“An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”— Plutarch 46 – 120 AD.

This observation by Plutarch, the Greek historian and philosopher, likely now applies world-wide rather than to within one particular country. Imbalances of wealth in the world are possibly more extreme than at any point in history. While this would be difficult to prove conclusively, it is true that global wealth imbalances are now worse than at any other time in recorded modern history. This condition has played a contributing role in the Global Financial Crisis (GFC), the effects of which continue to ripple throughout the world.

As we always point out, the necessary counterpart to high indebtedness is an imbalanced wealth distribution. It is impossible to have one without the other. It facilitates the process of the wealthy becoming wealthier, meaning that a greater portion of overall wealth is being accumulated by an ever-smaller number of holders.

Wealth accumulation has been greater than is popularly perceived (this must be the case, after all, given the huge rise in indebtedness). Why? Most surveys focus on income disparities rather than wealth, assuming that the two are correlated. This is true; however, it is the concentration of capital income (i.e. capital gains, interest and dividends and not employment income) that is the biggest contributor to the growing wealth skew. (See the graph below.)

Among a number of statements in the Bible that suggest growing elitism in the last days, we see the prophecy of rising wealth imbalances in James 5:1-6 as the most irrefutable. “Now listen, you rich people […]. You have hoarded wealth in the last days” (James 5:1,3).

The concentrated accumulation of wealth finally clashed with its handmaiden, high indebtedness. The point finally arrived — as was always inevitable — at which such high and increasing levels of debt could no longer be supported by the ever-poorer segments of populations. It is therefore not surprising that it is increasingly alleged that a plutocracy is emerging in the world, including within the United States. What is plutocracy? Quoting Wikipedia, it is a word that derives “from Ancient Greek ploutos, meaning ‘wealth’, and kratos, meaning ‘power rule’.” Plutocracy therefore means rule by the wealthy. The combination of both plutocracy and oligarchy is called plutarchy.

We are not so much interested in the economic or political viewpoints on plutarchy (or plutocracy) but rather the Bible’s perspectives. There, we are more likely to find a balanced treatment of this otherwise sensitive topic. Not only does the Bible lay out preventive measures again plutocracies (Please see our 3-part Jubileum series from the past year for an in-depth examination of this topic. Part I can be found here.), but it also reveals end time prophecies. And, as always, anything to do with prophecy involves the Jews and/or Israel in some way.

We must also warn that the association between the word plutocracy and Jews has a sordid history. For example, to the Nazis of the early 20th century in Europe, “plutocracy” was a code word for Jews. Britain and America were considered plutocracies because Jews were prospering in those countries. An Internet search of the word plutocracy leaves no doubt, bringing up numerous anti-Semitic articles. These hateful perspectives are not just limited to uneducated people, but span all of society.

Why? For his purposes, God continues to carry out his plans for his people the Jews. It remains the era of the Gentiles and therefore the age-old cycle born of a “separate people,” the “love of money” and persecution continues. In times past, outbreaks of persecution were a phenomenon that played out repeatedly at the country level, for example in Spain, Poland, Russia and Germany. The Bible says that a period of persecution of the Jews will break out at least one more time. That time it will be global, also involving the land of Israel. Unfortunately, many churches that claim to be Christian in name, aid and abet this development due to their denial of Scripture. They choose to ignore the hundreds of Bible prophecy verses that declare the yet-glorious future of the Jews.

Focusing upon America (which harbors the world’s largest population of the diaspora Jews), it must be noted that Wall Street is now increasingly unpopular and hated. The Occupy Wall Street (OWS) movement is just one example of this growing sentiment. Firms such as Goldman Sachs are despised. Recently, a former executive of this firm publicly exposed this company’s culture as being destructive and predatory. The rise of the complex of “money manager capitalism” and the “financial alchemy” of the entire financial industry is being associated with America’s ills of concentrated wealth and the stagnating incomes of the middle and lower classes. Counter movements are voicing their protests — rightly or wrongly.

