You Shall Not Commit Adultery

Aubrey Mercado

You Shall Not Commit Adultery

Here is God’s sound advice to those tempted to commit fornication and adultery.
From the November 2004 Trumpet Print Edition

Take some time and browse through any good-sized newsstand. Look at article titles in the most popular magazines. Nearly every magazine features an article on sex. Even by simply skimming through the articles, you would have to agree that editors want us to believe that the key to human happiness is sizzling sex. Whether you’re married, single, young or old, magazine writers leave us with the impression that if we are not having passionate sex there is something wrong with us.

Do humans have to put such focus on sex to find true happiness? Is sex the all-important thing in life?

Let’s face it! Our Western society is obsessed with sex. Prior to World War i, it was illegal in the United States to print, sell or distribute information about sex. Yet there was a need for proper sex instruction. But now, we are living with the opposite extreme. There are literally mountains of publications that openly discuss details of what should be reserved for the private, most intimate moments between a husband and wife.

It gets worse. abc News reported in January that in the U.S., the sale of pornography—in books and magazines, on tv, in movies and on the Internet—has grown into a $10 billion business. Human sexuality has been grossly corrupted—made into a sleazy business.

On the subject of sex, we have moved from the age of hush to a culture of full disclosure. We must ask this question: Has our increased knowledge and modern openness about sex made us happier? Sadly, the answer is no.

Our rising divorce rate is a good indicator of the growing unhappiness in people’s lives. In America, it is projected that one half of all new marriages will end in divorce. This statistic is the same for most every Western nation. Is there a connection between sexual promiscuity and divorce? Experts in marriage and family see a direct link. Infidelity is still a major cause of marital suffering, anguish and grief. Yet the suffering doesn’t end when the marriage does. In fact, usually it just begins. When a marriage ends, a home is broken. Often, children grow up frustrated with the loss of a warm, loving environment that only two loving parents can provide. Youth violence and crime is a direct result of our broken homelife.

Is our sexual freedom adding to the quality of our lives? Emphatically, no! In real fact, Western society’s promiscuous use of sex is destroying human health—even killing us. Over 20 million people have died worldwide from the hiv/aids epidemic since 1981. National Public Radio reported that approximately 5 million people contracted the aids virus in 2003—more than in any previous year (July 6). There is also a rampant increase in other venereal diseases, known as sexually transmitted infections (stis). Did you know that the United States has the highest sti rate in the industrialized world? Microsoft’s Encarta Reference Library reports that about half of Americans become infected with an sti before age 35. The economic, social and emotional impact of sexual disease is enormous. Besides the harm to adults, many infants have been left physically scarred, suffering from low birth weight and blindness, or harmful diseases such as pneumonia and meningitis. There is an ever increasing number of orphans due to aids deaths (an estimated 18 million by 2010—which is about the population of Australia).

Where is the sizzle in these statistics? Shouldn’t we begin to question our destructive, sexually loose lifestyles?

Seventh Commandment Stated

In the last two issues of the Trumpet, we have been covering the commandments that safeguard the incredible sacredness of human relationships and human life. The Fifth Commandment protects the government that God established in the home: “Honor thy father and thy mother ….” This commandment also preserves the parent and child relationship. The Sixth Commandment safeguards human life: “Thou shalt not [murder] ….”

The Seventh Commandment protects the most vital human relationship—that of husband and wife.

From Mount Sinai, our Creator commanded: “Thou shalt not commit adultery” (Exodus 20:14). Almighty God gave this commandment to protect the honor and sanctity of marriage. The married state is the highest earthly relationship possible for human beings. The wording of the commandment directly forbids adultery. The sin of adultery violates the sacred rights granted by the marriage relationship. This means that the commandment forbids any use of sex outside of marriage. Premarital sex is a grievous wrong done to a future marriage. God considers it unfaithfulness prior to marriage.

Although our free-for-all society refuses to recognize it, the Creator God has a lot to say about the use of sex. God designed sex and He set in motion a great law to regulate its use. Adultery and fornication are capital sins—demanding capital punishment. God told Moses this while the nation of Israel was encamped at Sinai: “And the man that committeth adultery with another man’s wife, even he that committeth adultery with his neighbour’s wife, the adulterer and the adulteress shall surely be put to death” (Leviticus 20:10). Men may try to reason around it, but adultery is a grave sin. In the New Testament, the Apostle Paul stated, “For the wages of sin is death …” (Romans 6:23). Paul means eternal death. When a person continues a life of sin—like adultery—without repentance, that individual faces God’s judgment in the lake of fire (Revelation 21:8).

Why does the sin of adultery call for such a severe punishment? God considers adultery such an awful sin because of the incredible purpose He planned for marriage. In our sophisticated, supposedly educated world, we have forgotten that the word holy should be associated with marriage and the use of sex in marriage. Men, women and children must come to understand the sacred meaning of marriage.

God’s Purposes for Marriage

To fully understand marriage, humans must not leave God out of the equation. Yet our educational system does just that.

Millions of young people attending high schools, colleges and universities are taught science, math, language and history all based on the false theory of evolution. Evolution is simply man’s explanation of a creation without a creator. When will the brightest minds wake up to the understanding that the theory of evolution degrades both God and man? Man is not an animal. He is unique, created for an astounding purpose.

In God’s plan, marriage and man’s incredible human potential are closely connected. It is time for every human being to acknowledge that sex and marriage are God-designed and God-ordained. To do so, we must go to Genesis. When we clear our mind of all prejudice and let the truth speak to us, it is awesome what is revealed.

Mankind is made in God’s likeness and image (Genesis 1:26). The word likeness shows that we carry the same shape and bodily features as God—only physical. The word image refers to God’s character. During this mortal life, God intends that we build His righteous, holy character.

Moses gives us details of Adam’s and Eve’s creation in Genesis 2. He wrote, “And the Lord God said, It is not good that the man should be alone; I will make him an help meet for him” (verse 18). The scriptural record shows that God brought Adam to life first. But God knew that Adam was incomplete in himself—it was not good that he was alone! So God decided to create a help meet, or suitable, for him. God intended to create another human being that Adam could truly share his life with.

Notice that God drives this important point home for us. After Adam’s creation, God put Adam to work, requiring him to name the newly created animals. Adam saw firsthand the wonderfully designed pairing of the cattle, birds and other living creatures. “[B]ut for Adam there was not found an help meet for him” (verse 20). There was no other creature like Adam. He recognized immediately that he was alone—no one to talk with. There was no creature capable of sharing his hopes, dreams, joys and sorrows.

God then did something incredibly miraculous. He caused Adam to fall into a deep sleep and created a woman out of his rib. This is not Hebrew myth—it is the revealed truth of God! When Adam saw this creature, he was truly elated. He said, “This is now bone of my bones, and flesh of my flesh: she shall be called Woman, because she was taken out of Man” (verse 23). Although Adam was created from the dust of the ground, Eve was not. She was molded and shaped from Adam’s own flesh. This fact carries deep meaning. Eve was created equal with Adam. As the Apostle Peter states, they were “heirs together of the grace of life” (1 Peter 3:7). Here was another human being—made in God’s likeness—who could share life with Adam. She was created to help Adam by being his wife and companion.

When presenting Eve to Adam, God said specifically, “Therefore shall a man leave his father and his mother, and shall cleave unto his wife: and they shall be one flesh” (Genesis 2:24). This verse proves that God instituted marriage—not man or the laws of man! Only God’s laws preserve and give honor to marriage.

God made man male and female (Genesis 1:27). God designed and created sex as a beautiful and holy thing. After the creation of man, Moses recorded, “And God saw every thing that he had made, and, behold, it was very good” (Genesis 1:31). God viewed the creation of sex in humans as very good. There is nothing shameful about God’s intended purposes for sex (Genesis 2:25). In fact, the proper use of sex—solely reserved for marriage—actually brings glory to God (1 Corinthians 6:20). For a thorough explanation of what the Bible reveals on the subject of sex, please request a free copy of Herbert W. Armstrong’s book The Missing Dimension in Sex.

Making Man Complete

A primary purpose for sex and marriage is to make man and woman complete. Each is incomplete without the other. Adam alone was not able to fulfill the purpose for which God created him. He was not able to learn the vital lessons of building godly character without the woman God created to assist him.

At the time of our first parents’ creation, it is clear that God intended Adam and Eve to live together as husband and wife. Of course, that meant bodily union. The use of sex in marriage is not sin. Adam and Eve were meant to share everything in this life. They were to grow together and become one in mind and purpose. Building a happy, mutually supportive marriage would have given them a physical completeness they would not have experienced otherwise.

