Policies from both Democratic and Republican politicians point to even more massive increases in debt.
A Yale economist expects a crash. CNN reported the following last year:
U.S. Dollar Will Crash in 2021, Senior Yale Economist Warns
Yale economist Stephen Roach has predicted a U.S. dollar crash by the end of 2021, joining a growing number of other analysts.
Yale University’s Stephen Roach has predicted the U.S. dollar’s demise in 2021.
Roach points to the growing current account deficit and the declining net-national savings rate as the two main factors pushing the dollar down.
The dollar has declined … Other analysts are also predicting a sharp loss of value.
The U.S. dollar will crash in value by the end of 2021, according to senior Yale University economist Stephen Roach. He also said the probability of a double-dip recession is now over 50%. …
Roach thinks a crash is inevitable, given the “laws” of economics:
Lacking in saving and wanting to grow, we run these current account deficits to borrow surplus saving, and that always pushes the currencies lower. The dollar is not immune to that time honored adjustment.
Whether or not a crash will come in later 2021 can be debated.
But it is my view that something, further down the road, will be worse than a crash.
The massive ancient Roman Empire and its financial system collapsed. Could the same happen to the USA?
Consider the following:
Roman Debasement
The major silver coin used during the first 220 years of the empire was the denarius.
This coin, between the size of a modern nickel and dime, was worth approximately a day’s wages for a skilled laborer or craftsman. During the first days of the Empire, these coins were of high purity, holding about 4.5 grams of pure silver.
However, with a finite supply of silver and gold entering the empire, Roman spending was limited by the amount of denarii that could be minted.
This made financing the pet-projects of emperors challenging. How was the newest war, thermae, palace, or circus to be paid for?
Roman officials found a way to work around this. By decreasing the purity of their coinage, they were able to make more “silver” coins with the same face value. With more coins in circulation, the government could spend more. And so, the content of silver dropped over the years.
By the time of Marcus Aurelius, the denarius was only about 75% silver. Caracalla tried a different method of debasement. He introduced the “double denarius”, which was worth 2x the denarius in face value. However, it had only the weight of 1.5 denarii. By the time of Gallienus, the coins had barely 5% silver. Each coin was a bronze core with a thin coating of silver. The shine quickly wore off to reveal the poor quality underneath.
The Consequences
The real effects of debasement took time to materialize.
Adding more coins of poorer quality into circulation did not help increase prosperity – it just transferred wealth away from the people, and it meant that more coins were needed to pay for goods and services.
At times, there was runaway inflation in the empire. For example, soldiers demanded far higher wages as the quality of coins diminished.
“Nobody should have any money but I, so that I may bestow it upon the soldiers.” – Caracalla, who raised soldiers pay by 50% near 210 AD.
By 265 AD, when there was only 0.5% silver left in a denarius, prices skyrocketed 1,000% across the Roman Empire.
Only barbarian mercenaries were to be paid in gold.
The Effects
With soaring logistical and admin costs and no precious metals left to plunder from enemies, the Romans levied more and more taxes against the people to sustain the Empire.
Hyperinflation, soaring taxes, and worthless money created a trifecta that dissolved much of Rome’s trade.
The economy was paralyzed.
By the end of the 3rd century, any trade that was left was mostly local, using inefficient barter methods instead of any meaningful medium of exchange.
The Collapse
During the crisis of the 3rd century (235-284 A.D), there may have been more than 50 emperors. Most of these were murdered, assassinated, or killed in battle.
The empire was in a free-for-all, and it split into three separate states.
Constant civil wars meant the Empire’s borders were vulnerable. Trade networks were disintegrated and such activities became too dangerous.
Barbarian invasions came in from every direction. Plague was rampant.
… Here’s a little ditty for you that you didn’t see on TV, or hear on the radio or read in the newspaper about the quality of jobs that have been added for the past 2 years: since 2014, the U.S. has added 450,000 waiters and bartenders, and no Manufacturing workers. Boy, I sure get good service when I belly up the bar these days. And here’s another ditty. Since 2014, the oil and gas producers have cut 200,000 jobs. But I don’t recall hearing anyone talk about that. Hmmm…
And wanna know something else about the jobs data? Well, notice above that I highlighted the words “seasonally adjusted”. That means 233,000 jobs were added by the BLS with their Birth/Death Model. These are “make believe” jobs folks, and without the “Seasonal adjustment” we would have had negative job growth in April. But we certainly can’t allow the markets and investors know that! Oh heaven! The Humanity! With “make believe” jobs you get “make believe” labor markets, but don’t let that get in the way of all those that keep saying that the U.S. economy is doing fine.
Speaking of “make believe”… I’m going to borrow a quote from my friend, James Powell, who had this to say in his latest letter:
The Fed has been pumping huge amounts of make believe money into the economy to get it going again, and it hasn’t worked. That should be no surprise to anyone but the government. With ‘make believe Money’ you get a ‘make believe recovery’.
Alright, I have to stop there on all this craziness regarding the labor markets. …
China’s FX reserves edged higher in April $6.4 billion, and that follows a $10.3 billion gain in March. So, if there’s no so-called Shanghai Accord, in place to stabilize the renminbi, then this is the miracle of Marco Polo! The renminbi is basically flat vs. the dollar so far this year, and that’s a lot like holding the renminbi before the Chinese broke the peg to the dollar in July 2005! But there’s a caveat here that we didn’t have pre-2005, and that is the de-dollarization that’s going on with China and Russia.
