Some challenging words from John Piper:
It’s of course no surprise that John Maynard Keynes was a fierce critic of the gold standard, but lest anyone think that he was an unthinking proponent of fiat currency, consider this quote from James Rickards’ Currency Wars:
Near the end of his life, Keynes supported a new currency, which he called the bancor, with a value anchored to a commodity basket including gold. He was, of course, a fierce critic of the gold exchange standard of the 1920s, but he was practical enough to realize that currencies must be anchored to something and, for this reason, preferred a global commodity standard to the dollar-and-gold standard that emerged from Bretton Woods in 1944.
Right now I’m reading one of the best books on economics I’ve come across: Currency Wars: The Making Of The Next Global Crisis, by investment banker and risk manager, James Rickards. Since we’ve bandied around on this blog with Ron Paul, Keynesianism, and other assorted economic truffles, I thought I’d weigh in with something provocative from Mr. Rickards’ book. Rickards contends that critics of the Fed like Ron Paul are actually a part of the U.S. central bank’s plan. As amusing as those Youtube clips are of Ron Paul laying into the central bank grand wizard, Ben Bernanke, according to Rickards, they’re exactly what Bernanke and his central bank minions want.
Before I defend this, I’ll provide some background reading to help this make sense.
We first have to understand the economic theory of monetarism. Monetarism is the theory, made popular by Milton Friedman, that changes in the money supply are the most important changes a country can make in GDP. One of the things that Friedman became famous for was his contention that GDP changes can be broken down into a ‘real’ component, with actual gains, and an ‘inflationary’ component, with illusory gains.
The theory is encapsulated in the following equation:
MV = Py.
Money supply (M) times velocity (V) equals nominal GDP, which can be broken down into its components of price changes (P) and growth (y).
The money supply is controlled by the Fed. But, not everything is directly under the Fed’s control (you could even dispute that ‘M’ is under the Fed’s control, but that’s for another post). The problem is that velocity is all psychological – the proverbial wildcard in the deck. As Rickards says:
It all depends on how in individual feels about her economic prospects or about how all consumers in the aggregate feel. Velocity cannot be controlled by the Fed’s printing press or advancements in productivity. It is a behavioural problem, and a powerful one.
In the mind of the Fed, the economy is screeching to a painful stop. Uncle Milton’s equation is breaking down. The Fed has exhausted their ability to change the money supply, so the solution is to attempt to change velocity. And this will mean manipulating the hopes and fears of enough U.S. citizens to get the economy humming along again.
There are two ways to do this. The Fed can instill in the public either euphoria from newly created ‘wealth’ or the fear of inflation. Rickards points out that there was a stock market rally from 2009-2011, but it wasn’t strong enough to move consumer spending and investment in any significant way. So, Rickards thinks that the government has turned to creating fears of inflation.
The way for the Fed to do this was to manipulate three things at once: nominal rates, real rates, and inflation expectations. You keep the nominal rates and inflation expectations high and create negative real rates (the difference between nominal rates and the expected rate of inflation). Rickards uses the example of having inflation expectations at 4%, nominal rates at 2%, with leaves you with a real rate of -2%. According to this way of thinking, if real rates are negative, borrowing becomes more attractive, which will fuel investment and spending. “Negative interest rates create a situation in which dollars can be borrowed and paid back in cheaper dollars due to inflation.”
Now, this all makes sense theoretically, but is there any evidence that Ben Bernanke agrees with this line of thinking? There is.
Bernanke and Krugman studied Japan’s economic plight in the late 1990s at Princeton University. A summary of their work was written by a colleague of Krugman and Bernanke, Lars Svensson, in 2003. First, Svensson talks about everything that we’re seeing play out in the world economy right now: a depreciating US currency in order to boost exports and create inflation.
Even if the … interest rate is zero, a depreciation of the currency provides a powerful way to stimulate the economy … A currency depreciation will stimulate an economy directly by giving a boost to export … sectors. More importantly … a currency depreciation and a peg of the currency rate at a depreciated rate serves as a conspicuous commitment to a higher price level in the future.
