— Bible-based commentary on vital issues of the day —

Red Alert Warning!

Economic convulsions are both imminent and inevitable.

The U.S. economy is tottering on the brink and the next blow will be soon and sudden. A growing roster of credible sources predict an implosion, not later than 2012 or early 2013; one notable calling it a "long depression."¹ Because of media focus on America's present  problems, Europe's equally desperate condition has gotten much less coverage.  Yet, a sovereign default there could trigger America's next major event ... and it would happen suddenly.  Indeed, the entire global system is precarious.

This (reluctant) report, though not as exhaustive as the subject warrants, is an overview of America’s present economic situation and an estimate of its impact on you.  Most statements are factual, though others are reasoned conjecture.  Included are ideas to help cushion what is about to occur, and at the article's foot, sources for further study.  Its essential message is that tumultuous times lie directly ahead.

This might be especially useful to without regular internet access and/or whose prime news input is through mass media.  Sadly, long gone is the day when its reporting was objective, professional and ethical.  Citizens are now much better served by trading most of mainline media for online or other sources.  A fairly recent and needful alternative, though they too are under hydra-headed siege.

To lighten up a heavy topic, we've cast early portions as a tongue-in-cheek stage play.  Please also be mindful it is written for a broad audience. (Lower the house lights, please.)

Washington D.C.'s present drama

Background and story line: through blood, sweat and bended knee, a hard-working and free-wheeling people with a can-do spirit, built from scratch, the most advanced and richest nation in the world's history. They then Doctor-Spocked, pampered and otherwise spoiled their post WW-II progeny ... lavishing upon them, "all that we never had."  It became a time in the nation's history when rebellion blossomed and tares of collectivism were widely sown.  Free-love and the smoke of pot and burning cities was in the air.  Not to lay full blame at that generation's feet, but they have contributed mightily to the nation's sharp left-turn from a constitutional republic to today's democratic socialism; from liberty and freedom, to statism and soft tyranny.  From virtuousness, to immorality; God, to ... "Whatever!"

Many rebelled against the disciplined values and virtues of society. They partied, shot up, dropped out and became enthralled with Marxism.  When finally gravitating to positions of authority, they promoted and/or elected those of like mind.  They took over entertainment, media, arts, education, corporate offices, boardrooms and eventually, government; infusing each with dogma of the failed Marxist/Leninist/Alinsky and other promulgators of Utopian fantasies (they now prefer the name Progressive).  After harvesting capitalism's rich rewards and fostering government "entitlements," they out-sourced the wealth producing sector of the economy.  Though the nation's manufacturing (and jobs) moved abroad, these privileged "boomers" could continue reaping income in air-conditioned work spaces, campuses, Beltway offices and at teak tables.  Many continued their leftward swerve from America's early ways of tilling, toiling and praying ... to teaching, talking and playing.  (On with the play.)

Opening scene: Today in Washington, D.C. (Cue sound: slow, solemn dirge.)

The curtain parts, revealing a distraught Timmy, the TreasSec,² pondering which of the 80 million accounts to pay in case old faculty lounge pals (represented in budget talks) don't license him to borrow boatloads of cash.  The nation's credit card is maxed out AGAIN; this time at $14,300,000,000,000 ($14.3 trillion).  He's slumped into an $8,000, baby-llama-covered, executive chair ... eyes pleading back and forth between a peanut butter-crafted bust of Jimmy Carter and a halogen-lit painting of John Maynard Keynes.³

Scene change: the Oval office (Minus the spirit of Churchill.)

Sequestered with a would-be king and vote-fixated congressional leaders, are supporting actors: a pregnant 2012 federal budget, obese debt limit, delicious taxes, bankrupt "entitlements" (unfunded pensions, SS, Medicare, Medicade, etc.).  But hogging the spotlight and towering over all, is a HUMUNGOUS debt (all in wet-suits because the nation is drowning in an ocean of I.O.U.s.) :))  Like a narcotic, debt is both the problem and palliative to keep the economy alive.  Since losing the nation's vital manufacturing base, America has morphed into a debt-addicted system always in dire need of a "fix."

Predictably, popularity poll-watchers and those "leading from behind"⁴ are not willing to endure the political pain of withdrawal.  Most striking is this scene's central absurdity: behind these closed doors, spender and SPENDER are negotiating a credit limit to impose upon the locked-out lenders (tax-payers). Were it not for ruinous consequences, the entire performance would be comedic.