A second purpose of sex and marriage is for building a family. God told Adam and Eve: “Be fruitful, and multiply, and replenish the earth …” (Genesis 1:28). With the birth of children comes the serious responsibility of protecting and teaching them. A stable, happy marriage is the key to a happy and stable home. A stable homelife is the only right way to properly nurture a child. God commands all couples, “Train up a child in the way he should go: and when he is old, he will not depart from it” (Proverbs 22:6). People in our fast-paced, materialistic society have become so self-centered that children are criminally neglected. Children are often left to themselves while parents pursue their own selfish goals.

Both parents are responsible for the supervision and education of their children. God charges the father with the overall responsibility to see to the needs of his wife and family (Ephesians 6:4). But the wife must shoulder the daily care and training of children. She is the God-created helper to her husband, and this most definitely includes his children. A woman can only achieve the true happiness God intended for her by embracing her God-ordained role as wife, mother and homemaker. This is not the teaching of a man or men. God commands that young women be taught “to be sober, to love their husbands, to love their children, To be discreet, chaste, keepers at home, good, obedient to their own husbands, that the word of God be not blasphemed” (Titus 2:4-5). We cannot take family lightly and claim to be religious. God the Father and Christ put prime importance on family. So must all men and women.

Character Begins at Home

A stable family life is the very foundation of all civilized societies. History shows repeatedly that when family life breaks down, nations crumble. Respect for law, authority, the property and welfare of others—elements of solid moral character—are all learned in the home. The qualities of goodness, patience, understanding, compassion and cooperation—all necessary to build up society—are first practiced at home. God’s holy, righteous character is outflowing concern for others. Jesus Christ stated, “It is more blessed to give than to receive” (Acts 20:35). Only well-balanced, stable homes can foster the growth of such character.

In this 21st century, men and women still want to experiment with marriage and family; many are searching for alternative families that will work. Let’s face reality. None of these alternatives will work. The family structure God designed for man is perfect. It is man that must change. We must stop trying to change God.

A third purpose for sex and marriage is for the preservation of the matrimonial bond in order to safeguard and protect the home and family. To fully obey God’s law in respect to marriage, a man and wife must totally give themselves to each other in every phase and aspect of their lives. The spiritual principle of give must be practiced in the sexual relationship.

The Apostle Paul taught, “Let the husband render unto the wife due benevolence: and likewise also the wife unto the husband. The wife hath not power of her own body, but the husband: and likewise also the husband hath not power of his own body, but the wife. Defraud ye not one the other, except it be with consent for a time, that ye may give yourselves to fasting and prayer; and come together again, that Satan tempt you not for your incontinency” (1 Corinthians 7:3-5). It is clear that neither God nor His true ministers ever taught that sex is evil, shameful or degrading. Paul’s teaching here is based on the positive principle locked within the Seventh Commandment. Paul taught that you shall have sex—in marriage! Sexual relations are a debt that married couples owe each other. Yet, it is a debt of love—true giving—not getting or taking. Sex must never become a weapon to harm or wield power over another. It must be the wellspring of mutual love that binds a husband and wife together for life.

God created sexual attraction as the initial spark to kindle genuine love. Love in its deepest spiritual sense is union. God designed marital relations to bring a man and woman together so there is a complete surrender of two lives—the perfect union of mind, heart and body. No home can be broken that is founded on such a union. Read our article on page 30 for some practical solutions to make your marriage truly happy.

Marriage—Type of Christ and His Church

God considers marriage holy. Why? Because it is a type of the relationship between Christ and His Church. Few understand this deep spiritual subject.

Paul taught, “Wives, submit yourselves unto your own husbands, as unto the Lord. For the husband is the head of the wife, even as Christ is the head of the church: and he is the saviour of the body. Therefore as the church is subject unto Christ, so let the wives be to their own husbands in every thing” (Ephesians 5:22-24). This strong teaching is not popular today. Yet its intrinsic spiritual value is immeasurable. It is worth more than all the gold in the world to those women willing to apply it.

God shows through Paul that a wife is to submit herself to her husband as the head of the home just as she must learn to submit to Christ for all eternity. In her marriage relationship to her husband, she is learning the deep spiritual lessons of obedience, loyalty and faithfulness.

Paul addresses husbands by teaching, “Husbands, love your wives, even as Christ also loved the church, and gave himself for it …. So ought men to love their wives as their own bodies. He that loveth his wife loveth himself” (verses 25, 28). This society desperately needs this kind of male leadership.

A real masculine husband will serve, help, protect, teach and give himself to his wife and family in the same manner as Christ did the Church. A man who truly follows Christ will gladly take the reins of leadership as the head of the home, yet he will use that office to serve, not bully, his wife and family. Almighty God holds all husbands responsible for being the right kind of leader.

Isn’t it time all men and women evaluate how they are living in their marriage?

There is a tremendous spiritual purpose behind marriage. Paul continued, “For we are members of his body, of his flesh, and of his bones. For this cause shall a man leave his father and mother, and shall be joined unto his wife, and they two shall be one flesh. This is a great mystery: but I speak concerning Christ and the church” (verses 30-32). Explained here are what should be the real goals for all marriages.

Through a marriage, God makes a man and a woman one flesh. That union must then picture the eternal, loving and serving relationship of Christ and His Church; therefore, nothing should come between a man and his wife.

God gave marriage and family to human beings to prepare us for our eternal future in the God Family. The Church will marry Jesus Christ at His return (Revelation 19:7-9). From that union will come multiple millions of children born into the God Family. The lesson of marriage is to teach us eternal faithfulness to Jesus Christ as our Head. To sever a marriage represents a tragic failure to learn what God most desires to teach us in marriage. God must reveal this great mystery to you. He will to all willing to listen.

God Hates Divorce

God wants us to prove our faithfulness to Him for all eternity by remaining faithful to our mate in this life. What kind of message do we send to God if we cannot remain faithful to one human being for life? If we cannot remain true for a few years—how can we ever remain true for eternity?

Divorce is rampant in our society. Eventually, our way of living is going to exact a heavy price. God tells us through the Prophet Malachi, “For the Lord, the God of Israel, saith that he hateth putting away …” (Malachi 2:16). “Putting away” simply means divorce. God hates divorce. Jesus Christ taught this fact clearly.

The Pharisees, always critical of Christ, one day quizzed Him about divorce. Divorce was common in Judah at the time of Christ. They asked, “Is it lawful for a man to put away his wife for every cause?” Jesus responded firmly: “Have ye not read, that he which made them at the beginning made them male and female, And said, For this cause shall a man leave father and mother, and shall cleave to his wife: and they twain shall be one flesh? Wherefore they are no more twain, but one flesh. What therefore God hath joined together, let not man put asunder” (Matthew 19:3-6). Taking a justified swipe back at these hypocritical lawyers, Christ asked them if they had read the account of marriage in Genesis 2.

It is clear that Christ upheld God’s Word that legalizes only one husband, one wife for life. What God has joined, man has no authority to separate.

Not liking Christ’s answer, and wanting to trap Him, the Pharisees fired back, “Why did Moses then command to give a writing of divorcement, and to put her away?” (verse 7). Jesus Christ, the Maker of man and marriage, answered simply and directly: “Moses because of the hardness of your hearts suffered you to put away your wives: but from the beginning it was not so” (verse 8). From the beginning of man’s creation, God intended that couples not divorce. It is because of the hardness of men’s hearts that divorce even exists.

Just after this public debate, in private discussions with the disciples Christ taught, “Whosoever shall put away his wife, and marry another, committeth adultery against her. And if a woman shall put away her husband, and be married to another, she committeth adultery” (Mark 10:11-12). God the Father and Jesus Christ name divorce and remarriage exactly what it is—adultery!

Other Violations

To fully obey the Seventh Commandment, we must also observe the spirit of the law. Unfaithfulness in marriage begins with the sin of lust. We must eliminate this sin from our minds. Jesus Christ taught, “Ye have heard that it was said by them of old time, Thou shalt not commit adultery: But I say unto you, That whosoever looketh on a woman to lust after her hath committed adultery with her already in his heart” (Matthew 5:27-28). Christ shows that you break the Seventh Commandment when you even think about sexual lust toward another person. Action follows thought. People who desire to obey God must learn to guide their minds and thoughts away from all lust and wrong sensual desires.

In our world, people have become so accustomed to an open display of sexual lust in clothing styles, in advertising, on tv and in movies that most don’t even realize what is happening. This base and degrading emphasis on sex in our Western culture is a grievous sin. We must realize that all use of all forms of pornography is adultery. The death penalty hangs over anyone’s head that engages in such a lifestyle (Romans 6:23). We must understand what a serious matter this is!