The two graphs shown above display the correlation between the rising incomes in the financial sector and the rising wealth skew in America. The implication is that the financial sector is responsible for an emerging plutocracy in the U.S. as well as in other countries. According to one analyst, “the rising relative pay of finance has been correlated with the growing income inequality, at least in the U.S.” While there definitely is a connection, the reality is that this phenomenon is much more complex and involves the complicity of the greater part of society.

But facts rarely get in the way of an expedient story or anti-Semitism. On Wall Street, Goldman Sachs is particularly reviled. Why? Quoting the Atlantic Wire, “Messrs. Goldman and Sachs, who founded the firm in the nineteenth century, were Jewish, as have been most of its partners since then, almost all of its leaders, and its current CEO (Lloyd Blankfein). It was founded because Jews were excluded from other firms. At this point Goldman is a publicly traded stock that anybody may own, and probably most of its employees are not Jewish. (Just as Jews are more than welcome at “gentile” firms like Morgan Stanley).”1

The above quote reveals a more balanced perspective. However, when times get tough, society and its politicians have usually seized upon hatred and convenient scapegoats.

1.        http://www.theatlanticwire.com/national/2010/01/how-to-think-about-jewish-bankers/25689/

A major secular “worldwide” turning point has been playing out across the world, having begun sometime in the 1980 to 1990 period, then progressing and cumulating to the breaking point in 2008-2009. There were numerous actors and influences that played a role; however, it is important to remain clear-eyed about these developments, to view them as a whole, and to understand their potential impact. They are momentous. You must understand that we are living in truly unprecedented times, with the scale and scope of developments so large, few can grasp their import.

At present, we continue to remain within the Global Financial Crisis (GFC) and it is not yet 100% certain how the ultimate scenarios will unfold from here. There are, however, really only two main ultimate scenarios: 1. High indebtedness becoming inflated away versus income levels; or 2. rolling debt defaults, deflation and slumping economies.

The fact that cannot be denied is that for the advanced nations as a whole, the tipping point of unsustainably high indebtedness arrived in 2008-2009. It signalled the end of the post-WWII period of economic and financial prosperity. A completely new phase has emerged which is far from having run its full course. Analysts will be misled should they continue to process data through the blinkers of post-WWII averages trends and developments. We have pointed out numerous times in our reports that virtually all of the underlying causal factors of the halcyon post-WWII economic boom period have halted or reversed.

Given the general depressants of over-indebtedness, uncompetitiveness, aging populations, and still-sinking residential real estate prices in many countries around the world, the best outcomes one can hope for are periodic rallies of economic growth and flashes of consumer confidence. That indeed qualifies as a mark of this era. The financial and economic outlook, both domestic and global, remains tentative and dependent upon the confidence-boosting measures of governments, monetary authorities and transnational agencies. It is a sad state of affairs when manipulations of “confidence” … in other words, confidence games … are the main hope.

Policymakers have been striving to reverse the natural deleveraging pressures that follow such pivotal debt-induced turning points. Effectively, large parts of the global banking system have been quasi-nationalized.

The current monetary policy of expanding central bank balance sheets as a means of rescuing the banking system is virtually without precedent. It is crucial to realize how large, reckless and desperate the actions of the world’s central banks have been of late.  Consider that about half of the bonds issued by the US, UK and the eurozone since 2008 have been acquired by the Federal Reserve, the Bank of England or the European Central Bank.

The eight largest central banks have inflated their balance sheets to greater than $15 trillion (as of October 2011), roughly representing a tripling in size since 2006. Just how big is this? It is equivalent to 23% of the world’s entire economic output (GDP). It continues to rise rapidly. Do observers not realize that this can never be reversed?

Although central banks may state that they intend to extricate themselves from these policies at their earliest convenience, it will not happen. Ultimately, their actions will serve to undermine monetary integrity. If such supposedly-august institutions are allowed to be so deceptive and dishonest, it should be no surprise that all of society has been heading down this same relativistic slope. As the Bible says, “Truth is nowhere to be found, and whoever shuns evil becomes prey” (Isaiah 59:15).

As a consequence of these and other actions, the time value of money has virtually collapsed. History likely will indict today’s policymakers as either corrupt or inept. Real interest rates (adjusted for inflation) are negative, with this burden falling heavily upon the income-dependent elderly. Moreover, various central banks have announced their expectation that interest rates will remain low into 2014.