Some players are waiting in the wings: personal, city and state debt, municipal bonds, stock and bond markets, interest rates, the dollar‘s value, QE (Quantitative Easing, money printing), price inflation, GDP (Gross Domestic Product) and unemployment.  Global auditioners also queue up: Europe's debt, bankers, oil, trade deficits, currency wars, Iraq, Afghanistan, the Mideast, Israel, regional cliques, cartels and covert efforts to destroy America, etc..  Then, the hidden players: politics, personal and party ideologies, agendas and a truancy of Churchillian leadership or statesmen.  HOWEVER ... overshadowing all, are the debilitating effects of America's debt, exacerbated by that of greater Europe and Japan.

America's debt-based death spiral

Vaulting over a century of details as to how the nation so arrived, it's evident that, short of divine intervention or a reversal of human nature, the economy is set to crash and there's nothing in view to avert this catastrophe-in-process.  Realistically, it's now beyond political remedy.  In the Capitol at this writing, intransigent Marxism is pitted against a weak-kneed will, and America’s future is held captive to ideology and staggering political cowardice.  A summary of government maneuvers confirm they've neither the will nor desire to axe the root problem: over-spending.  Even their boldest overtures fall ten-fold shy and years tardy to brake the nation's fall.  Political posturing and shenanigans are now all but irrelevant to the outcome.  Decades-late actions can only tweak the timing of a collapse ... or delay and intensify its pain.  The longer they stall ... the more painful the fall.

The impact will be global and historic

Because America's economy is STILL the world's largest, its DEBT the biggest, and its currency the instrument of international trade, WHEN this moribund system implodes, an economic tsunami will race to every continent and cove.  Inasmuch as tax-payer dollars have long been propping up other nations and funding untold global activity, it is likely that, those most tightly tethered, will also go down; at the least, be bludgeoned.  Effectually, it will be like sloppily shuffling a deck of cards, with some falling to the floor.  Eventually, out of the debris will arise the long prophesied new world order, global currency and government.

A humbled America will have been reduced to near-term poverty and thereby a more malleable world community-member; albeit, also with a much smaller voice.  It might also fall victim to the more vengeful and imperial minded.  The precariously retired will have been financially crushed and the middle class stripped of its wealth. The poor's lot might be buffered by a collectivist and more totalitarian state and the rich will have preserved some of their wealth.  The ruling class will still be comfortably ensconced in gated communities.  Understand, these are historic and prophetically-founded (and unpleasant) perceptions, rather than expressions of prejudice.

Triggering the debt implosion

Though unlikely, it could go k-boom in August.  Unless the nation's debt ceiling is raised, other coffers raided, or Treasury takes its creative accounting to a new level, August's $376 billion in payables cannot be covered by $205 billion of anticipated income.  That the International Monetary Fund has added its voice to S&P and Moody's (who are threatening to downgrade America's credit rating) could of itself, set off the debt implosion.  But since neither party truly wants to cut spending and in spite of today's political posturing and bird-like mating dance, the outcome is a given.  They WILL agree to increase the debt, then with banal bravado ... peddle to the public political cowardice as heroism.  Deja vous.

But, even if Washington DOES raise the debt limit, it's questionable whether investors will buy ... or buy enough Treasury offerings (lend us money).  In which case, the Fed (Federal Reserve) will again crank up its money presses, inaugurating QE3 (which preparations have just been disclosed to Congress by its Chairman).⁶ Of course, every ink and paper-created dollar correspondingly devalues those in circulation ... and in savings.  This inflating of the money supply means that it takes more dollars to purchase the same amount of goods and services .  Thus, QE leads to PRICE inflation and when taken to extremes, hyper-inflation. Mind you, QE is the monetary equivalent of a building's fire extinguishers; reserved for dire emergencies.  Yet, from 9/08 to 12/10, the Fed expanded the nation's monetary base from $851 billion to over $2 trillion ... more than doubling it in just 27 months.⁵ Unprecedented!

