We Need to Work for What We Have
But today's financial leaders haven't a clue how to help manage God's resources
Janet Yellen made a startling statement last week during testimony to a congressional panel — but her words beg for a more thorough explanation than the one she offered.
“Growth has been disappointing,” said the chair of U.S. Federal Reserve System. “I’m not sure of the reason.”
It’s God’s intent for all of us to do the work He has put before us.
Now, I do not come from inside the bubble of academia, which ranks second only to the bubble over Washington D.C. Yet I dare to suggest that I know something about the nature of our problems.
It’s simply what I have been saying for the last seven years: By and large, people are not spending money. This includes global spending and spans the full adult demographic, all the way from 20-something millennials to folks in their retirement years.
There are two primary factors contributing to this scenario.
One is the fear instilled in people as a result of 10 years of stagnation — no real wage growth, continuing food inflation, and out-of-control health care costs — not to mention an ever-present concern over losing their jobs.
The Obama administration loves to talk about the fact that people are retiring, which is ostensibly hurting the labor participation rate. However, the bigger problem is the diminishing size of the middle-aged population, who happen to be the largest spenders in an economy. It appears this trend peaked some years ago in Japan and China — now America finds herself stuck in the middle of it.
From a Christian worldview perspective, I know that the demographic I speak to each and every day has no problem with the idea that we need to work for what we have. After all, that’s God’s intent for all of us — to do the work He has put before us.
And I would hope that our desire is to save and provide for our families, as this is also biblical.
But we have come to a place where it is becoming increasingly difficult for us to spend money — especially when we seem to be facing more downward pressures on the economy, wages, and our working environment.
Here we are in 2016, with Ben Bernanke’s successor in place and wondering, “What could have possibly happened?”
Add to that the fear of a stagnating economy, and it would appear that a 2.1 percent growth in gross domestic product (GDP) is as good as it’s going to get for some time.
For some reason, the Ph.D.s at the Federal Reserve can’t seem to figure this out. They continue to look at false positives in the market and believe we are still living in a 1970s textbook scenario, when the market actually reflected the economy’s underlying fundamentals. Their inability to look at behavioral sciences and demographics in relation to the modern economy is sad. But, of course, this is the Federal Reserve we’re talking about.
Yellen’s astonishing admission — that she really doesn’t know what the problem is — confirms what I’ve been saying since 2009. Back then, I said that then-Federal Reserve Chair Ben Bernanke needed to take his nose out of the textbooks and start putting his ear to the street.
Admittedly, this is a very unorthodox methodology and would never be considered in the world of academic analytics. So, here we are in 2016, with Bernanke’s successor in place and wondering, “What could have possibly happened?”
Leading up to the financial crisis of 2007, the nation saw more than 50 years of an annual average growth rate of 3.6 percent in GDP. Since 2007, it has been stuck at around 2.2 percent (Obama’s legacy).
Yet, the Federal Reserve is still trying to figure out why creating a so-called “wealth effect” — near-zero interest rates and artificially pumping money into the economy — isn’t working in this environment of fear and lack of wage growth.
They are God’s resources in the first place. If only our leaders would realize that.
Since the feds refuse to look at productivity rates, demographics, wages and spending, we are likely to see another round of quantitative easing. In other words, the definition of insanity: continuing to do the same thing over and over again and expecting different results.
If the Obama administration and Congress don’t soon focus on economic growth, sound fiscal policy, budgetary constraint, or helping to grow the middle class, we are likely to see this “new normal” continue for some years to come.
Of course, 2.2 percent GDP growth might look pretty good, compared to what could happen if we continue down the same road we’re traveling. And, simply put, this road is not the path to a life of stewardship God intended for all of us. But with roadblocks constantly in our way, good stewardship becomes increasingly difficult. Nevertheless, we are called to manage our money in this way. After all, they are God’s resources in the first place.
Now, if only our leaders would realize that.
Dan Celia is president and CEO of Financial Issues Stewardship Ministries, Inc., and host of the national syndicated radio program “Financial Issues,” heard daily on over 600 stations across the country.