November 15, 2014


Who's Afraid of a Little Deflation? (JOHN H. COCHRANE, Nov. 13, 2014, WSJ)

The worry today is a slow slide toward falling prices, maybe 1% to 2% annually, with perpetually near-zero short-term interest rates. This scenario would unfold alongside positive, if sluggish, growth, ample money and low credit spreads, with financial panic long passed. And slight deflation has advantages. Milton Friedman long ago recognized slight deflation as the "optimal" monetary policy, since people and businesses can hold lots of cash without worrying about it losing value. 

The thing is, we know why this is a deflationary epoch : technology, free trade, the breaking of the unions, out-sourcing, America's role as the global economy's sole safe harbor, a vigilant Fed and a more mature monetary system have made it one. All of these are healthy as merely considering the ways to reverse them demonstrates.  What's most remarkable about our current situation is that even as competition forces business to pass on its savings to us consumers, profits remain strong.  And, of course, unlike in prior ages, thanks to 401k's and IRA's and the like, we all own those businesses; they are not held just by the few.  Falling prices and rising savings, what's to be afraid of?

Well, there is another deflationary pressure acting globally that is malignant, unlike the benign ones above, and that is the population inversion/implosion which is not only leaving countries with a dearth of young people but even sending them into population decline.  

This last is the danger that we should be, not afraid of, but cautious about. There are a myriad of ways we can protect against it, from open immigration to strengthening marriage and families to recriminalizing abortion, etc.  But these are primarily cultural issues and only secondarily economic ones. 

Christians and the Loss of Cultural Influence (Peter Wehner, 11.11.2014, Commentary)

In my experience, the people who see their lives as part of a great drama tend to be the most liberated of all. That doesn't mean individual chapters aren't difficult and painful and confounding. But if you believe that your story has an Author and direction, that there is purpose even in suffering and that brokenness in our lives is ultimately repaired, it allows us to live less out of fear and more out of trust. That is true of us as individuals, and it's true of us as citizens.

"We used to be the home team," one person of the Christian faith said to me. "Now we're the away team." The challenge facing Christians in America is to remain deeply engaged in public matters even as they hold more lightly to the things of this world; to rest in our faith without becoming passive because of it; to react to the loss of influence not with a clenched fist but with equanimity and calm confidence; and to show how a life of faith can transform lives in ways that are characterized by joy and grace. How all this plays out in individual cases isn't always clear and certainly isn't easy. Some circumstances are more challenging than others. But it is something worth aiming for.

Engaging the culture in a very different manner than Christians have-persuading others rather than stridently condemning them-may eventually lead to greater influence. But whether it does or not isn't really what is most important. Being faithful is. And part of being faithful is knowing that God is present in our midst even now; that anxiety and hysteria are inappropriate for people who are children of the King, as a pastor friend of mine recently told me; and that hope casts out fear.

Posted by at November 15, 2014 7:16 AM

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