God’s Word is plain that fornicators will not enter into the Kingdom of God. Paul taught, “Know ye not that the unrighteous shall not inherit the kingdom of God? Be not deceived: neither fornicators, nor idolaters, nor adulterers, nor effeminate, nor abusers of themselves with mankind … shall inherit the kingdom of God” (1 Corinthians 6:9-10). A wise and loving God states that all human beings should “flee fornication” (verse 18). God’s laws are written for our good and the good of those around us. Obeying them brings real joy, happiness and excitement to life.

What this world needs most is strong teaching about sex, marriage and faithfulness. That education can only begin when we are willing to obey God’s Seventh Commandment in both the letter and the spirit: Thou shalt not commit adultery!


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How Big Is Porn?

From the November 2004 Trumpet Print Edition

• In 2002, one in four Americans admitted to seeing an X-rated movie the past year.

• Porn rentals rake in $5 billion a year.

• Nearly 1 in 5 video/DVD rentals is porn.

• Internet porn takes in $1 billion a year.

• 70 percent of 15-to-17-year-olds say they have accidentally seen porn online.

• The amount of erotic webpages has increased 1,800 percent since 1998.

• Porn amounts to 7 percent of the 3.3 billion webpages indexed by Google.

• 26 percent of cyberporn users visit these sites multiple times a week.

• On some file-sharing sites, more people swap pornography than audio files.


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Porn Is the Devil


Porn Is the Devil

Exposing the “adult” industry’s devastating impact on our lives
From the November 2004 Trumpet Print Edition

Big Louie’s Adult Superstore, The Lion’s Den, J’s Adult Boutique, Starlite Adult Video. These aren’t dingy, back alley shops in some big city’s dark corners. These are a few of the seven “adult” establishments lining a 250-mile stretch of Interstate 44 that cuts through Missouri. Bold billboards announce each one, tantalizing travelers with offers of huge selections of pornography—followed by conspicuous exit now signs. And you don’t have to go far to accept these offers: The stores are in plain view from the highway.

This Midwestern strip of i-44—with an average of one adult store every 35 miles—is a good representation of how big the adult industry really is. There are more adult bookstores in the United States than there are McDonald’s restaurants. Pornographic products outsell diapers two to one. And Americans spend more at strip clubs than at Broadway, regional theaters and orchestra performances combined.

The actual figures for how much porn takes in is up for debate—no one really knows. Some have estimated as high as $10 to $15 billion—more than Americans spend on major league baseball, basketball and football combined. Some say this figure was fabricated, mostly by the porn industry itself, which, like Hollywood, likes to exaggerate its figures. One conservative estimate says closer to $3 billion a year (excluding strip clubs). Five years ago, according to a article, adult videos were generating $5 billion in sales and rentals. It also estimated the global industry of legal porn as raking in $56 billion a year. (Note the term legal.)

Most analysts agree that porn on the Internet—cyberporn—is taking in an estimated $1 billion a year. The number of erotic webpages has rocketed 1,800 percent since 1998, to where in 2003 there were 1.3 million pornographic sites—according to a study released in September 2003 by the Seattle-based Web-filtering company n2h2. A 2002 n2h2 report predicted that the online porn industry would grow to become a $5-7 billion business within five years.

These figures at least get us in the ballpark: Porn is huge.

Is this the sign of a healthy society, or one plagued with sexual obsession? Is porn therapeutic or harmful? What is the plain truth about pornography? Don’t be so sure you know!

If you believe porn is wrong, do you know why? There is a deep spiritual dimension that few understand, and it must first be discussed before we can answer this matter sufficiently. It comes from the foundation of all knowledge—God’s Word, the Holy Bible.

But isn’t the Bible out of date? you might ask. This magazine often—in the context of world events—trumpets how utterly current and even ahead of its time God’s Word is. It tells of future events before they happen. Is that an out-of-date book? Is it really just the prudish teachings of some ancient clerics? Or could it be the instruction manual for our everyday existence—current to this very moment and on into the future?

The Vital, Missing Dimension

Adult industry advocates say porn helps us become more open and comfortable about sex—that people still too often think of sex as something shameful, dirty. This “open” philosophy, in fact, sums up the “New Morality”—a movement after World War i that brought about drastic social changes thanks to research by Sigmund Freud a few years prior. Before the First World War it was illegal in the U.S. to publish, sell or distribute material on sex. Under the New Morality, however, sex became freely and openly discussed.

Attitudes changed about sex. Under the puritanical Old Morality, some authorities claimed that a woman’s visible arms, ankles or elbows were “obscene.” Some thought the Bible to be obscene, because of its plain teaching on sexual matters. But now, proponents of this New Morality would have us think that nothing is sexually obscene. And the Bible, in its balanced view, is now seen as prudish.

During this flourishing of the New Morality, Herbert W. Armstrong was able to offer “open,” frank, plain teaching on the subject of sex in his book The Missing Dimension in Sex. He used society’s openness about the subject to trumpet this vital biblical understanding, and condemned—as porn advocates do—the prudish society that branded sex as shameful. But he also sternly condemned the side of the sexual pendulum to which society had swung.

What pornophiles don’t realize is that the same spirit responsible for inspiring this present era of openness and unlimited sexual freedoms is the same spirit that, for centuries, held the Western world in the grip of thinking that sex is shameful.

Satan, once the archangel Lucifer, is the god and deceiver of this world (2 Corinthians 4:4; Revelation 12:9). The Bible reveals that angels are sexless (Matthew 22:30). And this evil angel hates sex, marriage and family most of all because it pictures God’s family plan for mankind. Satan’s broadcasts throughout man’s history caused the developed world to view sex the same way he did—as being shameful, nasty, embarrassing, something on the animal level. He was, after all, responsible for Adam and Eve discovering their nakedness and their being ashamed of it (see Genesis 3).

But God is not ashamed of sex. He created it! The Old Morality—under which proper education on sex was scarce—did irreparable harm to marriages and families! But this doesn’t mean that the New Morality—this opposite extreme—has helped. As Mr. Armstrong said in his book, if the Old Morality was the frying pan, this New Morality is the fire.

With the onset of the New Morality came increasing advancements in mass technology. The sexless Satan—hostile to God, His creation and His plan—used this technology to broadcast his “new” message. He still thought of sex as shameful, nasty and degrading, but instead of holding the world in prudish ignorance and embarrassment of it, he let the floodgates open so wide that sex, as in ancient times, became an idol. Society was now free—emancipated—from the restraints of yesteryear.

Through the sheer prevalence of sex in these modern media, he could discredit the institution of marriage and family. This New Morality—with its message that any sexual restraints are evil—would do even more for his cause than the Old. God’s family plan—pictured through family, marriage and sex—could be marred in the minds of the deceived millions. Divorce rose sharply, as did cohabitation of couples—heterosexual and homosexual. Sexually transmitted diseases, unwanted pregnancies and abortion became rampant. The number of sexually active teenagers grew. By 2002, 34 percent of all births in the U.S. were to unmarried women. And more than half of all marriages in the U.S. ended in divorce.

This “new IMmorality”—this unbridled openness about sex—flourished through mainstream media: books, magazines, and, eventually, movies and television. But it is most epitomized by “adult entertainment.” Pornography’s content encapsulates all the messages of Satan’s most cunning deception.

For some decades, porn proliferated mostly within an underground subculture. Then, with new mass technology in the 1990s, namely the Internet, this New Morality went to the next level. Millions could view pornography anonymously, until it came to the point where society in general was not ashamed of its fascination with erotica.

It’s IN, and It’s Everywhere

Just as society shed its sex-is-shameful outlook for anything goes, the same has happened in pornography. Once the guilty pleasure of the underworld, porn is now hip—it’s in. And if you think it’s harmful, you are laughably out of touch—or so the thinking goes.

Porn is “the new martini,” as a character on a popular television drama put it—a favorite at parties. Who can forget the shocking Frontline report in 1998 about the children of Rockdale County in Georgia, where scads of affluent teens gathered in their rich parents’ homes for sex parties that included imitating the acts they viewed on the Playboy channel?

Porn is quickly becoming America’s favorite pastime. The entertainment industry is catering to it by churning out more adult movies—over 10,000 a year—than Hollywood feature films (only 400). The moguls of the porn business are not just a few sleazy-looking kingpins from the seedy underworld. They are “respected” businesspeople who, after a hard day of filming sex, go back to their pads in the burbs, with the wife, the kids and the family pet.

