now is "crony capitalism" as described by David Stockman and others....and not true free market capitalism.

Wed, 07/30/2014 - 12:30 | 5022992 Tall Tom
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Jesus Christ was a Capitalist...

 

Look at the Parable of the Talents. The Master was really disappointed that the unfaithful and WICKED servant, not only did not invest the Talent by burying it in the ground, but did not put it in the Bank to GAIN INTEREST.

 

He is the Master if you did not get that.

 

So...You are WICKED???

Wed, 07/30/2014 - 11:56 | 5022867 armageddon addahere
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Myth #1: Increased money leads to economic prosperity.

It will, if the problem is a shortage of money in circulation.

 

Myth #2: Manipulating interest rates leads to economic prosperity.

It will, if the problem is interest rates

 

Myth #3: Lowering the foreign exchange rate of the currency, to give more local currency in exchange for foreign currency, will lead to an export driven economic recovery.

It will, if the problem is exchange rates. 

 

Myth #4: Money expansion will not cause higher prices.

It won't, if the problem is a  shortage of money.

 

Myth #5: More, better, and more vigorously enforced regulations can prevent loan and investment losses.

They can, if they prevent risky and crooked loans and investments.

 

Myth #6: Government can prevent hyperinflation.

It can, by being financially responsible and stable.

 

The lesson is, all these can be used intelligently but usually they are not.

Or to put it another way, laughter may be the best medicine but not if you have diarrhea.

 

 


 

 

Wed, 07/30/2014 - 11:58 | 5022873 falak pema
falak pema's picture

I encourage Austrian economists to yodle the sound of goldbug music on the Tyrolian Alps and to stop confounding economics and politics; Keynesian and Miltonian symphonies included. 

This is the age of Milton's sons gone mad as they invented Reaganomics sauce after having said "Raus" to Keynes's "gold exchange". And that lineage cannot be passed on to another.

Ask Greenspan why his alter ego on the other aisle, Krugman, is NOW advocating--post Lehman collapse-- continuing doing what he started. You would be surprised by the answer : We DONT believe in moral hazard anymore and the liquidity trap is an Austrian chimera, we both agree on that until we don't. And that will be the day the FED goes Weimar.

Now that is the very definition of "exorbitant privilege" which is a POLITICAL agenda--our money your problem-- and non negotiable with regards to an economia spin doctor's theoretical vision of the world, whatever his ideology! 

So what occurs first...will the CB go Weimar or will the Universal Empire go "Heil Hitler we take Moscow"? ...Is the more relevant question in current geopolitical terms regarding this awesome conundrum which smells of inevitable HIGHER energy prices worldwide...now hows that to support the growth the world desperately needs to avoid financial implosion?. 

And you can keep yodling your Austrian theoretical economia song in the Alps.

Wed, 07/30/2014 - 12:49 | 5023086 Citxmech
Citxmech's picture

Is this the proper goldbug yodle song?:  http://www.youtube.com/watch?v=BM_XKs7KkrQ

Wed, 07/30/2014 - 12:13 | 5022920 Thomas Aquinas
Thomas Aquinas's picture

Capitalism is unjust for many reasons and goes hand-in-hand with the charging of interest, which is an unnecessary cost of using money and an inhibitor of economic activity thereby.

Capitalism also seek to maximise profits, as opposed to charge fair or "common" profit. This always puts pressure on wages to injustice and also mis-allocates investment distorting the signalling function of price and causing excess and deficiency.

 

In answer to one of the questions above, here is an article on sound money.

http://www.michaeljournal.org/plenty40.htm

 

Government should abolish private issue of money and simply circulate sufficient money into the economy to satisfy the needs of projected exchange. We do not need a central bank or armies of economists.

Wed, 07/30/2014 - 12:25 | 5022962 armageddon addahere
armageddon addahere's picture

Why is it unjust to charge rent for the use of money? Is it unjust to charge to rent a car, a house, or anything else? Why would anyone give away their money, car or house to a stranger  if they could not charge rent?

 

"Capitalism also seek to maximise profits, as opposed to charge fair or "common" profit."