Here’s the money quote from Svensson:
If the central bank could manipulate private-sector beliefs, it would make the private sector believe in future inflation, the real interest rate would fall, and the economy would soon emerge from recession … The problem is that private-sector beliefs are not easy to affect.
In Svensson’s writings, we see what according to James Rickards, is Bernanke’s playbook: interest rates are kept close to zero, the dollar is devalued by quantitative easing, and public opinion is manipulated to create the fear of inflation.
It would seem that Ron Paul is accomplishing what Ben Bernanke wishes he could do himself – stoke the fears of inflation at home.
Rickards concludes in a poignant, though somewhat overblown conclusion:
This was central banking with the mask off. It was not the cool, rational, scientific pursuit of disinterested economists sitting in the Fed’s marble temple in Washington. Instead it was an exercise in deception and hoping for the best. When prices of oil, silver, gold and other commodities began to rise steeply in 2011, Bernanke was publicly unperturbed and made it clear that actual interest rates would remain low. In fact, increasing inflation anxiety reported from around the world combined with continued low rates was exactly what the theories of Bernanke, Krugman and Svensson advocated. America had become a nation of guinea pigs in a grand monetary experiment, cooked up in the petri dish of the Princeton economics department.
This is from Alister McGrath’s masterful biography of JI Packer. McGrath talks about the desperate state of the Anglican church for evangelicals in the 1940s. If it was this bad in the 40s and things turned around, there’s still hope for evangelicals choosing to serve in mainline churches today.
… However, as time went by, the Church of England gradually lost its close association with the ideas and practices of the Reformation. The rise of Deism and a form of theological liberalism usually known as Latitudinarianism during the eighteenth century eroded the influence of evangelicalism. Although a major evangelical revival developed during that same century, it had faded away by the 1830s. During the remainder of the nineteenth century, the history of the Church of England was dominated by the rise of Anglo-Catholicism (a ‘high church’ movement, linked with the Oxford Movement), and the rise of modernism and liberalism. Between the First and Second World Wars, the general growth of liberalism within the Church of England was supplemented by the rise of ‘Liberal Evangelicalism’. The strongly liberal ‘Group Brotherhood’, which began meeting in 1907, ‘went public’ in 1925 with the publication of a work entitled Liberal Evangelicalism. The result was that evangelicalism became seriously disunited and fragmented by the eve of the Second World War.
After the Second World War, evangelicalism was in a sorry state in England. It had lost any positions of power it once had in the national church. It was numerically weak. It was treated with something approaching contempt by academics, especially academic theologians. It was dominated by forms of Pietism which stressed the importance of personal intimacy with Jesus, yet discounted as irrelevance any serious thinking or engagement with theological issues. It was a movement with a distinguished past, but apparently no viable future. Hensley Henson (1863-1947), Bishop of Durham, dismissed it as ‘an army of illiterates, generalled by octogenarians’. With exceptions as honourable as they were few, the movement was characterized by an anti-intellectual defensiveness, nourished by a separatist mentality.
For a convinced evangelical, such as Packer, to go into ministry in the Church of England at this stage was rather like a Daniel volunteering to enter the lions’ den. It seemed that there was no place and no future for evangelicals inside that church. They were few in number, and were left in no doubt that they were unwanted. In the post-war period, the Church of England witnessed a major surge in the number of men wishing to be ordained, and a growth in its church life at every level. It seemed that its future was secure. The kind of evangelicalism which Packer represented – which at this stage was generally identified with ‘fundamentalism’ – was widely regarded as immature, simplistic, irrelevant and unreasonably dogmatic. For Packer to choose to minister in such a church was, quite simply, a step of faith. Could things be changed? In the closing years of the 1940s, there were few reasons to think so. But Packer kept his counsel.
I just finished Peter Leithart’s excellent commentary on 2 Peter where he argues for a partial preterist reading of the epistle. If you don’t know what means, it’s simple. The prophecies concerning the imminent judgment / arrival of Jesus were fulfilled with the destruction of Jerusalem in 70 AD. And lest you think that Leithart has veered off into heresy, he still affirms the visible return of Christ at the end of history. He just doesn’t think that’s what 2 Peter is talking about. And he’s not alone. Reformed great, John Owen, argued that 2 Peter 3 was linked with Isaiah 65. For Owen, 2 Peter 3 was talking about the end of the old covenant order, not the end of the world.