Producers and actors within the industry are achieving household-name status. Porn queen Jenna Jameson has been on tour with mainstream talk shows, had billboards in Times Square, been the subject of documentaries—mainly to promote her sordid autobiography, How to Make Love Like a Porn Star. She has made prime-time tv appearances, playing herself on one nbc drama last season. “The culture doesn’t just shrug at her celebrity; it embraces it” (Wall Street Journal, August 27).

And even though Jameson turned down having a reality show on network television called Who Wants to Be a Porn Star, a network in England finished its first season of a porn-style reality show in August, whose winner was awarded a porn film contract.

So who does want to be a porn star? Industry execs will tell you that girls aren’t necessarily being recruited to play these parts. Many are lining up to audition to partake of the average wage of $400 per scene.

In addition to porn stars achieving mainstream celebrity status, prime-time television has embraced pornography’s influence on our culture. On the networks, there was Fox’s effort at a drama about the industry—Skin—and a new openness about it on prime-time sitcoms like’s documentaries glorify the adult industry, while Showtime’s Family Business—about porn producer Adam Glasser and his accountant, his 70-something-year-old mother—has finished three seasons. There have been executive meetings between Adult Video News executives and the networks about televising the avn Awards Show—the “Oscars of porn,” as it is called.

Every medium has catapulted pornography into the limelight of acceptability: music videos, radio talk shows, major films. Hollywood has glamorized porn in movies like Wonderland, starring Val Kilmer. Boogie Nights earned Burt Reynolds an Oscar nomination. And 20th Century Fox’s most recent porn-based flick, The Girl Next Door, is about a teenage boy who falls in love with a former adult film star.

Consider also the increasing amount of material making it into mainstream entertainment—what we could call “pop porn.” This is material that, at one time, was cutting edge even for pornographers like Larry Flynt—particularly hbo’s triumph with Sex and the City, which tackled subjects that Flynt said he could barely broach in the 1970s. Even movies with less than an R rating now include “pornographic” material—either implied or shown, comedic or serious—that involves once-off-limits perversions.

Well, so what? Is this truly harming us? The facts, when viewed in light of the spiritual dimension—God’s perspective—will make the answer plain!

What IS Pornography?

Before we proceed any further, let us define a few terms. We have generally been using the word pornography to describe all “adult entertainment.” Some want to call it something more like “sexual material,” since pornography carries a negative connotation. Others use the more artistic term erotica to soften its reputation. But the actual etymology of pornography shows it to mean “writings of prostitutes.” It was material intended primarily for sexual arousal, particularly in men.

But even in this field, there are varying levels, or degrees, of pornography. The two most common classifications are softcore, or soft porn—the most commonly marketed—and hardcore porn. Hardcore usually involves what could legally be considered “obscene,” meaning that it offends the accepted norm of sexual morality. This segment usually constitutes “illegal” porn. It is not as pervasive as softcore material and usually includes a massive amount of actual sex acts, bestiality and sadomasochistic abuse—i.e. violence and torture in combination with sex.

Not surprisingly, it’s hardcore material that is gaining more momentum in the industry (the reasons for which we’ll see a bit later). In Britain, 33 percent of all Internet users are accessing hardcore porn sites. The statistic about one in five boys and one in 10 girls having their first exposure to pornography by age 12 is referring also to hardcore porn.

Harmful Effects of Porn

So how does pornography affect our society? First let’s look at the most extreme effects—pornography’s association with criminal behavior and sexual deviancy.

“I wasn’t some guy hanging out in bars, or a bum. I wasn’t a pervert in the sense that people look at somebody and say, ‘I know there’s something wrong with him’ …. I was a normal person. I had good friends. I led a normal life, except for this one, small but very potent and destructive segment [pornography] I kept very secret and close to myself.” These were the words of the infamous serial killer Ted Bundy to Dr. James Dobson hours before his execution (afa Journal, September 2004).

Though pornography doesn’t necessarily make all of its consumers criminals, it does, with nearly all criminals of a certain ilk, play a key factor in their antisocial behavior. Research has found that almost half of rapists “used pornography depicting consenting sex to arouse themselves before seeking out a victim. In another study, sex offenders said that pornography increased their appetites for deviant activities” (

Eighty-six percent of rapists admit to regular use of porn, and 57 percent admit to imitating porn scenes in committing their sex crimes. An fbi report found that 81 percent of serial sex murderers admitted to using pornography (

Yet “free speech” advocates, like Feminists for Free Expression, will state on their website: “No research … finds a link between ‘kinky’ or ‘degrading’ images and violence. … The derailed impulses of child abusers and rapists are caused by childhood traumas. ‘They are not,’ wrote leading researcher John Money, ‘borrowed from movies, books or other people.’”

That’s about as logical as saying that an apple pie is made with apples and nothing else! Sure, childhood traumas play a part—but even viewing porn is a kind of “trauma”; rapists are more likely than non-offenders to have viewed hardcore porn before age 10. Porn is simply a major ingredient in the antisocial behavior of child abusers and rapists.

Ted Bundy said he didn’t know a violent sexual deviant in jail who wasn’t addicted to porn. In fact, in an interview shortly before his execution, he said, “You are going to kill me, and that will protect society from me. But out there are many, many more people who are addicted to pornography, and you are doing nothing about that.”

Dr. Victor Cline—an expert in the field of sex addiction and pornography—has done extensive research into porn’s relationship to criminality. He tells of one businessman, head of a church committee on helping troubled children, who became a serial rapist from watching porn. He had a healthy childhood and made good grades in school. “His first rape,” Cline wrote, “was triggered by seeing a close resemblance in the woman he assaulted to the leading character in a porn movie he had seen earlier in the day” (

Dr. Cline has many more stories. He relates one of a 12-year-old boy who, a few days after listening to dial-a-porn, sexually assaulted a 4-year-old girl in his mother’s day-care center. “He had never been exposed to pornography before. He had never acted out sexually before and was not a behavior problem in the home” (ibid.).

Effects on the Family

The Trumpet’s editor in chief has frequently said that pornography “tears the family apart.”

Pornophiles would have you believe otherwise—that it’s harmless, constitutional, and even a healthy mental excursion, especially if used in moderation. They’ll tell you it’s beneficial even if it’s secret and is kept from the spouse (46 percent of all porn site users are married). They talk about the three A’s when it comes to cyberporn: It’s accessible, affordable and anonymous. They’ll quote a 2001 survey of over 7,000 adults that found two thirds of Internet porn users say it hasn’t affected their relationships.

On the other hand, there are the two thirds of divorce lawyers at a 2003 convention who said the Internet played a significant role in divorce.

Those who say pornography is harmless—that it has no effect on the consumer—are simply ignoring the fact that our educational system is based on the notion that printed material will influence minds; our advertising industry is basing its profits on the concept that people are motivated to act by visual images; and many works of art and literature often have profound effects on people.

Many say that porn makes us more open about sexuality—helps us remove our inhibitions. Yet pornography is often used in secret—fostering deception within a marriage.

Experts say that “men who frequently view porn may develop unrealistic expectations of women’s appearance and behavior, have difficulty forming and sustaining relationships and feeling sexually satisfied” (Time Magazine, January 19).

This fact is backed up by a story Mr. Armstrong told in Missing Dimension. A married man once decided to dabble in an affair. As Mr. Armstrong explained, he then entered another affair. “Soon he discovered that somehow his wife had changed. She was no longer so beautiful and attractive. She seemed no longer desirable. He couldn’t figure what had happened to her. Of course nothing had happened to her—it had happened to him!”

Porn does the same thing to marriages.

Advocates of the New Morality—and usually also of porn—say that we are more sexually fulfilled because there are no restraints. But ironically, our marriages are not happier!

Porn also has devastating effects on children.

One girl whose father was a respected man in the community became wise to her dad’s growing addiction to porn. “I noticed my dad becoming less and less the fun social person I had always pictured.” She noticed his lack of eye contact with her and her friends, and conversation between father and daughter dwindled (afa Journal, op. cit.).

Another young girl who was affected by her father’s obsession with porn was Tonya Flynt, daughter of the famous porn guru and founder of Hustler magazine, Larry Flynt.

Tonya was raised in the world of porn. She watched her father in the grips of this obsession, was abused by him, and was finally institutionalized at age 13.

Later in life she established the Tonya Flynt Foundation Against Pornography and Sexual Abuse. She aims to change society’s view of the porn-is-victimless myth. “How can anyone believe that lie?” she asks. “Yes, I grew up around it; my life was nearly destroyed by it. …

“I believe in the First Amendment,” she states. “I believe that is a wonderful freedom. But with that freedom comes responsibility. …

“Pornography has shaped our television, movie industries, art, theater, music, public decency and our basic institution of marriage and family. Pornography’s greatest harm is its ability to desensitize us to evil. It is impossible to measure how greatly it has rotted the core of our nation” (

Porn destroys families—plain and simple. And as the family is the foundation of a nation’s stability, Flynt’s daughter is right: “[I]t has rotted the core of our nation.” There is not one redeeming quality in something that causes that kind of harm in people’s lives! It destroys nations!

