Economic Armageddon?
By Dene McGriff
As a follow-up on Barbara’s blog yesterday, we see the headlines today. “Solid consumer spending spurs economic growth from a revised 3.7 to 3.9 percent.” Now may I ask, what produces real economic growth – consuming or producing? Do you grow the economy by making a shoe or buying a shoe? Duh………
If you look a little deeper into this number, you realize this so-called economic growth is really debt. Every month, Americans spend more than they earn. The savings rate for Americans is .2 percent and as recently as 1992 it was 7.7 percent compared to Asian countries that are from 30 to 40 percent. So here we are spending and borrowing our way into prosperity. Is there something wrong with this picture?
Stephen Roach is the chief economist of Morgan Stanley and normally very bearish (optimistic) on the economy. Now he is warning of an economic Armageddon or at the very least “the perfect storm”. To finance its current account deficit, the U.S. needs $2.6 billion every working day. As countries that have traditionally supported the dollar begin to withdraw their support, interest rates will have to rise, resulting in a domino effect throughout the economy - massive foreclosures (half of mortgages being made are adjustable ARMS), personal bankruptcies and business failures. The local, state and federal government will take in less money driving them to the brink.
A Bloomberg survey indicates, “The dollar may drop for an eighth week and set a record low against the euro after the world's major central banks signaled they will allow the currency to extend its slide”. Bloomberg notes that Asian banks in Korea, China, Japan, Taiwan, etc. are pulling their support for the dollar. Business Day discusses warns of the certain fall in the dollar.
The impact will not be felt just in the U.S. but around the world as all nations play the same money game printing currency out of “whole cloth.” , "The U.S. Fed has not merely brought about an explosion in the number of dollars around the world; it has also lit the fuse of other currencies all over the world. The United States sells dollar debt. Foreign central banks buy it by issuing currency of their own. The result? A world flooded not only with dollars, but also with yen, kroner, euros, and pounds. The broad money supply in Australia is rising at a 9.7% annual rate. In Britain, the pounds pile up at a 9.3% rate. Canada multiplies its loonies at 9.1% per year. The Danes are expanding their money supply at a breathtaking 10.7%. Euros are increasing 6% annually. And the dollar - the U.S. broad money supply is only increasing at a fairly modest rate of 4.8%, a rate that is still far above the increase in GDP." (The Daily Reckoning, 10/29/04) Grow your currency at this rate and you halve its value in about eight years.
Porter Stansberry writes in ”The Bankruptcy of America,” “According to the Federal Reserve Bank of St. Louis, US household consumer debt is up more than 12% from last year. Debt service, as a percentage of disposable income, is above 14%. Only twice in the last 25 years has debt service taken as large a chunk of America's income -- and that's despite the lowest interest rates in fifty years…Retiring Treasury obligations with dollars the Fed prints will cause a weaker dollar. That means, sooner or later, inflation will be back -- and in a big way. This is the real endgame.”
Do I believe all the experts? I believe that in some ways they are correct and in the short run things will get worse, the dollar will weaken and inflation/deflation will happen. Given another 20 years or so, no doubt the U.S. would decline to “second world” status, but I don’t think we have that much time. Once again, I believe we have prophetic momentum. The real “endgame” pieces are in place – Israel, the forces for the Gog Magog War, the presence of a superpower with a ‘divine’ mission and a strong attachment to Israel.
America will do everything it can to preserve its military and economic empire. Americans will suffer from inflation and their standard of living will gradually decrease, but the world also knows the consequences of losing the American market. It would be catastrophic to their economies – thus, their support for the dollar. Privatization of Social Security is critical since it will pump up the stock market and securities.
Overall, moves downward will be gradual but steady. The rich will continue to get richer and the poor and middle class will get poorer. But the elites will keep the façade of prosperity, a deception most will believe. Is the house I’m renting really worth three times as much as it was four years ago? No, but the owner doesn’t mind. He thinks he’s richer. Like the frog in the heating pot of water, he doesn’t notice the temperature change until it is too late.
Talk about deception! We are told we can “consume” ourselves into prosperity. Doesn’t this sound a bit like Revelation 18 – a consumer nation that the whole world trades with by sea? We make the world wealthy by trading with us while we consume. If the U.S. is that nation (and I can’t think of any other world power who supports Israel coming out of no where in the next few years), it will somehow keep its job of consuming. Don’t ask me how. But the appearance of wealth will continue and the nations will depend on us to consume what they produce.
Is it possible that the church in these last days is getting caught up in the same trap as the rest of society? Let’s check what the Bible says in the letter to the seventh church in the book of Revelations.
Revelation 3:14-22
14 "And to the angel of the church of the Laodiceans write,'These things says the Amen, the Faithful and True Witness, the Beginning of the creation of God: 15 I know your works, that you are neither cold nor hot. I could wish you were cold or hot. 16 So then, because you are lukewarm, and neither cold nor hot, I will vomit you out of My mouth. 17 Because you say, 'I am rich, have become WEALTHY, and have need of nothing'--and do not know that you are wretched, miserable, poor, blind, and naked-- 18 I counsel you to buy from Me gold refined in the fire, that you may be rich; and white garments, that you may be clothed, that the shame of your nakedness may not be revealed; and anoint your eyes with eye salve, that you may see. 19 As many as I love, I rebuke and chasten. Therefore be zealous and repent. 20 Behold, I stand at the door and knock. If anyone hears My voice and opens the door, I will come in to him and dine with him, and he with Me. 21 To him who overcomes I will grant to sit with Me on My throne, as I also overcame and sat down with My Father on His throne. 22 He who has an ear, let him hear what the Spirit says to the churches." ' "
Prophecy is interesting because there is a historical element and a prophetic side – the church in Laodicea was a very wealthy city on a major trading route in Asia Minor. The prophetic church in Laodicea bears a strong resemblance to the Western church today. What caused it to be lukewarm? Its material wealth! “We think we are wealthy and have need of nothing…” Yet, we are blind to our own condition. There is a credit/consumer trap out there that would ensnare even the elect! The word/faith churches of TBN, Benny Hinn, Kenneth Copeland, the “Prayer of Jabez” believers, etc. continue to preach the “green gospel” of prosperity – so perfectly symbolic of the Laodicean Church. And the rest of “REI, SUV, big home in the suburb” Christianity continues to accumulate more things with more debt as if there were no prophetic tomorrow…
The Bible gives us the answer, “Behold, I stand at the door and knock. If any man hears My voice and opens the door, I will come to him and dine with him and he with Me.” (Revelation 3:20) Stop consuming! Stop depending on your wealth! Open the door! Listen to His voice! Let Him in! Fellowship with Him. Brothers and sisters, the greatest deception of all time is coming upon us. This is the only way to be free from the clutches of the world, the flesh and the devil! Blessings from Sacramento!