So they do, and so does everybody. But they can't get away with it, as long as there are 2 or more suppliers of the same product or service they will compete and drive prices down.

Only if they have a monopoly will this not happen, and you can't sustain a monopoly for long without government intervention.

That means the "unfair profits" you are so afraid of, can only flourish in a socialist or government controlled economy.

"Government should abolish private issue of money and simply circulate sufficient money into the economy to satisfy the needs of projected exchange."

Boy wouldn't that be great? I don't know how many times this has been tried but it must be up in the hundreds. It has always worked, until the people in charge figured out how to goose up the economy with a few harmless gimmicks, that always led to graft, inflation and collapse.

Wed, 07/30/2014 - 12:36 | 5023030 Tall Tom
Tall Tom's picture

He is the WICKED Servant as was described in the Parable of the Talents.

 

He is a Wolf in Sheep's Clothing who seeks to devour by posing as something which he is not.

 

Even Jesus Christ is a Capitalist. As the Master in the Parable of the Talents he described the WICKED Servant as one who did not invest the Capital granted to him by the Master but would not let the Bankers use it to gain interest. As a result he was sent to Hell.

 

Socialists misquote the Bible and use it to advance their Atheistic Socialist Agenda. They have no belief in God, nor do they have any Faith.

Wed, 07/30/2014 - 12:55 | 5023106 lunaticfringe
lunaticfringe's picture

Competition, protected vigorously against monopolies or governemnt regulation, would re-install free market capitalism. Free market capitalism works when it is allowed to work.

What we have today is some bastardized crony capitalistic shit flavored with multiple monopolies on entire market segments- like cell phones, the homogenized media, the banking cartel, or 20 year patent protection and price gouging by big pharma. We have a fucking mess made that way on purpose by those fucks in Congress and getting worse weekly.

This of course will end, and not well. I am sorry that I will most likely miss that day- when American slaves finally say"'enough."

 

 

Wed, 07/30/2014 - 12:32 | 5023000 Thomas Aquinas
Thomas Aquinas's picture

To: armageddon addahere

 

Rent is fine, because it is a cost of a real exchange of say a car or house. But interest on money is an unjust cost on the use of the medium of exchange itself. See:

 

http://www.ccel.org/a/aquinas/summa/SS/SS078.html#SSQ78OUTP1


Wed, 07/30/2014 - 12:42 | 5023051 Tall Tom
Tall Tom's picture

See Matthew 25:27

 

26 “But his master answered and said to him, ‘You wicked, lazy slave, you knew that I reap where I did not sow and gather where I scattered no seed. 27 Then you ought to have put my money [d]in the bank, and on my arrival I would have received my money back with interest. 28 Therefore take away the talent from him, and give it to the one who has the ten talents.’

 

New American Bible Translation

 

That is JESUS speaking those words.

Wed, 07/30/2014 - 13:12 | 5023191 armageddon addahere
armageddon addahere's picture

Why is renting money different from renting a car or house? If someone leases a car promising to buy it at the end of the lease, and they sell the car as soon as they get it, but make all the lease payments and pay out the lease at the end, how is that different?

Wed, 07/30/2014 - 12:43 | 5023064 Starkman
Starkman's picture

Question: When talks about interest rates rising are in the air and that this is really bad (something, say, the government wouldn't want), how excactly are the rates raised? I mean, if it's some fellow in a government office who decides, well, he doesn't have to raise the rates, so what's the fear?

In other words, when talks about bond prices going up, reflecting a lack of confidence in the invenstment community, who exactly decides their rate hike, or how exactly is it that they rise?

 

Wed, 07/30/2014 - 12:52 | 5023096 Thomas Aquinas
Thomas Aquinas's picture

Psalms 54:12
And injustice. And usury and deceit have not departed from its streets.

 

The usury referred to be Our Lord has a spiritual denotation and is not literal - see objection 1 and the reply to Article 1

 

http://www.ccel.org/a/aquinas/summa/SS/SS078.html#SSQ78OUTP1

Wed, 07/30/2014 - 13:18 | 5023221 armageddon addahere
armageddon addahere's picture

Thomas, I regard 2000 year old economics in the same light as 2000 year old medicine, physics, mathematics, literature or any other branch of knowledge.