Such recklessness, is of itself, evidence of a "code blue" economy.  Drawn from history's tattered  playbook for failing nations, QE has long been used to "monetize" debt and the U.S. has been doing it for years.  Today, 43 cents of every debased buck Washington spends, is either borrowed or printed.  It's like having a $1000 overhead and living on a $570 income, by charging the $430 shortfall to a credit card.  How long do you think that would work?  In D.C., it's more like a shell game played by Congress, the U.S. Treasury and Federal Reserve.  It works like this.  Congress raises the nation's legal debt limit.  Treasury responds by creating more I.O.U.s (treasury notes, bonds, etc.) and the Fed prints more funny money.  The Fed then buys some of those "treasuries," paying for them in freshly minted one-hundred dollar bills.  Truck-loads are delivered to the Treasury's echo chambers and ... VOILA!  Government spenders can continue playing "extend and pretend" ... extend the debt limit and pretend we're rich.  Hmm ... appears someone in the Beltway forgot that we out-sourced our job and wealth-producing engine.  We don't have the income to repay this loan! What's Washington's response?  "Whatever ... 'bove my pay grade."⁷

QE also runs off investors.  Creditors (e.g., China and Japan; two of America's biggest) do not take kindly to having their investment portfolios lose value.  They expect them to EARN money.  In round numbers the dollar's 30% devaluing in just the past few years8 cost China about $27 billion. This prompts them to either demand a higher rate of return (interest) from debtor America, or sell their dollar holdings.  Dumped en masse, they further devalue the nation's currency.  Interest and prices inflate ... already hard-pressed citizens struggle the more, and societal displeasure rises.  Driving down the dollar by inflating the money supply, ALSO heightens the risk of collapsing the bond market.  If that should happen ... k-BOOM!

European debt is another HUGE threat to America through large banks and financial institutions (Bank of America, SunTrust, Wells Fargo, Citibank, etc.). They are heavily vested and dangerously exposed to sovereign default.5   E.g., the five members of the European Union: Portugal, Italy, Ireland, Greece and Spain (PIIGS) and now also Belgium, are already in various stages of economic collapse.  If Greece alone defaults American banks will be billed $41.4 billion.  If Portugal also goes down, U.S. banks will be required to come up with an additional $46.5 billion.  Worse; if Ireland crumbles, American banks will owe $105 billion ... and the SOURCE that much money?  Another taxpayer bailout?  Nah!  Ominously, a recent report8 noted that U.S. banks with European-exposed Money-Market funds, saw a heart-stopping $85 billion withdrawn in June alone.  Other foreign fuses begging to be lit include the U.S. government's responsibility for paying 17% of the International Monetary Fund's liabilities.  Should the IMF decide on a trillion dollar bailout, American taxpayers would be dunned for $170 billion (Gol-lee, that's a LOT of money!).  In this way, Europe's desperate financial problems can quickly be imported to trigger America's next big event.⁹

Within America, we don't need to look further for "fuses" than the 2000-or-so shaky banks, or hundreds upon hundreds of municipalities hard pressed to cover their payables. Also little mentioned is a possible $2 trillion municipal bond crash.  That's in addition to 27 U.S. states which cannot pay all their bills and are already laying off thousands and shutting down public services.  California, Illinois and New York alone, need tens of billions in additional funds just to squeak through this fiscal year.  In the face of this uncertainty, American shoppers (who account for 70% of the nation's GDP and much of Uncle Sugar's income) have snapped shut their purses and wallets.  Being a whole lot smarter than credited, they KNOW there's no recovery ... that the economy flat-lined months ago and is now heading south.¹

Summary and conclusion

Unsustainable debt is the nation's #1 issue and the government's fix-it measures and crushing collectivism have made matters much worse (after national security, its supposed to foster a healthy business climate, spend frugally ... then recess).  A free market is self healing, but unless debt is expelled, it festers, deepening economic injury, until the system is crippled.  America and much of Europe have now reached that point and the remaining industrialized world is not far behind.  Unsustainable debt DEMANDS to be purged and that happens by allowing persons, companies, industries ... or even the entire system, to go belly-up; then to re-boot.  Though unpalatable and painful, it's an economic reality.  To try "stimulating" America out of its debt-induced coma, is a fool's errand or delusionary.  At best, a delaying palliative.

We've blamed government and to a point, rightly so.  However, the base fault lies with we ... the citizenry.  We are more than complicit.  Indeed, we are the cause and enablers of debt.  We caused it by our own greed and fiscal imprudence and we've also enabled by not more wisely overseeing government.  Further, we are guilty of electing those who have fostered a welfare state, foreign to traditional America.  Having departed from the sound moral and fiscal principles of forebearers, for decades we've voted for more "entitlements" while living beyond our means.  But, government again bears heavy responsibility.  Through market manipulation, it misled many into believing they were richer than fact.  (Note: for sure, we DO need to conform our standard of living to reality.  Being in habitual debt is not a badge of distinction, nor does it bespeak wisdom.  To the contrary.  We do well to expunge the debt burden now and take our losses while still having some options.  Time is very short.)

