A great pit is created by the great and abominable church. The design is to hold men captive. It is filled by those who helped dig it. 1 Nephi 14 talks about the pit that is founded by the adversary and his children. The design of the great pit is to destroy free agency and hold men captive to materialism. Men lose their souls in pursuit of the corporate dream.
"And when the day cometh that the wrath of God is poured out upon the mother of harlots, which the great and abominable church of all the earth, whose founder is the devil, then, at that day, the work of the Father shall commence, in preparing the way for the fulfilling of his covenants, which hath made to his people who are of the house of Israel." 1 Ne 14:17
The great promise made to Abraham was through his seed all nations of the earth would be blessed. The work of God commences to fulfill his promises to the House of Israel. The covenanted promises have not be nullified. Instead, the justice of God and God's works will proceed in strength during the most difficult times. Justice can not be ignored, changed, or done away with.
The Book of Mormon is a marvelous work and a wonder in our day. The Book of Mormon restores many of the plain and precious truths lost during the dark ages. The Book of Mormon demonstrates how men are blessed when they keep the laws and covenants of God. Additionally, the Book of Mormon warns of justice and wrath that will turn against secret combinations seeking to destroy the work of the Lord. When wars and rumors of wars start, then one can know that the wrath of God is bringing justice against the secret combinations, and it would be well to repent and avert judgment. Wars around the world for several decades have cost us about $20 trillion.
The works of God entice men to think of peace and living in God's presence. The world entices men to think about money. The works of God free men from tyranny and materialism. Men must prize their liberty to understand the peril of the times. The works of God entice men to think of eternal life.
Financial judgment seems to be in the horizon, however, I maybe optimistic, for financial reckoning is upon us, now. Interest is the great monster. It is immoral of inanimate objects to reproduce. Yet, this is exactly what interest does. It reproduces more debt. The compounding affect of interest becomes a burden and yokes men down into financial slavery. Interest never sleeps; it keeps compounding and oppressing.
For example, there exists a pit called the trade deficit. A large trade deficit has an inflationary influence on the economy. The cost of a large trade deficit takes vital resources away from the economy, leaving little resources to work with. A massive trade deficit destroys the health and wealth of a nation. In 2017, the total trade deficit was $566 billion, and the U.S. imported $2.8 trillion in goods and services and exported $2.3 trillion in goods and services. Automobiles and consumer goods are the main goods and services driving the trade deficit.
Why is a trade deficit inflationary? Historically, gold flowed out of a country when it owed money to another country. The outflow of gold increased the credit rate resulting in fewer imports to being bought from other countries. Likewise, as gold flowed into a country, credit expanded to other countries and exports increased. Expanding credit caused from a surplus of gold would cause an economic boom. The expansion of credit causes prices to inflate. Inflation causes higher production costs, making products and services more expensive, slowing exports. A state of equilibrium should mean as exports decrease, then imports should decrease as trade deficits increase.
When credit expands, then risk increases by default. The increase risk of inflation causes interest rates to rise to offset potential loss due to bad loans and investments. Additionally, inflation causes taxation to increase to pay for government programs and public works such as: roads, bridges, power plants and other projects. Rising interest rates and increased taxes slow the economy down, decreasing growth.
Another pit is the junk bond market funded by pension investors seeking fix income growth. The Junk Bond Market has been investing in the stock market and Shale Oil. The growth and income have attracted Pension funds. However, the Junk Bond Market repeated experiences between 10 and 12 percent default every decade. Money will be gained and then money will be lost. Commercial paper or loans to businesses for daily operations are affected adversely by the defaults in the Junk Bond Market. Junk bonds have high yields. In 2018, $36 billion in Junk Maturities came due; in 2019 that amount will grow to $104 billion, and by 2020, the amount will become $182 billion. Debt laden companies find it difficult to roll their bonds when principle comes due. The history of low interest rates has allowed companies to borrow excessive amounts of money through bonds to grow their businesses. Rolling a bond means buying another bond to pay for the principle payment due. The debt cascades and remains acceptable risk bets when interest rates remain low. However, inflation causes interest rates to rise causing the debt financing to become burdensome and eventually forcing default.
Commercial paper or loans to businesses for daily operations are affected adversely by the defaults in the Junk Bond Market. Junk bonds have high yields. In 2018, $36 billion in Junk Maturities came due; in 2019 that amount will grow to $104 billion, and by 2020, the amount will become $182 billion. Debt laden companies find it difficult to roll their bonds when principle comes due. The history of low interest rates has allowed companies to borrow excessive amounts of money through bonds to grow their businesses. Rolling a bond means buying another bond to pay for the principle payment due. The debt cascades and remains acceptable risk bets when interest rates remain low. However, inflation causes interest rates to rise causing the debt financing to become burdensome and eventually forcing default.
The last great financial pit is derivatives. Derivatives make the economy more susceptible to a financial crisis and deepen the downturn once the crisis begins. Derivatives are futures, forwards, options and swaps. Derivatives privatize profits and distribute risk to the social group. A popular and new derivative is the interest rate swap. Interest rate derivatives increase or decrease in value as the interest rates change.
Interest rate derivatives have decreased in volume; however, they are four times the volume in 2000. This is a pit of epic portion.
President Trump sees that the low interest rates fostered by the Federal Reserve have coincided with the 227% growth in the stock market. The S&P is trade at 27 times earnings. Trump called the stock market a bubble and warned about the stock market collapsing if interest rates rose. China has decided not to dump U.S. government bonds in response to Trump's steel and aluminum tariffs. China could swap USG bonds for other assets U.S. dollar assets like real estate or gold. Should China decide to swap USG bonds for foreign currencies, the dollar would drop, and Chinese imports would decrease. U.S. exports would increase to foreign countries as products became cheaper. As exports increase, unemployment would decrease. The European and Japanese countries would not want China to buy up their currencies with money from USG bond sales because their exports would become more expensive as their currencies increased in value and exports would decrease for them
What would happen if China sold USG bonds and bought hard commodities? Commodity prices would go up. China would stockpile the commodities in storage facilities. The inventory would represent a liability. Unless Chinese exports increased, storage of more commodity would be avoided, representing additional costs.
In short, the trade pit must work on principles of equilibrium or it will get bigger. The bigger the pit, the harsher it is on those trying to survive and feed their families. The rising cost due to inflation is painful. Companies have access to cheap money, but production costs lessen profit margins. Companies insist that employees do more with less available workers. Wages do not adjust portionally with the increased cost of living. We pray for peace and hope that more sane economic principles will be restored. President Trump needs to think about his responses to bubbles in the stock market, real estate market, and bond market. Interest rates cannot remain low forever. The scales will swing back to more conservative principles, once again.