At the Precipice of Economic Collapse | Tomorrow's World

At the Precipice of Economic Collapse

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The U.S. government is broke! It must borrow more than $2 billion per day to fund its programs at home and its military operations around the globe. America's trade imbalance is also a huge problem for its economy

Can North Americans afford to fill their gas tanks at $4.00 or $5.00 per gallon? If not, what will millions do when oil prices rise? With very few exceptions (such as Canada), the governments of most oil-producing nations now hate the United States, and many are faced with the threat of war at home. When troubles come, U.S. oil supplies are certain to be hit hard.

The political and economic situation in the Middle East can be likened to an open barrel of gasoline—and Iran, Iraq, Syria, Saudi Arabia and the U.S. are all playing with fire around it. When will it explode? America's actions in the Middle East are deepening long-held Arab resentments against the world's only superpower. An all-out war between Sunni and Shiite Muslims in the region is also a very real possibility; not only would war interrupt oil production, it would also prevent oil tankers from safely transporting their product through the Persian Gulf. Experts warn that as tensions escalate in the Middle East, the price of a barrel of the "black gold" could rocket to $100.00 or higher.

Trouble Brewing South of the Border

In 2005, Mexico sent the U.S. 1.7 million barrels of oil per day. By December 2006, shipments were down to 1.2 million barrels daily. Mexican oil production is decreasing; experts estimate that in just four years, Mexico's state-owned oil company Pemex will reduce its production by half. A recent Money and Markets report pointed out that since oil revenues sustain Mexico's social welfare programs, a drop in those revenues will likely spur greater social unrest in Mexico, and increase the rate of illegal immigration to the U.S. (March 7, 2007).

What can the U.S. do in response? Because of their economic indebtedness, Americans have largely lost the ability to direct their nation's future. That power is increasingly in the hands of bankers and governments overseas, controlling the money and oil needed to power our energy-dependent and debt-riddled nation. We are seeing the truth of the biblical maxim, "The rich rules over the poor, and the borrower is servant to the lender" (Proverbs 22:7). Americans have been living on borrowed money for the last few years, using the inflated value of real estate to take "equity" out of their homes and fuel an ever-more-extravagant lifestyle.

America the Broke!

The U.S. government is broke! It must borrow more than $2 billion per day to fund its programs at home and its military operations around the globe. America's trade imbalance is also a huge problem for its economy. At the current spending rate, North Americans buy $810 billion more in goods and services each year than they sell overseas. The Treasury Department's printing presses are spewing out new currency at a frantic rate. These factors together put the nation in grave danger that inflation will soon spin out of control. As the dollar declines, everyone buying and selling in dollars will see their purchasing power reduced. The dollar holds its value only so long as people around the world have confidence in its strength. If you have U.S. dollar holdings, what is your level of confidence?

Thankfully, for the time being, the nations holding U.S. IOUs have not demanded payment. They know that doing so too quickly would destroy the value of the dollars they own. Just one rogue nation intent on destroying the U.S. could start a stampede away from the dollar by quickly selling off its U.S. currency holdings—bringing the U.S. down almost overnight in an economic crash. However, any nation doing this would be committing economic suicide, as this would also plunge the whole world into the depths of another Great Depression, bringing worldwide political and social instability—and in all probability leading to World War III! Instead of risking such chaos, many national treasuries around the world are slowly diversifying out of dollars, moving into gold, euros and other financial instruments they consider more stable and secure. So far, the dollar's decline has been relatively slow. But American foreign policy has made the nation an international pariah; at some point, if a country with large dollar holdings decides that the planet would be better off without the U.S., it can "pull the trigger" and quickly bring about America's economic destruction.

The 400-point plunge in the U.S. stock market in early March of 2007, when American markets fell in sympathy with declining Asian exchanges, illustrated how national economies are intertwined. International currency traders had been borrowing billions of Japanese yen at low interest rates, and investing in higher-yield markets around the world. When the central bank in Japan began to raise interest rates, a sell-off that began in Shanghai ignited panic selling around the globe.

For years, foreign investments in the U.S. have propped up the "housing bubble" which made cheap homeowner mortgages available to poorly qualified buyers. As those investments leave American soil, we can expect real estate values to fall in many U.S. communities. This in turn will increase the number of foreclosures, and will slow the construction industry by raising costs for new borrowers. Warren Buffett, perhaps America's best-known investor, referred to these international money flows as "financial weapons of mass destruction" (Worldwide Credit 'Event' on Verge of Going Boom," Register Guard, November 14, 2006).

The Government Will Not Save Us

The costs of meeting America's ever-increasing wants and needs is driving the nation to the poorhouse. War abroad and social programs at home are devouring U.S. resources, even while the hungry wolf of inflation is at the door of the average citizen struggling to pay this month's bills.

David Walker, head of the U.S. Government Accountability Office, recently warned, "We're underwater to the tune of $50 trillion, and that number is going up three to four trillion a year... we need to start getting serious soon to make sure that our future is better than our past."

America owes a significant portion of its debt to nations it defeated in World War II. God warned that if His people did not obey Him, they would have to serve their enemies. "I will give as plunder your wealth, all your treasures, and your high places of sin within all your borders. And you, even yourself, shall let go of your heritage which I gave you; and I will cause you to serve your enemies in the land which you do not know; for you have kindled a fire in My anger which shall burn forever" (Jeremiah 17:3–4). Just as a family that cannot pay its mortgage payment will lose its home, so too will Americans lose their land if their national debt cannot be paid.

As gas prices rise—along with the cost of food and other necessities—due to scarcity and inflation, how will the average citizen cope? Will you be prepared for what is coming? To whom will you look for your safety and security—the governments of this world, or the great Creator God who made you and loves you?

The U.S. and the other English-speaking nations are losing God's blessings and protection, as described in Deuteronomy 28. However, you can protect yourself personally from the worst effects of the coming crash. God will intervene on behalf of those who are obeying Him and seeking His protection. Turn to Him, while there is still time!


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