Here are his five ‘knock-down’ arguments for partial preterism:
- Peter wrote his second letter on the theme of the coming of Jesus, which he says was also a theme of his first letter, which is 1 Peter. Since 1 Peter’s teaching about the ‘coming’ of Jesus highlights its imminence, 2 Peter must be dealing with the same looming event.
- Peter defends the reliability of the promised coming of Jesus by reference to the transfiguration. In each of the synoptics, this event is connected immediately with a prophecy of Jesus’ ‘coming’ within the lifetime of some of His disciples, a prophecy filled out in the Olivet discourse. Peter’s argument from the transfiguration makes best sense if he is using it to support this prophecy. Thus the ‘coming’ that Peter insists will happen is an event that Jesus said would take place in the first century.
- Peter says explicitly that the destruction of false teachers is coming ‘soon.’ Their destruction is the same event as the destruction of the present heaven and earth, the ‘day of judgment and destruction of ungodly men’ (3:7). If the destruction of false teachers was near when Peter wrote, so also was the destruction of the heavens and earth and the coming of a new heavens and earth.
- Peter responds to mockers who doubt the promise of Jesus’ coming because time has passed without any sign of the Parousia. If there were no time limit on the original prophecy, then the mockers would have no grounds for their mockery and no way to attract converts to their skeptical views. Therefore, the original prophecy must have included a time limit, a terminus ad quem , and that time limit must have been the lifetime of the apostles.
- For the mockers, the passing of the ‘fathers,’ the apostles and their associates, casts doubt on the truth of Jesus’ promise to come in power. This objection has weight only if Jesus had in fact promised to come before the ‘fathers’ passed from the scene. Thus the prophecy in dispute in 2 Peter 3 promised a ‘coming’ within the apostolic generation. The prophecy Peter says will be fulfilled is a prophecy about Jesus’ coming within the generation.
At this year’s edition of Elephant Room, Driscoll interviews MacDonald on how he’s been taking it like a pinata at Cinco de Mayo over his decision to invite T.D. Jakes. Macdonald explains how it all got started:
Round 2. I was in California and I played golf with a well-known pastor. (He’s not a fan of you, Mark.) Not one hole, but two, three, five, eight holes, he couldn’t stop talking about everything bad Driscoll does. I was so upset about that. I got off the course and I called Jack Graham, who has everyone’s cell phone number. I said, “Jack, get me Driscoll’s number.” It took him five minutes. Mark picked up, and I said “hello.” I knew he had one of my books on his website so he knew who I was. We talked. He came to Chicago and we went to a Cubs game. Then I called him and said, “We’re going to Haiti.”
Macdonald discusses elsewhere his golfing with MacArthur in California.
Dr. Doug Groothuis, professor of apologetics and philosophy at Denver Seminary, was gracious enough to allow us to interview him for the blog. As none of us have a face for video (Dr. Groothuis notwithstanding), we decided to do the interview and post it here. For those not in the know, Dr. Groothuis has recently published his magnum opus, a textbook on Christian Apologetics. And given the exemplary recommendations it’s getting, (J.P. Moreland called it the “go-to text in the field) we thought it’d be a good idea to arrange an interview with the good Doctor. For more information on Groothuis, check out his blog, twitter, and homepage. But, most importantly, go buy the book.
1. Many people are unaware of your background. Could you please give us a short biography of your life? (E.g. education, family, vocation, interests)
I have a Ph.D. in philosophy from the University of Oregon (1993) and have taught at Denver Seminary since 1993. I am married to author and editor, Rebecca Merrill Groothuis. Besides philosophy, theology, and social analysis, I am interested in the history and philosophy of art, particularly painting and jazz.
2. When did you first become introduced to reformed theology and what difficulties did you have, if any, in accepting the doctrines of grace?
I took a class at an OPC church in the early 1980s on The Westminster Standards. This was the turning point for me, along with reading parts of Calvin’s Insitutes and Reformed writers such as Gordon Clark, R.J. Rushoony and Greg Bahnsen. (However, I am not a theonomist.) J.I. Packer’s work was helpful as well, particularly Evangelism and the Sovereignty of God.
