Twilights Last Gleaming?
The End of America As We Know It Part IIby Chuck Missler
In only a matter of months, tens of millions of Americans have seen their investments, retirements, life savings, home values, and employment decimated, or even evaporate completely before their eyes. Some are expecting that the worst is yet to come.
Welcome to 2009
To many, our summary last month may have appeared a bit overstated. However, available data have only gotten worse:
• U.S. housing starts fell a further 15.5% in December to 550,000, the lowest on record.
• U.S. industrial production fell a further 2.2% in December, to a 7.8% year-over-year decline.
• European industrial orders (a leading indicator of industrial production) are down 26% year-over-year, the largest decline on record.
• Japanese exports plunged 35% in December.
• Global steel production was reported to be down 24% in December.
All over the world, dramatic rates of decline in economic activity are being reported.
The shocking figure of $700 trillion in derivatives exposure in our previous report may have appeared fanciful. The latest reports estimate that this figure may be over $1,144 trillion! The proposed stimulus packages are simply pork and election paybacks…Paul Volker, former Chairman of the Fed, recently expressed his concerns as follows:1
The economic slump has begun to metastasize after a shocking collapse in output over the past two months, threatening to overwhelm the incoming Obama administration… What this crisis reveals is a broken financial system like no other in my lifetime. Normal monetary policy is not able to get money flowing. There has been leveraging in the economy beyond imagination…The trouble is, even with all the government intervention, the market is not moving again.
The traditional remedies are not working.
A Delayed Confession
The National Bureau of Economic Research officially announced, albeit almost a year after the fact, that the U.S. has been in recession since the 4th quarter of 2007. If Q4 2007 was the start of the recession, then Q4 of 2008 was the start of a depression!
It’s only getting worse. We are in the midst of an unprecedented global economic contraction, with no prospect for one region to “save” the others. This depression is global, pervasive, and deep.
Over the past several decades America has shifted from a producing economy to a consumer economy. Consumption has been aggressively promoted as the key to economic health, and Americans have become a very materialistic people. What family does not have multiple cars, computers, televisions, sound systems, electronic gadgets of all kinds (many seldom used), closets overfilled with clothes (many never worn), and every form of entertainment and amusement imaginable.
The pursuit of “the good life” has become an entitlement rather than a reward for achievement. Our activities and commitments are determined by our borrowing ability rather than our savings: our tether has only been limited by our capacity to mortgage the future to serve the present.
Most Americans have never known “hard times”—having to go without food, shelter, medical care, a job, or even prospects of finding one. Today, millions of Americans are living from credit card to credit card, let alone paycheck to paycheck. It has recently been reported that 31 million Americans (over 10% of the population) are now on food stamps. Crime is on the rise—especially in the major cities—as people are stealing to live and eat. Both riches and poverty are hazards:
Two things have I required of thee; deny me them not before I die: Remove far from me vanity and lies: give me neither poverty nor riches; feed me with food convenient for me: Lest I be full, and deny thee, and say, Who is the LORD? or lest I be poor, and steal, and take the name of my God in vain.
2 Proverbs 30:7-9
The Great Depression
Comparisons of our current predicament with the Great Depression of the 1930s are very misleading because both the personal and business debt levels then were less than 5% of what they are today. In the 1930s, most homeowners had 30-50% equity in their homes versus the 5-10% for tens of millions of homeowners today. Americans entered the 1930s with huge savings and little debt. Today they have zero savings and huge debt. The financial pain, delinquency, bankruptcies and impoverishment will be much greater in the current depression than in that of the 1930s.
Furthermore, the Americans of the 1930s were a hardened and resourceful lot. They had come through the “hard times” of World War I, and were tested by the “hard times” of the Great Depression, which then prepared them for the rigors of World War II. Their character, toughness, morality, ingenuity, resilience, and sense of community was a far cry from our population of today.
America today is not the America of the 1930s. We have lost our moral and spiritual moorings over the past four or five decades—ever since we ordered God out of our schools and public places. We have become a drug-saturated, divorce-plagued, greed-driven, promiscuous society where dishonesty from the White House to Wall Street, from the media to the grass roots, has become the norm. Billy Graham’s famous quip rings in our ears: “If God doesn’t judge America, He will have to apologize to Sodom and Gomorrah!”
Our aggressive promotion of the Consumer Society has led to unbridled materialism funded by debt. The result: excessive debts at all levels: personal, corporate, and government. This has finally caught up with us. There is, after all, a limit to our collective ability to borrow and we now have an enormous col-lapse of excessive debt—at all levels.
And what is the remedy to this crisis? More debt? The problem is so large that even the policy makers have yet to grasp the magnitude of the debacle we face. Home values are still plunging across the nation, having declined by over 25% from previous years’ levels. Banks and brokerage houses have collectively lost hundreds of billions of dollars in the ongoing hedge fund and derivatives meltdown. Weary investors were shocked to discover that the investment banking units of Wall Street firms couldn’t even manage their own assets, let alone those of their clients. Their outmoded investment models had no understanding of the structural nature of our debt-based economy and debt-based monetary system and, thus, were doomed to failure.
We have seen more than $8 trillion of wealth transferred in the last three months of 2008. This is modern “Robin Hood” economics which takes from the ignorant and uninformed and transfers the wealth to those who understand the system.