You can be sure that massive malformation and malinvestment will be and is occurring over this period. In the meantime, the accumulation of sovereign indebtedness continues. In the case of the US, it will likely report its largest budget deficit in history for this past fiscal year.

Yes, societies are in the good hands of policymakers, central bankers and politicians. Piero Carolo Padoan, a former official from the International Monetary Fund and current Chief Economist of the OECED, recently stated that “the global outlook is still largely dependent upon policy action.” These may not offer long-term solutions or repairs, but at least offer the assurance that short-term liquidity crises might be delayed, particularly in Europe’s financial sector, much of which is insolvent.

But was it not similar policy actions that led the world to this desperate point to begin with?

For the first time in 60 years, an advanced nation — a member of the rich-country club of the OECD — has defaulted on its debt. This was Greece and it is a bellwether that there will be more … perhaps many more country defaults. As the chart shows on the opposite page, past debt turning points usually played out in as many as three successive crises. We may soon be entering the second phase of the current GFC. Of course, policymakers are loathe to admit this and moreover must deny such possibilities.

The “spin” machine is already in frenetic motion in Europe. According to Wolfgang Schäuble, there is “not the tiniest hope hat other nations would restructure their debt” (FT, March 9, 2012). Elsewhere, according to statements of the Bank of Japan, one must “clearly recognize and explain to the public that central bank bond purchases are not for the purpose of monetization.” Past history clearly shows that all central banks that have pursued this course, always intended at the outset to return the stolen cookies to the jar. Moreover there has been an unnerving inverse correlation between future outcomes and the statements of policymakers.

Yet, globally, credit creation (based on private sector activities) is now turning over. This is occurring from China to America to Europe and is a negative influence upon both economic growth and financial market valuations. It must be noted that despite the huge interventions of the US Fed, the US Shadow Banking System continues to shrink (15 consecutive quarters running from $20.9 trillion to $15.1 trillion.) This is a deflationary influence on both economic growth and financial asset valuations.

Fraud and corruption are widespread and complicity extends to the highest levels. Rapacious capitalism is widely admired as “cunningness” and “business acumen.” To top it all off we have this development: After all the monetary sorcery that has been witnessed over recent years (none of it ensuring recovery, but rather an ultimate financial apocalypse of either a massive debt depreciation or deflationary default scenario), central bank leaders are now being lauded as world saviors. Their dubious alchemy (contributing to an ultimate systemic, pandemic financial breakdown) is being celebrated for its temporary buoying effects. The Atlantic Magazine recently profiled a highly-flattering account of Ben Bernanke. Mario Draghi, the head of the European Central Bank, has been similarly feted.

We have reached the point where the largest macro risks ever known in advance by the policymaking and financial community are being complacently ignored. It could be said that we know the known problems as perhaps never before. Any sentient person knows that one cannot print wealth and create money out of thin air to cover past debts and malformations. Yet, we see a collective will to endorse bogus solutions. In this there is an implied collusion; there is an agreed-upon complicity.

Social unrest can only escalate. Short-term gamesmanship rules. We must be wise to the epic scale of the story our times. It is a globally-intertwined saga of humanistic beliefs, religion and desperation as never before. We must see this relative to history … both past and unfolding. There is no question that the “historicity” of current global developments is indeed epic. We would even say it is of Biblical significance. [We invite readers to order our most recent book which provides the basis for that statement. Please see page 4 for more details.]

What about the US? Changes in sentiment and worldwide consensus have been extreme over the past three to four years. It is worth remembering that the US was considered to be the global pariah — and an apologetic one at that — throughout 2009 and 2010. It was widely accused of financial alchemy and as the “ground zero” of the Global Financial Crisis (GFC). Japan, at the time, despite its massive debts, was considered a safe haven. Less than two years later, the tables have turned. Europe (specifically the eurozone) is the global pariah. Japan is no longer considered a safe haven as it may have hit its “turning point.” Moreover, it is expected that more chaos will ensue in Europe. What next? Anything is possible. It should not be surprising that in due time, the US will again take a turn in the spotlight of crisis.