3. Can you share with us a bit about the influence that R.K. Macgregor Wright, author of No Place For Sovereignty, has had on you?
I was already a confirmed Calvinist (at least with respect tot he theology of culture and predestination) when I read this book. However, it helped me deal with some passages that Arminians claim support their view. I was impressed with the book, which is why I endorsed it.
4. How do you think Reformed convictions ought to express themselves in apologetic method? Should Calvinists only use a particular argument? Or only make defensive arguments? Can they appropriate arguments and methods from other traditions, or are they too compromised to be useful?
That is a rather complex question. To my mind, no Calvinist doctrine entails presuppositionalism, as the Van Tillians claim. I address this in Christian Apologetics. Total depravity does not extinguish the knowledge of God through general revelation, which serves as the epistemic basis for the argument of natural theology. Moreover, strong Calvinists such as R.C. Sproul support a non-presuppositional approach to apologetics. I do, however, accept the basic force of the transcendental argument for God’s existence, and use it in chapter 18 of my new book. However, I think this is one argument among many for the truth and rationality of the Christian worldview.
5. How do you understand Reformed theology’s teaching on natural revelation, and how does your understanding impact your view of natural theology?
See chapter 17 of my book.
6. Are there any important contemporary apologetic challenges that you think Reformed theology has the best ability to respond to? Are there any that you think Reformed apologists will have (or are having) more difficulty with than other traditions?
The Reformed view of Providence really answers the problem of evil better than Arminianism or openness theology, both on the philosophical and pastoral level.
7. What works, theological and philosophical, have been the most influential for you in terms of intellectual development and sanctification?
The corpus of Francis Schaeffer has been very influential, even though he was not a professional philosopher as I am. Carl Henry’s God, Revelation, and Authority, 6 vols., was also like a seminary education in itself, especially combined with a summer course I took from him in 1981. Blaise Pascal is also a constant companion.
8. What works can we expect from you in the future?
I hope to continue to teach, preach, and write as long as possible. I am not sure what my next book will be, but it may be on lament.
14. What differences do you see in the presentation of the gospel with monergists and synergists?
Both typically present salvation by grace alone, and both call upon people to make decisions for Christ. (By the way, there is nothing in Reformed theology that deprecates the importance of human decisions.) But synergists sometimes compromise salvation by grace by saying that human decision is free in the libertarian sense, not controlled by God. If that is true, then as Vern Poythress has said, my decision for Christ is the one part of salvation for which I don’t need to give thanks to the Lord.
From time to time I’m going to deal with objections evangelicals have with mainline denominations. Here’s one for today:
Don’t serve in a mainline denomination. You may lose your family. Who will your wife associate with? Who will your kids grow up with?
This is a common objection. A man is responsible for his household and there is nothing more important than your family. If a man can’t effectively lead his own home, he isn’t fit to govern the church (1 Tim. 3:4-5). My father in law once gave me great advice when it came to discipling children. I was marveling at the fact that both of his daughters were not just surviving as Christians, but had flourishing faiths. He told me that his philosophy of parenting was to treat the faith of his daughters like a wheel. In order for a wheel to work, there has to be numerous spokes. If one or two of those spokes failed, it was ok, because there were other spokes to support the rest of the wheel. He said that his goal as a parent was to provide as many spokes as he could, realizing all the while that a few of them would not work out. My wife, for example, definitely had one of those spokes fail her, but still has a flourishing faith because of the other intentional connections that he provided for her.
I bring this up to show that while the church is a normal means of discipleship for a wife and family, we live in a fallen world and sometimes things don’t work out the way we plan them to. I know plenty of people who have gone to great churches but haven’t been able to make the right connections. It’s not as if going to a great church is a guarantee of great friends and a spouse. Friendship, like many things in life, are a chasing after the wind, a la Solomon in Ecclesiastes.
The larger problem with this objection is the affect it would have on missions. The same argument applied to mainliners could equally be applied to church planters and missionaries. How could you send your family to Papua New Guinea to preach the gospel? It’s dangerous! Your wife won’t be able to go to a Beth Moore small group. Your kids won’t go to Muskoka Woods with all their church friends each summer. I can hear John Piper groaning in the background.
