Rickards: ‘Why Quantitative Tightening Will Fail.’ What do the Dead Sea Scrolls say about Habakkuk’s timing?

Dead Sea Scrolls’ Commentary on Habakkuk

In his most recent post, Daily Reckoning’s Jim Rickard put out the following:

Why Quantitative Tightening Will Fail

After nine years of unconventional quantitative easing (QE) policy the Federal Reserve is now setting out on a new path for quantitative tightening (QT).

QE was a policy of money printing. The Fed did this by buying bonds from the big banks. The banks would then deliver bonds to the Fed, and the Fed would in turn pay them with money from thin air. QT takes a different approach.

Instead, the Fed will set out policy that allows the old bonds to mature, while not buy new ones from the banks. That way the money will shrink the balance sheets ahead of any potential crisis.

For years leaders at the Federal Reserve have been rolling over the balance sheet to keep it at $4.5 trillion.

Here’s what the Fed wants you to believe.

The Fed wants you to think that QT will not have any impact. …

This is complete nonsense. They’ve spent eight years saying that quantitative easing was stimulative. Now they want the public to believe that a change to quantitative tightening is not going to slow the economy.

They continue to push that conditions are sustainable when printing money, but when they make money disappear, it will not have any impact. This approach falls down on its face – and it will have a big impact. …

My estimate is that every $500 billion of quantitative tightening could be equivalent to one .25 basis point rate hike. The Fed is about to embark on a policy to let the balance sheet run down. While I don’t know the figure, let’s give a rough estimate that they lower balance sheets at a rate of $10 billion a month, or $120 billion a year. I would expect for the long-term they’ll look to increase the tempo, which could even reach $20 billion a month or higher.

Under that estimate, it would be the equivalent of half a .25 basis point rate hike just in the first year alone, with expectations of Fed increases from there.

The Fed has pushed that hiking rates will have the same effect as QT. While they might attempt to say that this method is just going to “run on background,” don’t believe it.

The problem continues to be that the stock market is overpriced. …

Now that it’s apparent that the Trump agenda’s not going to be enacted, the market’s ready for a fall on its own. 06/30/17 https://dailyreckoning.com/quantitative-tightening-fail/

The Federal Reserve should realize that quantitative easing was dangerous, and that quantitative tightening poses stock market and other risks to the economy of the USA. That being said, since Fed Chair Janet Yellen and Donald Trump do not see eye-to-eye, this may be a way to get at Donald Trump.

While campaigning Donald Trump stated that interest rate rises would essentially hurt his plans, and we have had a couple of those since his election and will have more in the future.

Now, in theory, there are certain benefits from quantitative tightening. In essence, it should remove at least some of the ‘counterfeit’ money that quantitative easing created. But, because it appears that the US government is going to continue to run budget deficits and we are seeing interest rates rising, the USA itself will not only remain in debt, that debt is expected to grow. Hence, resulting in more ‘counterfeit’ money. I call it ‘counterfeit’ because it is created by the Federal Reserve without any goods or services required to back it up.

The debt of the USA still looks like it will go up.

Consider something that the prophet Habakkuk was inspired to write over 2600 years ago:

3 For the vision is yet for an appointed time; But at the end it will speak, and it will not lie. Though it tarries, wait for it; Because it will surely come, It will not tarry…5 Indeed, because he transgresses by wine, He is a proud man… 6 “Will not all these take up a proverb against him, And a taunting riddle against him, and say, ‘Woe to him who increases What is not his–how long? And to him who loads himself with many pledges’? 7 Will not your creditors rise up suddenly? Will they not awaken who oppress you? And you will become their booty. 8 Because you have plundered many nations, All the remnant of the people shall plunder you. Because of men’s blood And the violence of the land and the city, And of all who dwell in it. (Habakkuk 2:3,5,6-8).

9 “Woe to him who covets evil gain for his house, That he may set his nest on high, That he may be delivered from the power of disaster! 10 You give shameful counsel to your house, Cutting off many peoples, And sin against your soul. 11 For the stone will cry out from the wall, And the beam from the timbers will answer it. (Habakkuk 2:9-11)

The above prophecy will be fulfilled at the time of the end (cf. “The message was true, but the appointed time was long…in the latter days, for the vision refers to many days yet to come,” Daniel 10:1,14). Daniel 8:19, 11:27,29,35 use the same Hebrew term for “appointed time” as Habakkuk 2:3, while Daniel 10, using a different term, ties the latter days to the time in Daniel 8:19. Habakkuk 2 was not fulfilled in its entirety anciently.

Notice also the following from the Commentary on Habakkuk from the ancient Dead Sea Scrolls (roughly 2000 years old; translated in the 1950s by F.F. Bruce):

God commanded Habakkuk to write the things that were coming upon the last generation, but the fulfilment of the epoch he did not make known to him. (1Q p Hab. vii 1-5)

While ancient commentaries like this are NOT scripture, this particular one shows that those who understood the Hebrew language around 2000 years ago believed that Habakkuk’s words had NOT then been fulfilled and were for the time of the end.

As far as to who these passages in Habakkuk are directed to in the end, it makes little sense that these verses in Habakkuk 2 would be directed towards the modern nation of Israel as it does not have enemy creditors. It must be a nation or group of nations with some prominence at the appointed time of the end. As far as “violence of the land” as a contributing factor, this would seem to include crime, military missions, and perhaps riots/civil unrest, but might it also include promotion of violent sports? Is the USA government not giving shameful counsel regarding matters such as homosexuality and abortion?

The USA has a lot of debt:

The U.S. economy is the most highly indebted in the history of the world as a percentage of the global economy. The debt has piled up precariously on an eroding foundation of collateral. Think of trying to build a skyscraper out of pick-up sticks. The higher it gets, the more certain it is to collapse. (Davidson JD. The Economic Mess Trump Inherited. Strategic Investment/Sovereign Investor. January 26, 2017)

The USA is the most indebted nation of all time. The prophecy in Habakkuk is directed towards it.

This will not end well for the USA.

Quantitative tightening will not solve it.

The USA needs the Kingdom of God.

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