There was a time, up to about 1860, when we believed our grandfathers knew everything and we knew nothing. In those days you asked the oldest person for advice, and looked to the oldest books for wisdom, like the Bible, Plato, Aristotle or Hippocrates.

Today we believe we know everything and our grandfathers knew nothing. We want the latest discovery, the newest research. Your Bible based philosophy is a quaint relic of the past. If it is proven correct by the latest scientific research, well and good. Otherwise it is an antique, a curiosity.

Wed, 07/30/2014 - 14:03 | 5023411 MrButtoMcFarty
MrButtoMcFarty's picture

7. We are here to help.

Wed, 07/30/2014 - 14:21 | 5023479 Thomas Aquinas
Thomas Aquinas's picture

to armageddon addahere

 

You give no reasons as to why the Bible based philosophy is antique. It is in fact in harmony with natural reason which is the same now in man as it was in Adam.

 

Capitalism as a formalised economic system simply reflects the entrenchment of greed amongst men over the last 4 hundred years. This is because they have largely departed from worshipping the True (Catholic) God and have instead worshipped money.

Matthew 6:24
No man can serve two masters. For either he will hate the one, and love the other: or he will sustain the one, and despise the other. You cannot serve God and mammon.

 

When this reaches extremes, it crosses over to socialism, fascism and communism, which is the worship of human power.

“If it were necessary to give the briefest possible definition of imperialism, we should have to say that imperialism is the monopoly stage of capitalism. Fascism is capitalism in decay” - Lenin

 

Mark 10:42-43

"But Jesus calling them, saith to them: You know that they who seem to rule over the Gentiles, lord it over them: and their princes have power over them.  But it is not so among you: but whosoever will be greater, shall be your minister."

 

After the coming chastisement from God, a very welcome comeback for the Catholic Church and right order is providentially planned.

 

St. Columba (6th century). "Hearken, hearken to what will happen in the latter days of the world! There will be great wars; unjust laws will be enacted; the Church will be despoiled of her property; people will read and write a great deal; but charity and humility will be laughed to scorn, and the common people will believe in false ideas." St. Methodius. "A day will come when the enemies of Christ will boast of having conquered the whole world. They will say: 'Christians cannot escape now!' But a Great King will arise to fight the enemies of God. He will defeat them, and peace will be given to the world, and the Church will be freed from her anxieties."

St Nicolas of Flue

"The Church will be punished because the majority of her members, high and low, will become so perverted. The Church will sink deeper and deeper until she will at last seem to be extinguished, and the succession of Peter and the other Apostles to have expired. But, after this, she will be victoriously exalted in the sight of all doubters."

Wed, 07/30/2014 - 14:27 | 5023531 Econophile
Econophile's picture

Jeremiah 50:21-22 NLT

"Go up, my warriors, against the land of Merathaim and against the people of Pekod. Yes, march against Babylon, the land of rebels, a land that I will judge!  Pursue, kill, and completely destroy them, as I have commanded you," says the LORD.  "Let the battle cry be heard in the land, a shout of great destruction".

This makes about as much sense as anything else God says. Why is he/she/it always so angry?

Wed, 07/30/2014 - 14:19 | 5023497 Thomas Aquinas
Thomas Aquinas's picture

Renting money is different to renting a house or car as St Thomas explains:

 

"To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice. In order to make this evident, we must observe that there are certain things the use of which consists in their consumption: thus we consume wine when we use it for drink and we consume wheat when we use it for food. Wherefore in such like things the use of the thing must not be reckoned apart from the thing itself, and whoever is granted the use of the thing, is granted the thing itself and for this reason, to lend things of this kin is to transfer the ownership. Accordingly if a man wanted to sell wine separately from the use of the wine, he would be selling the same thing twice, or he would be selling what does not exist, wherefore he would evidently commit a sin of injustice. In like manner he commits an injustice who lends wine or wheat, and asks for double payment, viz. one, the return of the thing in equal measure, the other, the price of the use, which is called usury.