Harmless to Singles?

“Cyberporn is not just breaking up marriages,” writes Lynn Sherr. “It can have another, even more insidious effect: keeping young people from even forming relationships” (, August 27). In one sense, pornography essentially eliminates the need for a dating life, for marriage and for family. If someone is getting his or her sexual fulfillment and “intimacy” from a computer screen, what incentive is there to find that special someone and settle down?

The Almighty God created sex to strengthen love within the family. He did not intend for unrestrained use of it to eliminate the need for family.

Consider the “pop porn,” or the sexual content so prevalent in tv programming today, and the effect it is having on our teenagers. “Teenagers who watch a lot of television with sexual content are twice as likely to engage in intercourse than those who watch few such programs,” according to a study of nearly 1,800 12-to-17-year-olds (Reuters, September 7; emphasis mine throughout).

The study found that “shows where sex was talked about but not depicted had just as much impact as the more explicit shows” and that “12-year-olds who watched a lot of sexual content behaved like the 14- or 15-year-olds who watched the least amount.” Reuters continues, “It did find that the 10 percent of those who watched the most television with sexual content were twice as likely to have initiated sexual intercourse when checked a year later than adolescents who were among the 10 percent who watched the least amount of sexual content.”

Suggestive movies and television inflame a strong pull in people—especially teens, as this study shows. How much more does pornography?

Porn destroys human relations even on a non-sexual level, by reducing one’s capacity to love, says Dr. Cline. “[I]t results in a marked dissociation of sex from friendship, affection, caring and other normal healthy emotions and traits which help marital relationships” (op. cit.).

Pornography affects any mind—married or unmarried—old, and especially young. How?

Consider the messages of pornography. What is the attitude behind it?

First, it depicts an unrealistic and wrong view of sex. Fewer than 5 percent of all sexual encounters in pornography depict “normal” heterosexual intercourse. Someone who knew nothing about human sexuality and decided to learn about it purely from adult entertainment would think that one in five sexual encounters involved simulated or actual violence and torture.

Part of this view of sex is the message that casual sex carries no negative consequences or responsibility. That sex with anyone, anytime, anyplace, is acceptable and even beneficial. That sex, in the fantasy world of pornography, is the same thing as love and intimacy.

Another message in pornography involves the degradation of women (and, in less mainstream content, children). Playboy’s women are called “bunnies” or “playmates.” Penthouse calls its women “pets.” The theme of porn is that the woman’s only purpose is to meet the sexual demands of men.

Porn often depicts rape as pleasurable to a woman. It also perversely depicts torture and prostitution as exciting and enjoyable.

Two former adult movie critics told London’s Guardian newspaper, “[W]e have never properly resolved what we think about how, why and whether it is degrading to women. We suspect that it might be. We suspect that pornography might be degrading to everybody” (Nov. 8, 2003).

And that’s just the point. Pornography is degrading to everyone!

It is from the mind of the devil! He broadcasts his messages through pornography—that humans are slaves to their sexual urges and that marriage and family are obstacles to sexual fulfillment. In fact, usually the only occasion a “family” is depicted in pornography is in the context of incest.

As Mr. Armstrong eloquently explained in Mystery of the Ages, “Satan has seized on this sin to make it far more universal than is generally realized. Satan, himself, has no sex. He is resentful of the fact God has endowed humans with sex. Therefore, Satan sways humanity into making sexual sins one of the most universal and destructive.”

Harmless If in Moderation?

Even if porn is used in “moderation,” even if it does not foster an addiction, we still must understand the deep evil behind pornography.

Understanding God’s purpose for sex, marriage and family—and how much Satan wants to destroy that understanding—we must understand that pornography is becoming one of the devil’s most powerful weapons on our minds, to make us hostile toward God’s transcendent purpose for creating humanity!

With porn, there is no “moderation.” It’s like saying you can consume rat poison as long as you do it in moderation (and you don’t tell your spouse).

The fact of the matter is, there is nothing moderate about our society’s use of porn. We are glutting ourselves on this poison!

Desensitization and the Future of Porn

Present trends indicate that pornography is inevitably going to get more prevalent and perverted. It will happen through a “creeping cycle of desensitization,” as one author put it.

This author was referring to the increase of objectionable content in movies and on television. Back in the 1960s and 1970s, when the film industry had to compete with television, films started to include content that wasn’t available on the mainstream medium—tackling more “mature” subjects and including more violence, sexual content and “adult” language. The film industry would go as far as it could in this direction until there was a public outcry—then it would pull back slightly to appease the censors. A little later, it would proceed forward again after people had become desensitized to the content.

The same is true of most media outlets today, which are profit-driven businesses that compete for the attention of consumers. Often what gets the attention is something bawdier and seedier. If you watched a reality show last season where someone ate dead bugs, what will it take to get you to tune in to a competing reality show? Maybe it advertises that its contestants will eat live bugs. And so it goes for sexual content in movies, on television and in pornography. When consumers get desensitized to something, another business goes a step further to produce something that will sell.

As Mr. Armstrong wrote in Missing Dimension, “Today we have ‘progressed’ completely past ‘topless’ bars and restaurants. When they became no longer shocking, ‘bottomless’ followed, and finally, the supreme jolt as a shocker—and in several places—to entertain a lust-gripped audience, actual live sexual intercourse performed in the nude on stage. Not simulated. ‘For real!‘” This book was revised in the late 1970s and still holds its currency! “Actual live sexual intercourse” is common in the adult entertainment business, and it is the boon of the pay-per-view industry.

As the cycle of desensitization occurs on television and in movies, pornography has to sink to new depths to satisfy its audience. As soft porn becomes more mainstream and part of the regular tv and film diet, cyberporn barons have to “upgrade” their services to include more material that you can’t get just anywhere.

Based on this cycle, we can see that porn is only going to get more obscene—and what was once considered pornographic will eventually become common fare for television and mainstream movie audiences. This, it could be argued, has already been happening for years.

Business of Porn

Porn is a business driven by this cycle of desensitization.

Ever since Hugh Hefner scraped together $7,000 to reprint a nude calendar of Marilyn Monroe, with a couple of articles (and sold 50,000 copies), businesspersons have discovered that porn is a logical choice for those out to make a profit—“profit through lust,” as Mr. Armstrong called it in Missing Dimension.

On one average workday, any person with a modest camera and a few thousand bucks can produce a porn film, sell it for $29.95 (or more) a copy, and make tens of thousands—even millions—of dollars.

On hotel televisions with pay-per-view capabilities, porn movies are rented 10 times as often as regular feature films—and they cost more. Do the math. It’s a profitable decision for hotels, which benefit from people’s addiction to porn—usually garnering 5 to 10 percent of the revenue that goes to distribution companies like LodgeNet or On Command.

Porn, because of its pervasive demand, is largely immune to the ups and downs of the economy. “If you look around at a lot of the other dot-com businesses out there, they’re not profitable,” says Cybererotica’s president Jonathan Silverstein. “We are very, very profitable. We’ve learned what it takes to make a dollar. Not just make a dollar, but make a dollar and make a dollar and make a dollar” (msnbc News, Aug. 9, 2000).

And this business will do anything to make a dollar. It won’t just play on the increasing desensitization of society. It often relies on subtle, deceptive traps to lure people into this addiction.

Adult websites reserve domain names that are similar to common website addresses—like—where if someone accidentally adds a letter or leaves one out—up comes the porn site. Some use common names you might never associate with a porn site.

Through pop-up ads, banners and a technique known as “mousetrapping,” porn sites can lure unsuspecting Web surfers. If surfers who accidentally happen on some porn sites try to close out of the site, they are sent to another webpage automatically—which can happen dozens of times until the users panic and restart their computer.

Little wonder that in 2001, 70 percent of 15-to-17-year-olds said they’d accidentally seen porn on the Net (Time, op. cit.).

The Ultimate Future of Porn Because of the greed-driven nature of the pornography business and the cycle of desensitization afflicting our society, porn is destined to thrive and become more normalized in mainstream society. We will see it do more damage to marriages and families.

Don’t get caught in its obsessive trap! Realize the devilish motives behind this industry—don’t fall victim to it. If you believe porn is evil, you are not “laughably out of touch.” You are not anti-sex. PORNOGRAPHYis anti-sex!