THE ECONOMIC AND SOCIETAL OUTLOOK IS DIRE ^1,11

True, because most of the critical faults causing the 9/08 economic earthquake have not been corrected, plus ... several trillions have since been heaped upon an already impossible mountain of debt.  Moreover, the nation is now MUCH weaker.  Homeowners have lost a third in property value and more than half of mortgages are "under water." Millions forfeited jobs, businesses and savings; some, even their hope.  Many also realize that the government is doing the same destructive things (and more) that caused the '08 meltdown.  Instead of a "housing bubble," this time, their policies are pumping up both the commodities and stock markets.⁹

Worsening matters, demonic wickedness from the highest levels of society have relentlessly fueled the fires of fear, racism, hatred, class envy and strife.  Since the Great Recession began 3-1/2 years ago, distraught Americans have seen their hallowed Constitution, historic values, national borders and the Rule of Law ... not merely abused, but maliciously trampled and held up to ridicule before our enemies.  By the very ones sworn to uphold same (it's increasingly difficult to tell friend from foe).  In recent years, Americans have been government force-fed with everything most find offensive.  Mark it down: many are aroused to an anger and a resentment that will NOT go unrequited.  The classic American spirit despises deceit and tyranny.  Fomenting in America today is a holy clash with the dark forces behind top echelons of leadership, a subversive judiciary, fascist unions and their mobs of screaming and spittling poster-bearers; minions ...  demanding their already hard-put neighbor also pay THEIR bills.  It's quite likely that Greece will one day be visiting your hometown.

However, America's GREATEST debt and deficit ... are to God and the loss of Judea-Christian principles upon which she was founded.  Tragically, He and they have been "progressively" expelled from our schools, media, market and workplaces; also government.  The price of that grave apostasy is still in early stages of exactment, with much pain ahead for responsible parties.  Suffering is also in store for the innocent because of the former.

If there ever was a time for sorrowing to tears, true repentance and confessing our sinfulness to an offended God ... it was yesterday (though TODAY is still a perfect time).  He is loving, just, merciful, quick to forgive, sure to save and ready to heal and restore.  Alienation from Him is one's BIGGEST deficit, and yet ... it is humanly impossible to repay.  However, Savior Jesus has fully paid mankind's sin-debt.  We implore you to accept His payment on your behalf ... today.  It might be your last chance; things can change suddenly.

To you, whose Father is the God of the Bible, hear now His counsel: "I exhort therefore, that, first of all, supplications, prayers, intercessions, and giving of thanks, be made for all men; For kings, and for all that are in authority; that we may lead a quiet and peaceable life in all godliness and honesty.  For this is good and acceptable in the sight of God our Saviour; Who will have all men to be saved, and to come unto the knowledge of the truth. For there is one God, and one mediator between God and men, the man Christ Jesus; Who gave himself a ransom for all, to be testified in due time. Whereunto I am ordained a preacher, and an apostle, (I speak the truth in Christ, and lie not;) a teacher of the Gentiles in faith and verity. I will therefore that men pray every where, lifting up holy hands, without wrath and doubting." (1Tim 2:1-8)

— References and Resources —

1. Barron's interview with Ray Dalio — http://online.barrons.com             3. Economist, http://en.wikipedia.org/wiki/John_Maynard_Keynes    
4. Obama doctrine — http://www.washingtonpost.com/opinions/the-obama-doctrine-leading-from-behind/2011/04/28/AFBCy18E_story.html
2. Timothy F. Geithner, Secretary of the U.S. Treasury      9. GEAB, http://www.leap2020.eu/GEAB-N-56-Special-Summer-2011-Contents_a6680.html              
5. Weiss —"The Great American Apocalypse" http://finance.uncommonwisdomdaily.com/reports/SMR/4351/index.php?s=G446&e=4351444
6. Ben Bernanke's 7/13/11 Congressional testimony —  http://www.federalreserve.gov/newsevents/testimony/bernanke20110713a.htm
7. Wall Street Journal 4/23/11— http://blogs.reuters.com/frontrow/2008/08/16/obama-says-pointed-abortion-query-above-his-pay-grade/
8. Robert Morley — http://www.thetrumpet.com/?q=8437.7156.0.0    10. Conrad Black, Days of Economic Reckoning, National Review Online
11. Peter Ferrara — 2012: The End of the World As We Know It — http://spectator.org/archives/2011/07/20/2012-the-end-of-the-world-as-w

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