Many years ago I read a book by the late Larry Burkett entitled The Coming Economic Earthquake (out of print so not easy to find). If you’re not familiar with him, it founded Christian Financial Concepts which eventually merged with Crown Ministries. Larry had cancer and knew it was time to step aside. His cancer claimed him in 2004. He was a Dave Ramsey voice long before even Dave was.
I say all of this because I’m glad he never got to see a day his predictions may very well come true. That link was written eight years ago about a book now published some eighteen years ago. Keep that in mind as you read on.
If you’re not familiar with the word trillion, one trillion written out looks like this
1,000,000,000,000
Or, put another way, one trillion is one million squared, or a million sets of one million. Obama has us spending over $3,000,000,000,000 and he’s not only not broken a sweat, he’s not slowing down for trifling questions like “How will we pay for all of this?” Out expenditures may well be beyond $5T by the time this is all done.
Social policy no longer scares me (and that should scare you). Abortion? Can be undone. Fairness Doctrine? Reversible. But this loan (make no mistake about what it is) is not reversible. And what it is going to do to you (yes you) should scare you.
One of Burkett’s major cautions was against the Fiat Standard. That means that the money in your pocket, bank account, etc, has value because the US Treasury says it does. There is nothing beyond what the Treasury says to back this up. Once upon a time, the US Dollar was backed by gold and silver found in places like Fort Knox. This is what Ron Paul was on about in his presidential bid. This isn’t necessarily a bad thing out of hand but it lets the US tinker with the value of the Dollar by controlling the supply. This is what made Allan Greenspan such a powerful man.
The problem comes when any government gets into monetary trouble. So let’s say the US owes you $1,000. They could, literally, print some up and give it to you. Not a big deal. But let’s say they did that for everyone in the country. Free $1000 to everyone! Sounds good, right? But consider that there’s 350M or so Americans. So that would be $350B in new currency running around. What happens next is called inflation. Inflation happens when the buying power of currency falls. This happens naturally over time. But when the government prints money to pay debts you get hyperinflation. This is a bad thing. A VERY bad thing.
Germany did just that at the end of WWI. They had to repay France and England so their leaders figured they would print some up and hand it over. But France didn’t buy it. They took Germany’s coal mines and all the profits from them. But Germany had all this extra currency laying around. So you got hyperinflation. Imagine a world where a loaf of bread costs $1000. That really happened in Germany. The exchange rate between the US Dollar and the German Doich Mark before Germany’s economy collapsed was 1 trillion to 1.
Unsurprisingly there was a revolt in Germany because the average working guy didn’t get any of the currency and yet had to make do with the same wages that bought less and less until they might as well have been paying him in dirt. People starved and the country ground to a halt. The result of that revolt brought a man named Adolf Hitler to power.
So why type up all of this now? Well, consider for a moment that we’re overextended as a country. Not by a little bit but by well over $1T. Now consider what Burkett wrote eight years ago, after the Clinton era ended (emphasis mine).
I felt that our national debt and annual deficit were out of control and would eventually bring our economy to its knees, creating an economic collapse of historic proportions. Although I did not say that I thought the economy was going to drop in any particular year, I did feel that if we did not change our ways we would experience a huge economic crisis sometime after the turn of the century.
The reality is that neither the Democrats in power, nor Barak Obama, are dealing with the economy. Instead, we’re watching wholesale passage of every liberal spending plan ever dreampt of. What was in the $787B “stimulus” bill? Nobody can really say for sure yet. Certainly almost nobody read it in its entirety before passing it. And we have Bush’s folly of the $700B “bailout” where nobody knows where that went either. In fact, some of its largest recipients have come back for more. Then there the $410B earmark, er, spending bill. And now Obama wants Universal Healthcare and mortgage bailouts to boot. Is there no end to this?
Obama ran on the platform of change and many people voted for just that. No more wars with potential draft. No more “war on terror”. Maybe even no more economic gloom and doom. But we might have just saved our children from fighting in a war that’s pretty much over anyways only to put them on the hook for what may be the largest political fraud ever. Even if we held a new election tomorrow (we’re only 45 days into the Obama presidency), much of this is already law and being done as I write this. Everyone will be paying higher taxes soon in the form of energy taxes and bad energy policy and that’s just the start of this menagerie. If inflation surges (and I suspect it will soon) then all bets are off. If the Chinese (the larget buyers of Treasury Bills, basically a government bond) call in their markers then we’ll be so far up a creek even a paddle factory won’t be able to pull us back.
Pray for our country. Pray this madness ends soon. Pray that someone stands up to this and that we at least make it until 2010, where politicians feel some accountability for this foolishness. It’s just not social policy at stake anymore, it’s freedom.
The rich rule over the poor,
and the borrower is servant to the lender.
Proverbs 22:7