   On the other hand, there are things the use of which does not consist in their consumption: thus to use a house is to dwell in it, not to destroy it. Wherefore in such things both may be granted: for instance, one man may hand over to another the ownership of his house while reserving to himself the use of it for a time, or vice versa, he may grant the use of the house, while retaining the ownership. For this reason a man may lawfully make a charge for the use of his house, and, besides this, revendicate the house from the person to whom he has granted its use, as happens in renting and letting a house.

   Now money, according to the Aristotle (Ethic. v, 5; Polit. i, 3) was invented chiefly for the purpose of exchange: and consequently the proper and principal use of money is its consumption or alienation whereby it is sunk in exchange. Hence it is by its very nature unlawful to take payment for the use of money lent, which payment is known as usury: and just as a man is bound to restore other ill-gotten goods, so is he bound to restore the money which he has taken in usury.

Wed, 07/30/2014 - 16:56 | 5024315 armageddon addahere
armageddon addahere's picture

Aristotle is a boob. Money is not consumed in exchange. Gold or silver, the money of his day, may pass from hand to hand a hundred times and not be used up, worn out or diminished in value.

Furthermore, it was not invented chiefly for exchange. Tha is only one of its uses, others being a store of value, as a way of comparing the value of different things.

What does he say about credit? Is it lawful to give a discount for cash, or to charge more when selling goods on credit?

Wed, 07/30/2014 - 14:56 | 5023685 Thomas Aquinas
Thomas Aquinas's picture

To Econphile;

 

Why is God angry? Because man, especially in our day, refuses to submit, repent and obey God, passively ignoring God so as St Thomas states "they may sin freely". That is why we have the New World Order coming:

Daniel 3:26-32

"Blessed art thou, O Lord, the God of our fathers, and thy name is worthy of praise, and glorious for ever:  For thou art just in all that thou hast done to us, and all thy works are true, and thy ways right, and all thy judgments true.  For thou hast executed true judgments in all the things that thou hast brought upon us, and upon Jerusalem the holy city of our fathers: for according to truth and judgment, thou hast brought all these things upon us for our sins.  For we have sinned, and committed iniquity, departing from thee: and we have trespassed in all things:  And we have not hearkened to thy commandments, nor have we observed nor done as thou hadst commanded us, that it might go well with us. Wherefore all that thou hast brought upon us, and every thing that thou hast done to us, thou hast done in true judgment:  And thou hast delivered us into the hands of our enemies that are unjust, and most wicked, and prevaricators, and to a king unjust, and most wicked beyond all that are upon the earth."

 

http://www.ccel.org/a/aquinas/summa/SS/SS010.html

 

Wed, 07/30/2014 - 15:05 | 5023738 Thomas Aquinas
Thomas Aquinas's picture

To starkman,

 

In theory, the interest rates are changed in order to demand manage inflation, because inflation causes mal-investment and corrupts purchasing power.

 

In reality, interest rates in our day are set by bankers who control the Federal Reserve to this end:

 

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." - Thomas Jefferson

All the FOMC stuff is just theatre for the people, who in the majority, cannot believe that such a monstrous conspiracy exists - see:

http://www.thirdworldtraveler.com/Banks/Tragedy_Hope_excerpt.html

Wed, 07/30/2014 - 17:03 | 5024336 armageddon addahere
armageddon addahere's picture

"You give no reasons as to why the Bible based philosophy is antique."

Seriously, you do not know that something that is 2000 years old is an antique? Are you not aware of anything new being thought, done, written, tried, or invented in the last 2000 years? Or do you believe anything old must automatically be better than something new?

Do you only patronise doctors who practice bleeding, purging, and the use of herbal remedies 2000 years old? Do you only wear handmade clothes of hand woven cloth, sewn in the fashions of 2000 years ago? Do you not believe in the existence of North and South America, Australia, New Guinea and other places not known to the ancients?

Do you only believe in the economics, politics, and philosophies of 2000 years ago?

Have you ever seen a baseball game?

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