Embrace God’s view of sex. God is pro-sex. He created it—and for a transcendent purpose! Used properly, it will help to keep families intact and nations strong. It will help bring us peace—within our homes and in society!

A time is coming soon when pornography will be completely eradicated—both through “government regulation” and the changing of human nature. When Jesus Christ returns to Earth, He will establish the government of God over this whole planet. That government will enforce the keeping of God’s perfect, beautiful, joy-producing law.

But it won’t just be through this government’s “regulation.” As Richard Nixon said, “When indecent books no longer find a market, when pornographic films can no longer draw an audience, when obscene plays open to empty houses, then the tide will turn. Government can maintain [barriers] against obscenity, but only people can turn back the tide.”

At the core, it is human nature that must be changed. And Satan—who broadcasts on humanity’s pulls and moods—must be removed. That is exactly what will happen. Soon he will no longer be able to transmit his anti-God, anti-family message.

Imagine this world of tomorrow! Obscenity will be done away through the presence of one “pure language” (Zephaniah 3:9). Artistic expression and freedom will be allowed within the confines of this pure tongue, and within the ultimate guidelines of God’s loving law.

Yes, a pure world is coming. But it is first coming through an intense purification process! God, in His Word, compares the end-time sexual craze in the Western world to that of Sodom and Gomorrah. And He says the same fate is coming on our people if we don’t repent! This coming Tribulation is the only way God will be able to get through. Thankfully, the world will be humbled, and society will be compelled to live by God’s righteous standard.

In the World Tomorrow, all will keep this law. Yes, there will be restrictions—restrictions from things that harm us, just as a parent would restrict his toddler from running into a busy intersection. Think of a world free of pornography—a world where sexual activity is used and cherished as God intended it.

There will be no more rape, abuse, child molestation, venereal diseases, illegitimate children. Proper sex education will be of high priority in all homes, and will be supported by right teaching in all schools. Married couples will trust each other. No more deception—either from illicit affairs or clandestine moments with the computer. This trust will engender sexual bliss within all marriages. Knowledge of the missing dimension in sex—God’s revelation—will be understood by all. Couples will not feel the need to turn to smut or other perverted sorts of sexual experimentation for any sort of fulfillment.

To understand how to live this abundant way today, it cannot be overstressed that you must have Herbert Armstrong’s book The Missing Dimension in Sex.

It was only 30 years ago that, when the predecessor to this magazine addressed the subject of porn, the solution it presented was simply to stay away from it—simply not to visit adult bookstores, shops or movie theaters. If only it were that easy today. Porn is thrust at us, through popular culture, tricky Internet ploys and the like. You must understand how to battle this pervasive element of our culture. You need to understand The Missing Dimension in Sex. Please request your copy today. Because it is so essential to your life, we can only offer it absolutely free.With reporting by Sarah Leap

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A Real Beauty


A Real Beauty

From the November 2004 Trumpet Print Edition

Holding it together at your mother’s funeral isn’t easy—particularly when you’re giving the eulogy. The video montage of her life helped in that regard. The pictures I saw made me smile—shots of my mother and father in Hawaii with my sister and me in tow, family portraits, dinner dances, speech banquets, vacations—they all brought back such wonderful memories.

But I nearly lost it at the last photo—the one displayed right before I spoke. It was my mom’s senior picture from high school. I’d seen it before, but not like this. As I sat in the audience, staring at this picture, it dawned on me that this beautiful, healthy-looking teenager who would later bring me into the world was now dead.

I never saw her at that time in her life—but I did see her the night she died. And she didn’t look much like that photo. Her skin had wrinkled over the years, her hair turned grey. The massive strokes she had in the months before she died marred her appearance all the more. Right toward the end, jaundice had set in and her body was swollen with fluid.

What a contrast to the physical beauty Western culture is so obsessed with. We glamorize beauty, among women especially, as if good looks and a youthful appearance are all that matters. In this world, physical beauty is almost everything, as attested to by the billions we spend each year on our looks: cosmetic surgeries like breast implants, liposuction, tummy tucks and face-lifts; Botox; makeovers; full-body waxing; chemical peels; colonics; manicures; pedicures—and on it goes. Even teenagers, thanks in part to popular reality shows and celebrities and models who keep getting younger, are joining the ranks of those willing to pay big bucks to alter their look or to “delay” the aging process everyone eventually goes through.

Now obviously, God wants us to be physically healthy and fit. He wants us to take care of ourselves—even our appearance. But just think of how different this world would be if we paid as much attention to inner beauty as we do outer beauty. Peter compared life in the flesh to a blade of grass or a flower. Grass withers, he said, and flowers fall away (1 Peter 1:24-25). James compared human life to a vapor that appears for a short time and then vanishes (James 4:14).

It’s no wonder God says beauty is vain! (Proverbs 31:30). It doesn’t last. And even before it fades, it can be dangerously deceptive. Lucifer’s heart was “lifted up” because of his beauty (Ezekiel 28:17). He couldn’t get his mind off his own beauty and it caused him to turn against and fight God. This is how Lucifer became Satan. And he has since foisted off on an unsuspecting and gullible world his interpretation of what beauty is (Revelation 12:9).

In examining one’s real worth—his or her beauty—God gives no thought or consideration at all to what’s outside. He always looks on the heart (1 Samuel 16:7).

In 1 Peter 3, God exhorts women to pay special attention to how they adorn themselves, but it’s speaking of spiritual adornment—“the hidden man of the heart, in that which is not corruptible” (verse 4).

This is where my mother put special emphasis. She had a wonderful gift of encouragement. People who stood in her presence always went away uplifted and happier. She handled herself with dignity and class.

She was a people person. Her last church service was nearly a year ago—there were a lot of visitors in town for a singles event. She was in bad shape—her health declining—but she wanted to be with the people, so she pushed herself. Three days after that, she had a massive stroke that left her without speech and paralyzed half of her body.

My mother’s 40-year career was in marriage and family. My sister would tell you this same thing—Mom was always involved in our lives. For me, she was involved in my life when I was a little boy, as a teenager, even on into my adulthood. She left a permanent mark on my life, showing me what it meant to serve and give—even to the point of real sacrifice.

She taught me about love, about authority and submission. She gave my life direction. She made my upbringing fun. She had such a wonderful laugh.

I tried to express this to her as she was dying early Sunday morning, September 5, but the words were hard to come by.

Now they’re not. She was a real beauty.

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Fannie Mae and Freddie Mac

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Mortgage Loan Corporation (Freddie Mac) were originally chartered by the U.S. government but have since become private corporations. They are key players in the U.S. housing market. Home prices can only go up if there are new mortgage loans available at the increased price. Enter Fannie Mae and Freddie Mac. Here’s how they facilitate the housing bubble.
From the November 2004 Trumpet Print Edition

In most cases, a home buyer does not have the cash to purchase a home, so he takes out a mortgage from a bank, savings and loan association or other mortgage lender. These institutions that originate the loan are known as primary lenders. The primary lender can hold on to the loan until maturity (usually 30 years), collecting principal and interest payments during this time. Or, it can sell the loan in the secondary market to corporations such as Fannie Mae or Freddie Mac. This gives the primary lender cash which it can use to originate a new mortgage. The process repeats itself over and over.

But where do Fannie Mae and Freddie Mac get their money? Either they issue corporate bonds (and use the proceeds from these bond sales to buy the mortgages) or they sell previously acquired mortgages which are grouped together into mortgage-backed securities (derivative-like instruments) to third parties such as insurance companies, mutual funds or pension funds. These third parties then receive the income stream from the underlying principal and interest payments.

Fannie Mae has even gone one step further—taking the mortgage-backed securities and grouping them again into more complex derivatives called Real Estate Mortgage Investment Conduits (remics). “Approximately half of all Fannie Mae’s [mortgage-backed securities] have been transformed into these highly speculative remic derivative instruments.

“Thus, what started out as a simple home mortgage has been transmogrified into something one would expect to find at a Las Vegas gambling casino. Yet the housing bubble now depends on precisely these instruments as sources of funds” (Executive Intelligence Review, June 21, 2002).

Fannie Mae and Freddie Mac are probably the top two private company debt holders in the world. Together they now own over $4 trillion of debt linked to home mortgages—more than 75 percent of single-family mortgages in the U.S. This dominance of the housing market by just two corporations disturbs many, including Federal Reserve chairman Alan Greenspan.

In a speech to the Senate Banking Committee on February 24, he suggested that these companies have an unfair competitive advantage because they are perceived to be backed by the federal government even though they are not. He warned that they are expanding at a pace that could threaten the stability of the entire financial system should either of them get into trouble! (Freddie Mac has already admitted to overstating profits by nearly $1 billion in 2001.) Greenspan further admonished that the companies should stick to core competencies and avoid branching out into complex derivatives.