Most politicians, bankers, and Wall Street operatives are promoting a typical Keynesian approach to try to solve our economic debacle. John Maynard Keynes, a British economist, is the architect of our current economic model in the U.S. and around the world. Keynes wrote a book in 1920, The Economic Consequences of Peace. In the book Keynes states,
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of its citizens. There is no more surer nor more subtle way to overturn the existing basis of society than to debauch or destroy the currency. It engages all the processes of economic law that comes down on the side of destruction and does it in a manner that not one person in a million can diagnose.
One person in a million? That’s proof that the game is rigged.
Government Meddling with Free Markets
Some say this has been a failure of free market economics. Quite the contrary. It can be traced to at least four major fail-ures of government intervention:
1) Central bank attempts to keep interest rates far lower than what free markets would have warranted (especially post-9/11), supported by the lie that inflation was non-existent;
2) The existence of government-sponsored enterprises such as Fannie Mae and Freddie Mac, fuelling ridiculous (forced) excesses in mortgage finance and credit availability from ever-rising housing prices;
3) The moral hazard that ran amok as it became obvious that financial institutions can take egregious risks partly be-cause they became “too big to fail”; and,
4) The existence of an unprecedented current account deficit in the world’s reserve currency, financed by government-run foreign institutions (central banks and sovereign wealth funds).
The Travesty Continues
Governments the world over are taking an increasing role in the functioning of the economy and the financial markets. But are they trying to solve the main problem: namely, too much debt? Quite the contrary: every single solution they’ve adopted has been trying to get the good old days back—cutting interest rates to zero; throwing money at the banking system so it can lend again. All these solutions have one goal: to bring in more debt.
They are ignoring, at least for the time being, the paradigm shift. But the markets aren’t buying it… literally. Debts continue to implode. Every bailout is being followed by an even more massive bailout down the road. The government’s solution has been to shift debt from the financial markets to the taxpayer. Is there a difference? Instead of individuals living beyond their means, we now have governments living beyond their means. Substitute taxpayers for governments and you will quickly realize how the whole thing is a farce.
The Law of Unintended Consequences
The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple. It operates with limited information (rational ignorance), short time horizons (to get re-elected), low feedback, and poor and misaligned incentives (17,000 lobbyists bidding at auction for their patronage!). Society, in contrast, is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system, you often get unintended consequences.
Basic incompetence, however, may be an assessment too kind. Some suspect that the assault on the dollar is more sinister.3
President Bush’s furtive positioning for a “North American Union” was anticipating a new common currency to replace the U.S. dollar, the Canadian dollar, and the Mexican Peso, called the Amero. Robert Pastor, the architect of the plan, had published 2010 as the target date for its introduction.4
Many regarded this as ridiculous: it would take a major crisis: massive U.S. government debt; an unbridled credit expansion, the prospect of major property collapse, etc. However, the current crisis would certainly seem to fit the bill! Might this very crisis actually be deliberately engineered? If so, we won’t have to wait very long to test that hypothesis.
Our Basic Predicament
The real problem is that America is in moral free fall. We are victims of spiritual warfare: We have a media masking truth. We have courts perverting justice. We have schools deliberately “dumbing down” our youth. We have replaced our traditional heritage with “multiculturalism,” revisionism, and value relativism. We deny the very existence of truth. So our traditional patriotism has now been relegated to an obsolete form of idol worship.
Our government is now the purveyor of immorality. Why are we surprised? Governments have always loved crises: they provide the rationale for increasing budgets and bureaucracies, and subjugating the population. Most new dictators create external crises to consolidate their internal powers. In our country, they long ago learned that social crises serve that function as well as military ones.
There is one insight that supplies a key missing link: immorality results in social crises. Is it any surprise to learn that governments have an enormous incentive to promote immorality? Should we be surprised by the attacks on the family, the promotion of homosexuality, abortion, and other disruptive factors to destabilize and disrupt our society?
Our Personal Action Plan
Obviously, we all need to get back to basics, and lower our cost of living and get out of debt as aggressively as possible.5 We also need to reprioritize ourselves to lead resourceful, productive lives, and extricate ourselves from our own material-ism and self-indulgences. We need to refocus ourselves toward self-reliance, virtuous lives, focusing on real values, and, above all, to regain an active reverence for the Living God And, all our prayers should include the petition that the lessons not be wasted.
We can’t change the coming tide. But we can warn others. And now the good news: It is going to be the biggest opportunity of a lifetime to serve our Coming King! People who were previously apathetic or complacent will soon be desperately looking for answers! We need to be prepared to provide them! (Ah, there’s the rub: we need to be prepared! Are you? How can we help? Some relevant sources of comfort include Phil 4:19; Deut 31:6; Ps 119 (cf. v.50, 76, et al.); and, Rom 8:28-39.
For more information, see our newly recorded and updated briefing, Twilight’s Last Gleaming. It will be released on DVD in April.
1. Paul Volker speaking in London 11/21/08.
2. This confirms our view that the “taking the name of the Lord” refers to ambassadorship rather than vocabulary. Cf. Ex. 20:7.
3. It is interesting that “sinister,” incidentally, means “left.” Draw your own conclusions.
4. See Jerome Corsi’s landmark exposé, The Late Great USA, WND Books, 2007.
5. See our briefing, The Vortex Strategy” for more information.