Global Financial Crisis

The globe has essentially shut down. Travel has ceased. Restaurants, cinemas, amusement parks—anywhere people gather in public—are closed. Retail sales are plummeting as no one ventures out.

With no money coming in, firms are at risk of going “bust.” Millions of people could soon be “unemployed.”

Into the breach steps government. Every major government has unveiled a massive spending plan. Right now, the United States government is working on a $2 trillion spending package. That’s over 40 percent of typical annual government spending—“all poured out on just one crisis.”

This response could make a real difference in people’s lives and stop a lot of the immediate economic pain this virus could cause. But it could also fatally damage our economies, preparing the way for a future collapse.

In past crises, people looked to their own resources. It wouldn’t have even occurred to Americans 100 years ago to expect the government to “save” them. But now we’re used to the government taking “care” of us. They pay us when we’re unemployed, provide our health care, and bail out airlines and banks to keep the economy afloat.

In return, we pay “heavy” taxes. In the United States, it’s 30 percent. All that taxation makes it hard to save up for a rainy day—and makes us feel entitled to government “handouts” when our livelihoods are threatened.

In many cases governments are the ones “forcing” people to stay home. If the governments are “destroying” our livelihoods, it seems only fair that they “help” rebuild them.

The trouble is, our governments—even with their colossal levels of income—cannot afford to provide those handouts.

To survive the 2008 financial crisis, the U.S. and many other governments “borrowed” heavily. Prior to that, America’s national debt was 65 percent of its annual economic output. By 2011, it had jumped to 95 percent as it buoyed its economy by borrowing at the fastest rate since World War II.

Since then, instead of paying the “debt” off, America has continued to borrow. U.S. debt is now about 105 percent of its gross domestic product. Harvard economics professors Carmen Reinhart and Kenneth Rogoff have concluded that any debt above 90 percent of annual economic output is “dangerous.”

The unprecedented “response” to the 2008 crisis broke more than the budget. It also broke a major taboo. Major government intervention became “expected” in any economic crisis.

Imagine the public outcry if, when the coronavirus crisis hit, the government “refused” to help. You spent trillions “bailing” out the banks, what about ordinary Americans? You’ll help “rich” bankers, but not us?! With its extravagant response in 2008, the government effectively “committed” itself to similar measures in any subsequent crisis.

And that is exactly what it is doing in response to the coronavirus. America’s $2 trillion bailout package will have to be financed by more “debt;” it alone will add another 5 percent to the national debt. By the time this ends, the U.S. will have taken a giant leap toward equaling its highest-ever level of debt: 121.7 percent, reached during World War II.

But borrowing will not be enough to meet these crises. If America borrows too much, creditors could become worried about the government’s ability to repay the debt. That fear could destroy the economy. So the government is looking at another source of income: “the printing press rescue.”

The 2008 financial crisis began a great experiment with a new tool for central banks: “quantitative easing.” With this tool, central banks create “money from nothing.”

There is, rightly, a huge taboo on governments printing money and spending it. This type of money printing can be catastrophic, leading to “hyperinflation” that renders a currency basically worthless.

So central banks trod carefully on their quantitative easing experiment. They didn’t hand the newly created money directly to the government; instead, it bought government debt and other assets from banks. And central banks pledged to “wind down” this printing in the future: “to sell the government bonds they had bought and then destroy the money they had created.”

Twelve years later, it looks like the “quantitative easing” experiment worked. The extra money kept the financial system going. The central banks bought up government debt and kept interest rates on that debt at record lows, enabling governments to spend record amounts.

But most central banks have destroyed only a fraction of the new money they had created. Yet the sky hasn’t fallen in. You don’t have to bring your money in a wheelbarrow to buy a loaf of bread.

So in reaction to the coronavirus, central banks are running the printing presses faster than ever.

The U.S. Federal Reserve announced again unlimited quantitative easing. After the 2008 crisis, the Fed has never done anything like this; instead, it announced quantitative easing within a huge, though specified, limit. The first round, from December 2008 to March 2010, for example, was capped at $1.5 trillion.

Previously the Fed also announced that it would inject $1.5 trillion into the repo market, essentially where banks go to get cash.“It is effectively underwriting U.S. Treasury bonds and ‘printing’ money for direct fiscal measures,” wrote the Telegraph’s Ambrose Evans-Pritchard. The Bank of England also announced $236 billion in quantitative easing.

The central banks may also drop many more of the restrictions that were placed on quantitative easing in 2008. The thinking is: “It worked, they got away with it, and so less caution is required this time.”

Even right-wing economists are now talking about “helicopter money”—creating money using quantitative easing and more or less “raining it down from the sky” on ordinary citizens.