Currently, the companies are regulated by the Office of Federal Housing Enterprise Oversight (ofheo), which has limited oversight powers. Greenspan urged the Senate Committee to create a tough new agency to more directly supervise the two companies and advised them that “preventative actions are required sooner, rather than later.” However, Fannie Mae and Freddie Mac have powerful lobbyists in the halls of Congress. Previous efforts to control them have been fruitless.

On September 22, just seven months after Greenspan’s admonition, ofheo released a shocking report. It documented how Fannie Mae’s top management intentionally rigged expenses in order to earn higher bonuses, meet financial forecasts and most importantly, stabilize earnings. One executive admitted this was done “to make sure Fannie [Mae] would be perceived as a low-risk enterprise” (BusinessWeek Online, September 23).

The demise of either or both of these companies because of a severe housing bubble bust or other financial problems would generate a colossal catastrophe for the banking system, mutual funds, pension funds and the U.S. economy.

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The Biggest Bubble Ever

From the November 2004 Trumpet Print Edition

No one disputes that housing prices in the United States since 1995 have soared way beyond inflation. However, that alone does not reveal a housing “bubble.” Escalating home prices could be caused by a shift in fundamental economic factors that leads people to value home ownership more than they did before, in relation to other goods and services. On the other hand, if home prices rise without regard to real value, then we have a bubble in the making. A bubble forms as rising prices lure more buyers into the market who are looking to build equity before prices rise further, regardless of the real value of the asset. This increases demand, prices rise even more, and the cycle continues.

Before the technology stocks (for example, “dot-coms”) crashed in 2000, many economists argued that such stocks were on the verge of cutting-edge technology that would revolutionize business. They were not overvalued, they said. There was no stock bubble, they insisted, in spite of outrageous price-to-earnings ratios compared to historical standards. But they were wrong. Since the dot-com bust, the technology stocks have not recovered and the stock market as a whole has been stagnant.

Likewise today, some argue that there is no housing bubble. How can we know if there is, and if so, what are the ramifications if it bursts—not only for the U.S. but for the many countries around the world that have experienced similar trends in housing in recent years?

A Merrill Lynch economist, David Rosenberg, identifies six characteristics of any kind of asset bubble: overheated prices, over-ownership, too much debt, speculation, complacency and denial. Let’s examine these factors in light of the U.S. housing market.

Evidence of a Housing Bubble

Overheated prices. Until 1995, housing prices largely kept pace with inflation. In the last nine years though, home prices on average have spiked 35 percent after adjusting for inflation. In some areas (mostly coastal cities) home prices have skyrocketed by incredibly higher margins than that. In San Diego County, for example, the median price of a home is now $472,000. (That means that half the homes sell above that price and half of them sell below it.) That represents an increase of 129 percent in just five years! Yet the county’s median income, at $52,000, has gone up only by about 11 percent during that time.

On the national level, the average house now costs 3.4 times as much as the median family income—a new record—19 percent above the average that stood for a quarter of a century between 1975 and 2000. Home prices cannotperpetually rise faster than incomes. Since they have for four years now, it suggests that a bubble has formed and prices would have to drop substantially to return to the average long-term ratio.

Another indication that homes are overpriced is that the real costs of owning compared to renting have diverged dramatically in the last few years from the long-standing normal pattern. If demographic forces were driving the demand for housing, the surge in housing would be reflected in both the housing and rental markets. But that is not the case. There is plenty of housing available on the supply side of the equation. Rental vacancy rates hover around 10 percent, the highest since the Census Bureau started recording the statistic. In the downtown areas of some major cities, rental rates have been declining since 2001.

According to the Economist, the ratio of house prices to rents is a very good indicator of whether homes are fairly valued. “[T]he price of a house should reflect the future benefits of ownership, either as rental income or in the rent saved by an owner-occupier. America’s ratio of house prices to rents is at a record high,26 percent above its average over the 25 years to 2000” (September 11; emphasis mine throughout).

Some say that this is an anomaly attributable to very low mortgage interest rates. That actually supports the view that housing prices are in a bubble since interest rates cannot stay low indefinitely, especially with high federal government budget deficits projected into the foreseeable future. Without substantial growth in disposable incomes to offset interest rate increases, current prices are unsustainable.

Over-ownership. According to a study by the Center for Economic and Policy Research (August 5, 2002), the housing share of total consumer expenditures increased sharply in the ’70s and early ’80s and the rate of increase slowed suddenly in the mid-to-late ’80s. This corresponds directly with the history of the baby boomers that were starting families in the ’70s and early ’80s and were largely living on their own by the late ’80s. Using data from the Bureau of Labor Statistics, the study shows that as baby boomers approach retirement, the housing share of consumer expenditures should be falling (under normal circumstances). That’s not what is happening.

Furthermore, the average rate of home ownership for a quarter of a century has been 65.2 percent. Currently, 68.6 percent of Americans own their own homes. That represents several million households above the norm. It would not be a concern if this were due to rising incomes. But it’s not. Rather, it is because more people with marginal credit histories and low incomes are qualifying for home loans. For example, low-income families can now borrow 103 percent of a home’s price from the Federal Housing Administration! In summary, sub-prime lending (to home buyers with poor credit) has gone up by 25 percent in the last decade.

Today’s frenzy to purchase a home aided by lenders’ willingness to lower the standards will result in tomorrow’s spate of foreclosures. Too many are over-extended, and that ties in to the next point proving the housing bubble is real:

Too much debt. About half of the lowest-income households pay out at least 50 percent of what they earn toward housing—far more than the long-standing guideline of 28 percent suggested by the Federal National Mortgage Association (“Fannie Mae”). In addition, homeowners borrowed a record $138 billion against the equity of their homes last year, helping them buy new cars, appliances and other goods.

One of the most remarkable statistics is that mortgage debt has climbed even faster than home values. The ratio of homeowners’ equity compared to market value was more than 67 percent for three decades during the ’60s, ’70s and ’80s. In the last 20 years, it averaged 61 percent. Today, it stands at a mere 55 percent, which is particularly striking since the population is quite a bit older, on average, than in prior decades. This shows that people’s homes are far more leveraged today than they have been historically.

Meanwhile, in the last three years, despite record low interest rates, “[t]he number of mortgages more than 90 days past due is up 20 percent, the number of foreclosures is up 18 percent, and the number of household bankruptcies is up 33 percent …” (Time Magazine, September 13). These figures will soar as interest rates climb and as housing prices level off and start to decline. Many home buyers who have not qualified to lock in to a fixed interest rate will find themselves in trouble with more mortgage debt than they can handle—and unable to sell their home at a high enough price to recoup their investment.

Speculation. One way people have traditionally built wealth is through home equity. Now, however, in order to be able to increase their consumption today, many forego that future wealth hoping their homes will continue to rise in price to an unreasonable degree. Several recent studies show that people are counting on their homes to provide a lot of wealth in the future. Many older people, for example, anticipate selling their home and moving into a smaller one, hoping that the net equity proceeds from the sale will provide a large part of their retirement income. A bust in the housing bubble could shatter those dreams.

It’s also worthy to note that after the dot-coms crashed in 2000, home prices really started to soar, especially in coastal areas. This suggests that speculative money jumped from stocks to real estate. What this indicates, along with the other factors discussed earlier, is that many people are buying houses as investments they hope will rise in value, rather than, above all, as places to live. A major factor driving up sales is the expectation that prices will be higher in the future.

Complacency. It’s never been easier to buy a home, but many borrowers are getting hooked on risky loans. Lenders are continually coming up with more unusual (and risky) mortgages to allow less-qualified buyers—even those with limited cash and shaky credit—to purchase a home. Many “predatory” lenders are making offers that are practically irresistible. The banks and mortgage companies are often complacent themselves because more than 75 percent of the single-family mortgages they originate are sold in the secondary market to either Fannie Mae or Freddie Mac—government-sponsored private corporations that assume all the risk.

A recent survey commissioned by the Consumer Federation of America (cfa) shows that many Americans, especially low-income families and minorities, don’t understand the risks inherent within adjustable-rate mortgages (arms), for example. The payments on these mortgages increase as interest rates climb. “Given the high probability of interest rate increases, an adjustable-rate loan made to a family which can barely afford the initial monthly payments represents a ticking time bomb,” said cfa Executive Director Stephen Brobeck (Los Angeles Times, August 1).

arms are now preferred by 30 to 35 percent of mortgage purchasers, yet most people couldn’t tell you how high their mortgage payment could go when interest rates rise, according to Catherine Williams, vice president of financial literacy for Consumer Credit Counseling Service of Greater Chicago.

