Friday, November 26, 2010

A Caution About Hyperinflation

It's important that people understand an important concept (regardless of whether it is good news or not).  In the past it may have been that Christmas shopping provided a substantial boost to the U.S. economy (providing an excuse for people to engage in consumerism rather than storing their treasures in heaven)However, that was at a time when much of the goods being purchased were manufactured in the U.S., thereby helping American companies throughout the supply chain.

On the surface, the economic impact of millions of shoppers bumping into one another and fighting over the latest hot item "in limited supply" seems healthy to our economy.  To some extent, it does help retail stores, restaurants, etc. that are dealing with one of their busiest days of the year.  However, we must also recognize that much of the goods being purchased are manufactured in other countries, particularly China.  Thus, the economic impact of consumerism is considerably less than it once was because the jobs that are being supported are primarily low-wage service jobs (often with low or no benefits), while in the past our purchases supported  both those jobs and the high-wage manufacturing jobs associated with the American goods being purchased.

Purchasing foreign goods, however, contributes to the United States' trade deficits, which have ballooned in the past decade and show no signs of leveling off.  Quite simply, Americans spend more on foreign goods than other countries spend on ours.  As we continue to shift manufacturing overseas, we have no way to bring that back into balance.  The problem with this can seem subtle until you see it for what it really is: we are spending more than we are earning.  Of course, we know intuitively that one cannot run a personal budget like that for any period of time without experiencing serious financial problems.  As we expand that concept to a macroeconomic scale, the same basic problem exists, except arguable much worse because it's a national economy at serious risk.  The old adage, "the bigger they come, they harder they fall" may very well apply.

One day the U.S. debt to other countries (particularly China) is going to come due, and when that happens the only way the Federal Government is going to be able to repay the debt is to print more fiat money.  Increasing the supply of money, however, will only lessen the purchasing power of each dollar.  It's otherwise know as inflation, and that is not a good thing.  To some extent we know that inflation is inevitable, as it's predicted to happen in the Bible.  Revelation 6:6 forewarns that it will take a day's wages to purchase food alone.  What is all the more ominous is that it will not likely be confined to any nation, since Bible prophecy most certainly is not intended for the U.S. only (actually, it's as much or more intended for other countries).  Regardless of the country you call home, at a personal level we all should be as prepared as possible to survive economic hard times.

As we watch these events unfold, I'd like to leave you with the words of Jesus in Luke 21:36, “Be always on the watch, and pray that you may be able to escape all that is about to happen, and that you may be able to stand before the Son of Man”.
Are You Ready?

Related Links:

For more information, watch these related videos about inflation:

Many experts are predicting that we are heading into a hyperinflationary period. These three videos explain that concept in sobering terms:

The next video features Peter Schiff who is not a "Bible prophecy guy", but someone that predicted the current recession well before it happened (all the while being scoffed at).  He continues to forecast, via economic analysis, that the recession will get worse, much worse.  He predicts that inflation is just around the corner and price of basic necessities such as energy and food will especially increase.  We also know that Bible prophecy warns us of inflation in Revelation 6:6, where it will require a day's wages just to purchase food, which will be priced very high.

Yet another economic forecaster says times will get especially bad, and civil unrest will eventually be seen.  We also know from scripture that it will not be a good environment, for in 2 Timothy 3:1-4 we read, "But mark this: There will be terrible times in the last days.  People will be lovers of themselves, lovers of money, boastful, proud, abusive, disobedient to their parents, ungrateful, unholy, without love, unforgiving, slanderous, without self-control, brutal, not lovers of the good, treacherous, rash, conceited, lovers of pleasure rather than lovers of God."

Along with many other issues, the topic of inflation is also discussed in the book, Pray That You May Escape.

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