The Way the World Works is by divine Justice, Laws, and good works

The Way the World Work is by divine justice and works. God's justice and laws are immutable. Man laws and justice are less perfect than divine justice and law. Justice is eternal. Without justice there would be no law. 

A great pit is created by the great and abominable church. The design is to hold men captive. It is filled by those who helped dig it. 1 Nephi 14 The pit is founded by the adversary and his children.  The design of the great pit is to destroy free agency and hold men captive to materialism. Men lose their souls in pursuit of the corporate dream.

"And when the day cometh that the wrath of God is poured out upon the mother of harlots, which the great and abominable church of all the earth, whose founder is the devil, then, at that day, the work of the Father shall commence, in preparing the way for the fullfilling of his covenants, which hath made to his people who are of the house of Israel." 1 Ne 14:17  The great promise made to Abraham was through his seed all nations of the earth would be blessed. The Work of God commences to fulfill his promises to House of Israel. The covenanted promises has not be nullified. Instead, the Justice of God and God's works will proceed in strength during the most difficult times. Justice can not be ignored, changed, or done away with.

The Book of Mormon is a marvelous work and wonder in our day. The Book of Mormon restores many of the plain and precious truths lost in the dark ages. The Book of Mormon demonstrates how men are blessed when they keep the laws and covenants of God. Additionally, the Book of Mormon warns of Justice and wrath that will turn against secret combinations seeking to destroy the work of the Lord. When wars and rumors of wars start then one can know that the wrath of God is bring justice against the secret combination and it would be well to repent and avert judgment. Wars around the world for several decades have cost us about $20 trillion.

The works of God entice men to think of peace and living in Gods presence.  The world entices men to think about money. The works of God free men from tyrany and materialism. Men must prize their liberty to understand the peril of the times. The works of God entice men to think of eternal life.

Financial judgment seem to be in the horizon, however, I maybe optimistic for financial reckon is upon us, now. Interest is the great monster. It is immoral of inanimate objects to reproduce. Yet, this is exactly what interest does. It reproduces more debt.  The compounding affect of interest becomes a burden and yokes men down into financial slavery. Interest never sleeps, it keeps compounding and oppressing.

For example, there exists a pit called the trade deficit. A large trade deficit has an inflationary influence on the economy. The cost of a large trade deficit take vital resources away from the economy leaving little resources to work with. A massive trade deficit destroys the health and wealth of a nation. In 2017, the total trade deficit was $566 billion and the US imported $2.8 trillion in goods and services and exported $2.3 trillion in goods and services. Automobiles and consumer goods are the main goods and services driving the trade deficit. 

Why is a trade deficit inflationary? Historically, gold flowed out of a country when it owed money to another country. The outflow of gold increase the credit rate causing less imports to be bought from other countries.  Likewise, as gold flowed into a country, credit expanded to other countries, and exports increased. Expanding credit caused from a surplus of gold would cause an economic boom. The expansion of credit causes prices to inflate. Inflation causes higher production costs making products and services more expensive, slowing exports. A state of equilibrium should mean as exports decrease then imports should decrease when trade deficits increase. 

When credit expands then risk increases of default. The increase risk of inflation causes interest rates to rise to offset potential lose due to bad loans and investments. Additionally, inflation causes taxation to increase to pay for government programs and public works, such as, roads, bridges, power plants, and projects. Rising interest rates and increased taxes slow the economy down decreasing growth.

Another pit is the junk bond market funded by pension investors seeking fix income growth. The Junk Bond Market has been investing in the stock market and other Shale Oil. The growth and income have attracted Pension funds. However, the junk bond market repeated experiences between 10 and 12 percent default every decade. Money will be gained and then money will be lost. Commericial paper or loans to businesses for daily operations are affected adversely by the defaults in the Junk Bond Market. Junk bonds have high yields.  In 2018, $36 billion in Junk Maturities came due; in 2019 that amount will grow to $104 billion and by 2020, the amount will become $182 billion. Debt laden companies find it difficult to roll their bonds when principle comes due. The history of low interest rates has allowed companies to borrow excessive amounts of money through bonds to grow their businesses. Rolling a bond means buying another bond to pay for the principle payment due. The debt cascades and remains acceptable risk bets when interest rates remain low. However, inflation causes interest rates to rise cause the debt financing to become burdensome and eventually forcing default.

The last great financial pit are derivatives. Derivatives make the economy more susceptible to a financial crisis and deepen the downturn once the crisis begins  Derivatives are futures , forwards , options , and swaps. Derivatives privatize profits and distribute risk to the social group. A popular and new derivative is the interest rate swap. Interest rate derivates increase or decrease in value as the interest rates change.

How does an interest rate swap work? Suppose party A swaps a variable rate loan with party B for a fixed rate loan. Party B variable rate is below the fixed rate loan and he enjoys lower interest payments. However, half way through the swap, the rates increase upward due to a financial shock, the reversal to a fix rate with costs to refinance. Party B carries heavy losses due to increased interest payments verses Party A fixed rate loan payments. Party B are the banks. If interest rates rise above 4 percent than they will have to payout payments to hedge funds that believe interest rates would be forced to rise due to inflation. In 2008, the Hedge funds earned over $150 billion by hedge against the banks believing that interest rates had not increased enough and that a credit bubble had formed. The excess credit had increased the risk of too many bad loans. The exposure of the sub prime market validated that the bond tranache was toxic having mixed good and bad loans, together.  The housing market collapsed and the banks faced the possiblity of bankruptcy. 

Today, excessive credit due to low interest rates has allowed credit volumes to return to pre 2008 levels. The fact the fed has not raised interest rates suggests that debt correction could be immediate. "OTC interest rate derivatives rose from $368 trillion to $416 trillion in the first half of 2017" according to the Bank of International.  OTC interest rate derivatives contracts totalled $438 trillion in 2016. Since Trump has taken office, interest rate derivates have decreased in volume, however, they are four times the volume in 2000. This is a pit of epic portion.

President Trump sees that the low interest rates fostered by the Federal Reserve have coincided with the 227% growth in the stock market. The S&P is trade at 27 times earnings. Trump called the stock market a bubble and warned about the stock market collapsing if interest rates rise. China has decided not to dump US government bonds in response to Trumps Steel and Aluminum tariffs. China could swap USG bonds for other assets like US dollar asset like real estate or Gold. Should China decide to swap USG bonds for foreign currencies, the dollar would drop and Chinese import decrease. US exports would increase to foreign countries as products became more cheap. As export increase then unemployment would decrease. The European and Japanese countries would not what China to buy up their currencies with money from USG bond sells. 

What would happen if China sold USG bonds and bought hard commodities? Commodity prices would go up. China would stockpile the commodities in storage facilities. The inventory would represent a liability. Unless Chinese exports increased storage of more commodity would be avoided representing additional costs. 

In short, the trade pit must work on principles of equilibrium or it will get bigger. The bigger the pit the harsh it is on those trying to survive and feed their families. The rising cost due to inflation is painful. Companies have access to cheap money, but production costs lessen profit margins. Companies insist that employees do more with less available workers.  Wages do not adjust portionally with the increased cost of living. We pray for peace and hope that more sane economic principles will be restored. President Trump needs to think about his responses to bubbles in the stock market, real estate market, and bond market. Interest rates can not remain low for every. The scales will swing back to more conservative principles, once again.