ICG and LCG on US Debt Crisis

“I will break the pride of your power” (Leviticus 26:19)

In his latest update, ICG’s Mark Armstrong has the following:

Not a week goes by without reminders that we are living in times unlike anything we have experienced in the past. As the United States bogs down into a morass of class warfare arguments and accusations, political grandstanding on a litany of manufactured crises is enough to make us all want to tune out permanently…

The United States has, over our lifetimes, been a stabilizing influence due to our own economic power and military capabilities. That looks to be changing now, as both are in question. It seems that America’s economic influence is being undermined to the point that we’re all nervous about what may transpire here in the months ahead…we’re seeing an unrelenting acceleration of the debt crisis here in the United States. It turns out that the “mandates” of socialist health care will cost double the amount advertised, and that’s just been admitted by the government’s own accountants.

The Living Church of God (LCG) reported the following in its commentary today:

The Debt Bomb 2.0

By Dexter Wakefield | Saturday, March 17, 2012

A Tomorrow’s World article last year warned that trillion-dollar budget deficits run up by the United States government are accumulating into an unsustainable “debt bomb” that will eventually explode to the detriment of the nation. A recent Wall Street Journal article has now warned of the same “debt bomb”—as the crisis Tomorrow’s World described last year is growing even worse!…

A $1.2 trillion deficit is projected for 2012, continuing the dangerous trend.

What some do not realize is that these huge deficits contain another “explosive” feature. The overall impact of the total debt on the U.S. economy and credit rating is also affected by interest rates. Call it “The Debt Bomb 2.0.”

Remember that the interest cost of debt at 4 percent is twice the cost at 2 percent. Federal Reserve policy has kept short-term borrowing costs near zero in recent years, and the annual rate on the benchmark 10-year Treasury bond has been under 2 percent, keeping the total costs of borrowing abnormally low. But the situation is changing rapidly. The Obama administration hoped to “jump start” the U.S. economy through deficit spending, which has proved in the past to be inflationary. So, as the economy has improved, inflation has been edging up, forcing investors to demand higher interest rates on long-term bonds.

In the last six months of 2011, annualized U.S. inflation averaged around 3.5 percent. This means that an investor who bought a ten-year Treasury bond yielding 2 percent could be facing a true yield of negative 1.5 percent—the difference between the bond yield and the inflation rate.

This could not last long. On March 12, ten-year Treasury bonds were yielding 2.03 percent. By March 16, they had leaped to 2.31 percent, a huge increase. Is this a trend? The Congressional Budget Office thinks so. The Wall Street Journal reported that, for the years 2013–2017, “CBO expects average rates on 10-year Treasury notes to climb to 3.8 percent” (“Uncle Sam’s Teaser Rate,” p. A14). That is nearly double the current rate, and would nearly double the interest cost of new debt. Yet the CBO may be making a rosy assessment of the situation.

Are existing low rates “locked in” for a long time? No! The Wall Street Journal also reported, “Today, 52 percent of the debt is due within three years” (ibid.). This means that trillions of dollars in debt will need to be refinanced at higher rates, adding huge sums to the existing deficit. Also from the article: “Low interest rates disguise the federal debt bomb… During the 1990’s the average [overall federal interest rate] was well above 6 percent… If Uncle Sam had to pay 6 percent on its [current] debt the annual interest payments of $642 billion would surpass total federal spending on Medicare… Such a radical change in budget math could trigger a political panic…” The election campaigns will likely make an issue of “this fiscal nitroglycerin that Mr. Obama and Fed Chairman Ben Bernanke have created… The next Presidential term may be spent trying to defuse the Obama debt bomb” (ibid.).

That is, if the debt bomb does not explode first. Our July-August 2011 Tomorrow’s World article noted a warning by Board of International Settlements (BIS) economists, “that the U.S. could be approaching a ‘tipping point’ in which interest on debt exceeds economic growth, forcing a spiral of more borrowing and deficits. This occurs around the point where government debt exceeds the gross domestic product—exactly where the U.S. is today. The BIS also warned that on the downside of the tipping point, interest rates can spike ‘sharply and suddenly,’ exacerbating the problem and accelerating the downward slide. This could be triggered by a downgrading of U.S. sovereign debt.”

Such an event would likely produce “The Debt Bomb 3.0.”

Scripture reminds us, “the borrower is servant to the lender” (Proverbs 22:7). Centuries of U.S. prosperity are coming to an end, according to Bible prophecy. To learn more, read The United States and Great Britain in Prophecy, and watch “Seven Steps to Destruction.”

The Bible warns that the pride of power will be broken (Leviticus 26:19), and for the USA this apparently is not only referring to its military might, but its economic pride, its dollar.

Now as I have been saying, the USA dollar will NOT totally collapse (become worth a small fraction of its purchasing value) until shortly before the start of the Great Tribulation (Jeremiah 30:7; Matthew 24:21). But the USA is setting itself up for a collapse that few outside of the Church of God see coming.

