Extreme Uncertainty and Double-Mindedness :: By Wilfred Hahn

A most uncanny and precarious situation now exists worldwide. On the one hand, there are blinking indicators of extreme fear, uncertainty and international policy strife. On the other, there are indications of extreme confidence in the future.

How can these two conditions exist at the same time in the same medium? Can something be both hot and cold? Notably, the Bible ridicules such dichotomies … calling them double-mindedness.

For example, says James: “Can both fresh water and salt water flow from the same spring?” (James 3:11).

Jesus also points to the forked conditions of blatant contradiction:

“A good tree cannot bear bad fruit, and a bad tree cannot bear good fruit” (Matthew 7:18).

Returning to world economies and financial markets, we therefore have a major and blatant conundrum at the present time. What are the implications?

First, let us document some of this contradictory data. Having done that, we’ll try to explain why this “double minded” state of affairs exists and for how much longer.

To begin, here are some conditions that can be interpreted to reflect a “no-worries” stance.

Consider the VIX. This is the Volatility Index that trades on the Chicago Board Options Exchange (CBOE). This financial instrument is based on a mathematical model that (in theory) measures the degree of risk priced into financial markets. In recent months, the fear of such risk was at its lowest level in decades.

Next, let’s review the implication of negative interest rates. At this time, still some $10 trillion-worth of world government bond markets trade at a negative yield. In other words, the longer that you hold these bonds, the lower their value will become. What this implies therefore is that investors are more certain about the future than the present. Of course, this is ludicrous. Nevertheless, this condition implicitly reflects a rosy outlook for the future.

Also, stock markets (particularly so in the U.S.) are at rarified valuation levels. That means that investors are confident enough (or possibly greedy enough) to purchase investments at very high prices and have little fear of what invariably will happen—prices going on a downward trajectory for a time.

Now, let’s contrast the ebullient outlook just described with that of the worrywarts.

Firstly, consider the Global Economic Uncertainty Index shown on the front page. It is at its highest level since records began. The higher the index, the greater the uncertainty. That makes for potentially volatile conditions.

The same “uncertainty” sentiment is revealed in other surveys, especially those that are concerned with global policies and geopolitical conditions. These types of indicators are the most worrisome of all, in our view. After all, this represents a reversal of the cooperative trends of the last several decades (seen in a general sense).

Quoting from the most recent Global Risk Survey 2017 of the World Economic Forum: “In a worrying sign of deteriorating commitment to global cooperation, states are stepping back from mechanisms set up to underpin international security through mutual accountability and respect for common norms.”

No doubt, a much more volatile and precarious policy state is clouding the geopolitical climate.

A major sign-post of these new times is populism which is the domain of charismatic and unpredictable demagogues and politicians. They are characterised by playing upon people’s emotions, making grandiose promises (saying the things that itching ears like to hear) and leaning to a more authoritarian style. There are quite a number of Populist-type leaders that have emerged over the last few years. Not all have been elected nor may possess much power.

Whoever they may be, the trend is clear. The Developed World Populism Index was recently developed by Bridgewater Associates LP showing a worrisome trend. The “populism wave” today is back to levels last experienced in the 1930s.

Most will recall the dangers and atrocities that the world experienced in those times—many disgruntled populations that were facing economic challenges (to a degree, in response to the high concentration of wealth having developed earlier), Nazism, Fascism, wars and other destructive developments.

The same need not repeat in decades ahead. However, the populist trend is likely to continue … some steps back, then for a time forward. Time will tell.

Nevertheless, global tensions are rising on every continent and there are numerous potential friction points. It only requires one spark to start a fire that can then be wind-swept into a great blaze. For instance, belligerent North Korea is again threatening neighboring countries with its purported nuclear capabilities. The options here are few for the U.S. and the prospects of a new war are very real.

We return to our final question: Just why all the double-mindedness?

Why do financial markets and sentiment reflect both optimism and great fears at the same time?

It is a feat only possible with human beings. We live at a time where dysfunction, illogic, denial of the lessons of history, and policy recklessness exist in the service of ever-rising nominal financial values and greed.

Tragically, it now seems very clear that many nations are going it alone … brutally pursuing their interests first.

This spirit of antagonistic international affairs of non-cooperation and self-interest—is being pursued by the most prosperous nations in the world. Already the richest, they want more, their super-rich citizens to heap up even more wealth (this seems more pointedly the case in the U.S. but also in other nations).

We are facing double-minded conditions, which provides some insight to its likely future outcome. James equates double-mindedness with instability. He says: “Such a person is double-minded and unstable in all they do” (James 1:8).

Certain instability lies ahead. We can certainly study global trends and strive to stay aware of new developments and their potential impact upon ourselves and our families. We may therefore be more knowledgeable. But, are we likely to escape the dangers of our times? Likely not.

The Psalm writer experienced a similar time. He was not a participant in the corrupt and debased times that he witnessed. His response to such times was a godly one.

“My heart is set to keeping your decrees to the very end. I hate double-minded people, but I love your law. You are my refuge and my shield; I have put my hope in your word. Away from me, you evildoers, that I may keep the commands of my God! Sustain me, my God, according to your promise, and I will live; do not let my hopes be dashed. Uphold me, and I will be delivered; I will always have regard for your decrees. You reject all who stray from your decrees, for their delusions come to nothing. All the wicked of the earth you discard like dross; therefore I love your statutes” (Psalm 119:112-120).

For resources on “end-time economics” and to subscribe to the free newsletter, Eternal Value Review, visit Wilfred’s website www.eternalvalue.com or contact him at:staff@eternalvalue.com

About the Author: Wilfred J. Hahn is a global economist/strategist. Formerly a top-ranked global analyst, research director for a major Wall Street investment bank, and head of Canada’s largest global investment operation, his writings focus on the end-time roles of money, economics and globalization. He has been quoted around the world and his writings reproduced in numerous other publications and languages. His 2002 book The Endtime Money Snare: How to Live Free accurately anticipated and prepared its readers for the Global Financial Crisis. His newest book, Global Financial Apocalypse Prophesied: Preserving true riches in an age of deception and trouble, looks further into the future.