We created money and “gave it to the banks” in 2008, the thinking goes, so why not create the money and “give it to ordinary people?”

“We are certainly going to see some form of ‘helicopter money,’ the mechanism by which the state, via the central bank, simply prints money and hands it out to people,” wrote finance journalist Matthew Lyn in the Spectator.

“The next logical step in the chain of unconventional monetary policy is helicopter money and that is a direct liquidity injection into the heart of the real economy,” said Neil MacKinnon of VTB Capital.

These are just two of a great number of similar statements. Helicopter money used to be a fringe idea, something only “crazies or socialists” talked about. Now, your freshly printed money may reach you before next Monday.

The massive increase in spending globally is “pushing” all countries in the direction of “socialism.” Companies of all sizes are banging on the U.S. government’s door asking for a “bailout.” Government money could soon be flowing into more sectors of the U.S. economy than ever before.

The trouble is, it’s very hard to “reverse” on the road to socialism. With each new government intervention, “voters” expect more from their governments the next time. Once they receive “handouts,” they expect to keep receiving them.

Anyone who tries to “roll back” the clock is taking something of theirs away. And once a government takes “power” over something, the bureaucracy and politicians are very “reluctant” to give it back.

Even if we succeed and take a step back from “socialism,” what happens when the next crisis hits? The 2008 crisis broke taboos, but 2020 has smashed them beyond all repair. Once again, there will be massive borrowing.

Once again, the printing presses will be fired up—with even fewer rules than before. How long before government finances, the currency and our whole economic system collapses entirely?

We’re not just on the road to socialism, but to economic “Armageddon” ruin.

This unprecedented response may stave off an immediate crisis, as it did in 2008, but what next? We never managed to pay off the “debt” or destroy the newly created money from that crisis. We may stave off the crisis for now, but we are setting ourselves up for catastrophe.

America and our whole financial system are in a “tough” position. Refusing to take these kinds of measures would mean a lot of immediate pain for a lot of people. But adopting them simply pushes the pain into the future, and guarantees that when it hits, it will be worse.

The problem isn’t the bailout. This isn’t about one bad decision destroying everything. It’s the whole system. We have built an entire economic system on a “foundation of debt.”

The government manages the “economy” by encouraging people to borrow. When a crisis hits, it lowers “interest rates,” so people “borrow more and spend more.” With little savings, people cannot look after themselves in times of “crisis” and have to turn to the government.

But the government can’t help without “borrowing” more. It’s a cycle that builds up more and more “debt.” In the long run, it is “unsustainable.” Step by step, choice by choice, we are creating conditions that are guaranteed to produce an unprecedented, world-altering “crash.”

This crash of a “banking” collapse in the United States would have major consequences abroad, as well as at home.

It’s not just a tweaking of interest rates or a different way of printing money. The smartest men in “finance” have been unable to “devise” a working solution within our current system. We need an entirely new system.

Revelation 18 NIV describes the vast wealth its merchants acquire as they take over the global trading system. The implosion of America’s financial system could easily usher in this “economic revolution.”

America’s “financial practices” are unattainable. Psalm 37:21 NIV says,“The wicked borrow and do not repay, but the righteous give generously.” Borrowing money like this is “wicked” behavior which will never end well.

The Bible forecasts such a real solution. Soon, God will establish a“fair, stable, prosperous” financial system on Earth. Micah 4:4 NIV prophesies of this future: “Everyone will sit under their own vine and under their own fig tree, and no one will make them afraid, for the Lord Almighty has spoken.”

There will be universal property ownership, not communism, nor indebted mortgage payers. God talks about the ground producing so many crops they cannot be gathered fast enough. “The days are coming, declares the Lord, when the reaper will be overtaken by the plowman and the planter by the one treading grapes. New wine will drip from the mountains and flow from all the hills.” Amos 9:13 NIV

Jeremiah 31:12 NIV paints a picture of this prosperity: “They will come and shout for joy on the heights of Zion; they will rejoice in the bounty of the Lord, the grain, the new wine and the olive oil, the young of the flocks and herds. They will be like a well-watered garden, and they will sorrow no more.”

3 John 2 NIV says, “Dear friend, I pray that you may enjoy good health and that all may go well with you, even as your soul is getting along well.” God wants the world to have prosperity, and He has a plan to provide it.

The coming “financial crisis” will help bring us to the point where we are willing to listen to what God says on finance and much more, where we’ll finally be willing to choose the way that “leads to prosperity.”

In a world full of financial “miseries” and other “sufferings” this hope is essential for everyone.

What Is Money?

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