Denial. Some economists deny there is a housing bubble, especially if they work for realtor associations. According to cbs MarketWatch, even Freddie Mac’s deputy chief economist insisted there is no housing bubble (September 8). One argument some forward is that housing prices are strictly regional in nature so a national housing bubble is impossible. However, the Economist refers to a study that shows home prices are overvalued in 20 states that represent more than half of America’s population (op. cit.). When enough regional bubbles start popping so that their impact is felt nationally, no one will question that a genuine national housing bubble exists.

It is clear that all the signs of a classic bubble persist in the current housing market. When it will pop is another question. Where interest rates are headed next may reveal the answer.

Interest Rates Are Key

In essence, the housing bubble emerged as a result of loose monetary policy designed to stimulate the stagnant economy. From January 1996 to June this year, the Federal Reserve increased the supply of cash by 69 percent and bank deposits grew by 111 percent. When there’s more money circulating, the cost to borrow it (interest) goes down. Consequently, banks have been able to instigate a massive borrowing boom thanks to lower interest rates and deposits that more than doubled in just eight years! This encouraged consumers to keep spending (although it was a debt-fed consumption) and was especially helpful in the short term: both after the 2000 tech-stock crash, and after the economy slumped in 2001. It also helped mitigate the damage from 9/11. But quick and easy economic solutions usually have a side effect. The cheap credit spurred by remarkably low interest rates also helped inflate the housing bubble big time.

Perhaps the best indication that the bubble is going to pop is that interest rates are heading back up (see May Trumpet, “When the Debt Bomb Explodes” on under Issue Archives) and many economists foresee that mortgage rates will likewise climb in the next few years. The Federal Reserve, even with the recent rate hikes, is still lending to banks below the inflation rate. The average lending rate for 20 years has been more than 2 percent above inflation. The pressures coming to bear could push the rates up by as much as 2 percent within a year or two and even higher thereafter.

Why is that important to the housing market?

First, more and more people are financing their homes with adjustable-rate mortgages. Compared to traditional fixed-rate mortgages, the monthly payment is less initially. However, as interest rates climb, so does the monthly payment. A variation that’s becoming more popular, especially in the most expensive markets, is interest-only loans that require buyers to pay only interest for a fixed period of time.

To illustrate the danger of escalating interest rates, suppose you have a 30-year $100,000 arm, currently at a 6 percent interest rate. Your mortgage payment would be about $600 a month (not including taxes and insurance). Were rates to go up by 2 percent, your payment would increase to $734 a month—about $1,600 per year more. A 4 percent increase would cost you $878 a month, or about $3,330 more per year. For a $200,000 mortgage, you can double the amounts. While many arms limit how much interest rates can go up (usually in the neighborhood of 5 percent), some arms have no caps! Even with a cap though, your mortgage payment could increase by 50 percent or more. Too many Americans are not familiar with the risk they have taken.

According to the cfa study referred to earlier, Americans who say they prefer arms over the traditional fixed-rate mortgages are generally younger, poorer and have less education. This suggests a lack of financial knowledge associated with the preference for arms. Yet in a bid to keep business booming, lenders and bankers have shoveled out these loans almost like the free suckers you can pick up at the bank teller window.

In 2003, about 19 percent of all home mortgages issued were arms, although in the fourth quarter, it had shot up to 27 percent. By the second quarter of this year, 35 percent of new home mortgages were arms. And in some of the most expensive markets, arms are now the most popular type of mortgage! In California, close to 75 percent of home buyers in August used arms. Of the total home mortgage debt outstanding in the U.S., about 20 percent—more than $1.3 trillion—is financed by an arm. That is rather shocking.

Yale economist Robert Shiller, author of the book Irrational Exuberance, which accurately forecast the stock market bubble just before the crash of 2000, is weighing in on housing. He believes the popularity of arms is creating the risk of a “serious debacle” and that the current housing market, showing signs of “irrational exuberance,” bears all the hallmarks of a housing bubble.

The Federal Deposit Insurance Corporation (fdic) in its spring outlook letter expressed concern about the trend toward arms because more people with “high leverage, volatile incomes or limited wealth” are being lured into the housing market.

When interest rates go up on these arms, a lot of people won’t be able to manage the payments because they have purchased homes they can barely afford. Foreclosures and bankruptcies will soar. The housing bubble will start to deflate and prices will begin to fall.

Rising rates would also affect potential new home buyers, pricing them out of the market, unless home prices were to drop enough to compensate. According to Business Week, if 30-year fixed-rate mortgages were to rise by just 1 point from 6.2 to 7.2 percent, for example, house prices would have to fall by 11 percent to keep mortgage payments the same. A rate of 8 percent would require a 20 percent drop in prices to keep payments level (July 19).

Finally, climbing rates will impact consumers who have used their homes as a sort of atm machine—drawing money out with home equity loans to purchase items they couldn’t otherwise afford. This has helped prop up the U.S. economy (consumer spending is 70 percent of gross domestic product) only temporarily. Generally, homes that have been leveraged already cannot continue to be leveraged, especially when prices level off and then start to nose-dive.

In relation to personal disposable income, total homeowner debt payments (mortgage and credit card) currently stand at 15.5 percent. Only once in the last quarter century did they go over 16 percent—at the end of the recession in the fourth quarter of 2001. This indicates that there is little room to maneuver when interest rates go up. It will most likely cause homeowners to slow their spending. That will be a drag on the economy.

While interest rates are key to the status of the housing bubble, there’s more to it than that.

Uncharted Territory

There is a school of thought that says even if interest rates don’t go up, asset bubbles like housing are prone to burst when the pool of real funding begins to shrink.

Between 1970 and 1994, changes in the federal funds rate (the rate at which the Federal Reserve lends money to banks) were followed by corresponding changes in industrial production, always within 12 months. When rates were low, production increased. When rates were high, production decreased. In 1995 (the same year housing prices began to outpace the inflation rate), the correlation ceased. Normally, with interest rates so low, industrial production should increase. But production has been depressed since 1995 (relative to the federal funds rate) and steadily declining for the last four years. This suggests that real funding is drying up.

In other words, when the Federal Reserve flooded the economy with new money (doubling bank deposits in just eight years), much of the excess liquidity found its way into housing, followed by consumer spending that was supported by home equity, rather than increases in production and wages. The wealth that was created is an illusion—not based on real productive activities. Hence, the housing bubble is bound to pop, the thinking goes, even if interest rates don’t go up.

Either way, chances are that the housing bubble will explode! And not just in the United States. The Economist calculated that home prices are at all-time highs in relation to average incomes in two thirds (by economic weight) of the world it tracks (op. cit.). Countries such as Britain, Ireland, Australia, South Africa and Spain have witnessed triple-digit percent increases in just the last seven years! Many others have seen double-digit increases during that same time. The value of property worldwide is now estimated to be $50 trillion, including about $15 trillion of U.S. housing (compared to roughly $30 trillion worth of property stocks in the world). The effects of a severe housing bubble collapse could be disastrous for the entire world economy.

Merrill Lynch economist Rosenberg calculates that if housing prices in the U.S. were to drop just 10 percent, it would inflict more damage to the economy than a 1 percent rise in interest rates or a $10-per-barrel increase in the price of oil. Some, including famous investor Sir John Templeton, predict that, when the bubble bursts, housing prices will plummet at least 20 percent just for starters. He expects that 20 percent of homeowners with a mortgage will lose their homes when the bubble pops and has even told investors to prepare for a crash similar to the stock market crash of 1929 that led to the Great Depression! (Daily Reckoning, April 1 and August 18).

Does that sound extreme?

Let’s briefly take a broader view of the U.S. economy. The budget deficit this year is a new record, and the gap between what the U.S. produces compared to what it consumes (the trade deficit) is also smashing records. The personal savings rate is at near historic lows. Total homeowner indebtedness compared to disposable income is very close to the highest it’s ever been. Homeowner equity compared to market value is way below normal even though prices have been skyrocketing! Despite ultra-low interest rates, industrial production is dropping and employment growth is stunted to an unprecedented degree. Real wages for the American worker are 6 percent lower than a quarter century ago.

Never before have we witnessed the confluence of so many negative economic factors to this degree. We are truly in uncharted territory. Yet the U.S. economy has been perking along largely because it’s been propped up by the greatest housing bubble ever known. We’ve shown how that simply cannot continue. When it starts to unravel, it will likely lead to the biggest bubble bust in world history, hurtling the U.S. economy into chaos, reminiscent of the Great Depression—or worse! The shock waves could lead to a major global recession like we’ve never seen. Prepare now to reduce your standard of living.