LCG Evangelist Dr. D. Winnail wrote about the suddenness of what will happen:

Handwriting on the Wall! On July 4, the United States, currently the most powerful nation in the world, celebrated 234 years of independence. The following day, on Monday, July 5, British-born Harvard professor and economic historian Niall Ferguson opened the 2010 Aspen Ideas Festival with a stark warning that the American “empire” could suddenly collapse—possibly within the next two years—due to the country’s rising debt! (Winnail W. LCG World Ahead Weekly Update, July 8, 2010)

The U.S. and the British-descended peoples have enjoyed living off the resources of the world, but the prophet Habakkuk warns: “… Will not your creditors rise up suddenly? Will they not awaken who oppress you? And you will become their booty. Because you have plundered many nations, all the remnant of the people shall plunder you” (Habakkuk 2:7–8). (Winnail D. Sudden Calamities Ahead! Tomorrows’ World, Volume 10, Issue 5. Sept-Oct, 2008)

Hebrew prophets also warned repeatedly that the future demise of God’s chosen Israelite peoples would come “suddenly” and unexpectedly (Isaiah 9:14–15; 29:5; 30:13; Jeremiah 6:26; 15:8). Modern financial analysts realize this could happen if the nations lending to America decide to dump the dollar and call their loans. The prophet Habakkuk’s warning to the ancient Babylonians, “Will not your creditors rise up suddenly?” (Habakkuk 2:7)—may also ring true for debt-plagued nations like America and its Israelite cousins. Prophetic scripture contains a sobering message: debt and disobedience lead to the demise of nations! (Winnail, D. Debt, Disobedience and Demise of Nations. Tomorrows’ World, Volume 12, Issue 2. March-April 2010, p. 27)

It is the the United States and its Anglo-allies that have loaded pledges of debt in these end times that they really do not expect to pay back.

When creditors rise up suddenly, the “debt bomb” will be exploding.

According to Bible prophecy, the end of the Anglo-dominance of the world is coming, and the final age of the Gentiles will be here in a relatively few years. The debt and other financial issues in the USA are indicators that not too many more years are left before the start of the Great Tribulation.

It is not the Europe and other portions of the world will not have their own issues, it just is that since they have not quite followed the USA into the debt creation machine to the same degree, they will completely fall apart later than the USA does.

To learn more, please check out the following articles:

Anglo – America in Prophecy & the Lost Tribes of Israel Are the Americans, Canadians, British-English, Scottish, Welsh, Australians, Anglo-Southern Africans, and New Zealanders descendants of Joseph? Where are the lost ten-tribes of Israel? Who are the lost tribes of Israel? Will God punish the U.S.A., Canada, United Kingdom, and other Anglo nations? Why might God allow them to be punished first?
Will the Anglo-Nations be Divided? Will the lands of the United States, United Kingdom, Canada, Australia, and New Zealand be divided? What does Bible prophecy teach? Are there non-biblical prophecies that support this idea? Who will divide those lands? Who will end up with the lands and the people?
Prophecies of Barack Obama? Are there biblical and non-biblical prophecies about Barack Obama. Did Nostradamus predict Barack Obama dealing with the Antichrist? This is a lengthy article with many prophecies that Barack Obama may end up fulfilling.
Barack Obama, Prophecy, and the Destruction of the United States Some claim that Barack Obama is the prophesied “son of Kenya”. Might Bible prophecy be fulfilled by him?
The Plain Truth About Gold in Prophecy. How Should a Christian View Gold? What do economists and the Bible teach about gold? Gold and silver may drop in value. Inflation/deflation? What do Christians need to know about gold?
When Will the Great Tribulation Begin? 2012, 2013, or 2014? Can the Great Tribulation begin today? What happens before the Great Tribulation in the “beginning of sorrows”? What happens in the Great Tribulation and the Day of the Lord? Is this the time of the Gentiles? When is the earliest that the Great Tribulation can begin? What is the Day of the Lord? Who are the 144,000?
Japan, Its Biblical Past and Future, Part 1: Any Witness? Where did the Japanese people come from? Have they had any witness?
Japan, Its Biblical Past and Future, Part 2: Prophecy Japan in prophecy. What is prophesied for Japan? Will God save the Japanese?
Who is the King of the North? Is there one? Do biblical and Roman Catholic prophecies for the Great Monarch point to the same leader? Should he be followed? Who will be the King of the North discussed in Daniel 11? Is a nuclear attack prophesied to happen to the English-speaking peoples of the United States, Great Britain, Canada, Australia, and New Zealand? When do the 1335 days, 1290 days, and 1260 days (the time, times, and half a time) of Daniel 12 begin? When does the Bible show that economic collapse will affect the United States?
Europa, the Beast, and Revelation Where did Europe get its name? What might Europe have to do with the Book of Revelation? What about “the Beast”? Is an emerging European power “the daughter of Babylon”? What is ahead for Europe?