Last year I read D.A. Carson’s biography of his father, Tom Carson, who spent his whole career ministering ‘unsuccessfully’ in Quebec. Carson grew up being bullied by Catholics in church plants that never seem to have grown beyond 30 people. Should Tom Carson have packed up and moved to an area of Canada where there were more evangelical churches? Well, he didn’t because he felt called to preach the gospel to unreached areas of Quebec. Similarly, evangelicals in mainline groups may feel a similar call to preach the gospel, not just to an area, but to a particular gospel-less congregation, and sometimes, even to a gospel-deficient elder board.
It seems then that what’s good for Samoa is good for St. Andrew’s by the Gas Station.
In 1966, at a national evangelical conference in the U.K., D. Martyn Lloyd-Jones called on all British evangelicals to leave theologically mixed denominations. John Stott, sensing that many of his fellow evangelical Anglicans might actually follow Lloyd-Jones’ admonition, decided to rebuke Lloyd-Jones in front of the whole assembly and call upon his fellow evangelical Anglicans to maintain the course. Alister McGrath, in his biography of J.I. Packer, said that if Stott had not done this, there would have been an evangelical exodus out of the Anglican church.
The Stott / Lloyd-Jones debate is important for it highlights a real tension for evangelicals in mainline denominations. At what point should evangelicals simply pack up and leave the decaying husks of mainline churches that are declining all over the Western world? Complicating this even further is the fact that some Anglican evangelicals, like J.I. Packer and David Short, who at first argued for evangelicals to stay in mainline denominations, are now arguing for them to leave. Why? According to Packer and Short, the Anglican leadership have repudiated the gospel by their repudiation of biblical norms of sexuality. Simply put, they’re preaching a gospel without a need for repentance, which is no gospel at all.
No doubt, Short and Packer are right. A gospel without repentance is no gospel, and many in the leadership of mainline churches are guilty of this. Does it follow though that evangelicals should leave those denominations? Should we follow the advice of Lloyd-Jones, even if it is about 50 years after the fact?
I’m not so sure. Liberals fudging the gospel is nothing new. I mean, if John Greshem Machen is correct, theological liberalism can’t be called Christian, and he said that in the 1920s! And what about mainliners like John Spong? Spong denied the virgin birth and the resurrection of Christ and he was a bishop in the Episcopal church. If there ever was an award for preaching a gospel-less Christianity, Spong certainly wouldn’t have to worry about taking second place. And he has always appeared to get a sympathetic hearing in the Episcoal church. I realize that not all are were as extreme as he is, but many are extreme enough to warrant the admonition that they’re no longer preaching the gospel.
Orthodox Christians have always had problems in the institutional church. The Wesley’s, Charles Simeon, George Whitefield, John Newton – all faced opposition in their day. Unless you’re willing to break away and start a new denomination, faithless preaching will always coexist besides faithful preaching (in varying degrees of course). To once again reference Alister McGrath’s biography of Packer, in the post-war era of the 40s and 50s, Anglican evangelicals were hemmed in on all sides. Anglo-Catholicism was vibrant, liberal theology was growing in acceptance, and most Anglicans had committed themselves to a form of ecumenism which saw a concern for ‘right doctrine’ as being out of touch with the modern world. It was in that context that Packer urged evangelicals to reform the Anglican church instead of leaving it.
I realize that mainline churches allowing ministers to marry and ordain practicing homosexuals is a terrible move for biblical orthodoxy, but I don’t see how this is materially different from other forms of theological liberalism. All we’re seeing now are the Spong’s of the church open up the bedroom doors.
If, according to thinkers like Packer and Stott, having a mixed liberal-orthodox denomination was never a reason to leave in the first place, I hardly see how having practicing ordained homosexuals are a reason to leave. If Gene Robinson becoming a bishop means you’re going to leave the Episcopal church, why was it ok to stay when John Spong was a bishop? This argument only breaks down if faithful ministers are being coerced to assent to this slouch towards Babylon. If they’re not, and orthodox congregations are given space to preach the gospel, then Stott’s response to Lloyd-Jones from 1966 would seem to still apply.