And speaking of Russia… did you hear what Russia has done now to move their de-dollarization plans further down the road? It appears Russia is close to taking the next big step towards de-dollarization and killing the petro-dollar as Vladimir Putin’s “dream” of ruble-based pricing of its domestically-produced oil is on the verge of realization. SPIMEX (The St. Petersburg International Mercantile Exchange) is actively courting international oil traders to join its emerging futures market, which as Bloomberg reports, is designed “to create a system where Russian oil is priced and traded in a fair and straightforward way.”
F. William Engdahl was quoted as saying, “This move could deal a dramatic blow to the petrodollar’s dominance”. You think? WOW. A new Mr. Obvious for us today! …
For What It’s Worth. It’s not every day that I get to quote the great James Grant, he of the Interest Rate Observer newsletter that has strict rules about using snippets of his letter. But when he gives an interview with someone else, then it’s all fair game, and nothing makes me smile larger regarding this stuff than finding an interview with James Grant. So, the interview is really long, but you can find it all at ZeroHedge it was post last Friday, or opt for the snippet:
Diminishing returns is the essential problem of the debt: Past a certain level of encumbrance, a marginal dollar of borrowing loses its punch. There’s a moral dimension to the problem as well. There would be less debt if people were more angelic. Non-angels, the taxpayers underpay, the bureaucrats over-remit and everyone averts his gaze from the looming titanic cost of future medical entitlements. Topping it all is 21st-century monetary policy, which fosters the credit formation that leads to the debt dead end. The debt dead end may, in fact, be upon us now. A monetary dead end could follow.
Thus, the thought processes of Janet Yellen’s predecessor. Reading him, we are struck, as ever, by his clinical detachment. Does the deployment of helicopter money not entail some meaningful risk of the loss of confidence in a currency that is, after all, undefined, uncollateralized and infinitely replicable at exactly zero cost? Might trust be shattered by the visible act of infusing the government with invisible monetary pixels and by the subsequent exchange of those images for real goods and services? The former Fed chairman seems not to consider the question- certainly, he doesn’t address it.
To us, it is the great question. Pondering it, as we say, we are bearish on the money of overextended governments. We are bullish on the alternatives enumerated in the Periodic table. It would be nice to know when the rest of the world will come around to the gold-friendly view that central bankers have lost their marbles. We have no such timetable. The road to confetti is long and winding.
The USA has created money out of thin air (which its debt as well as previously ‘quantitative easing’ programs have done) in order to create jobs, pay back political favors, and deal with government COVID caused issues.
Russia and China (and others) are working to topple the dominance of the US dollar as the world’s reserve currency. The US dollar is actually backed by NOTHING, but because oil producers mainly price oil in dollars, this has given the appearance of the US dollar being backed. This, of course, is make believe, as at some point oil producers could change this. And Russia, China, Iran, Venezuela, and others are working to not price oil in US dollars.
And then there is the problem of debt. As I have reported here repeatedly, the US is the most indebted nation of all time. While many political leaders act like this can go on indefinitely, that is simply not true.
The US dollar used to be backed by gold and silver. Yet now, because the US dollar is not truly backed by anything tangible (other than a semi-agreement with Saudi Arabia to price oil in dollars), the excess production of US dollars via debt/quantitative easing dilutes the value. This is a modern form of ‘dross’ (a coin that is worth less than it appears because it is not pure silver or gold despite its outward appearance).
As far as currency debasement of ‘hard money’ goes, starting in 1965 the USA started to remove silver from its then silver coins and replace it with cheaper metals. That has been done by others in the past.
Diocletian Antoninianus (Photo by Sosius11)
Governments have devalued their currencies by making their coins ‘dross’ and this has led to various problems throughout history. Related to the Romans, Wikipedia noted:
The Antoninianus was a coin used during the Roman Empire thought to have been valued at 2 denarii. It was initially silver, but was slowly debased to bronze. The coin was introduced by Caracalla in early 215 …
But even at its introduction the silver content was only equal to 1.5 denarii. This helped create inflation – people rapidly hoarded the denarii, while both buyers and sellers recognised the new coin had a lower intrinsic value and elevated their prices to compensate. Silver bullion supplies were running short since the Roman Empire was no longer conquering new territory, the Iberian silver mines were exhausted and a series of soldier emperors and usurpers needed coin to pay their troops and buy their loyalty. So each new issue of the antoninianus had less silver in it than the last, and each contributed to ever increasing inflation.
In other words, it was a ‘dross’ coin. The USA continues to try to cheapen its remaining coins as well. Its production of debt is another massive form of dross.
This diluting of the value of coinage/currency is condemned in the Bible:
4 Take away the dross from silver (Proverbs 25:4a).
22 Your silver has become dross, Your wine mixed with water. (Isaiah 1:22)
25 I will turn My hand against you, And thoroughly purge away your dross, And take away all your alloy. (Isaiah 1:25)
18 “Son of man, the house of Israel has become dross to Me; they are all bronze, tin, iron, and lead, in the midst of a furnace; they have become dross from silver. 19 Therefore thus says the Lord God: ‘Because you have all become dross, therefore behold, I will gather you into the midst of Jerusalem. 20 As men gather silver, bronze, iron, lead, and tin into the midst of a furnace, to blow fire on it, to melt it; so I will gather you in My anger and in My fury, and I will leave you there and melt you. 21 Yes, I will gather you and blow on you with the fire of My wrath, and you shall be melted in its midst. 22 As silver is melted in the midst of a furnace, so shall you be melted in its midst; then you shall know that I, the Lord, have poured out My fury on you.’” (Ezekiel 22:18-22)
Although the Bible warns against using dross and diluting the money supply, modern ‘experts’ have a different view. The wrong views on economics will lead to economic problems and ultimately the total crash of the dollar of the USA. Economic problems in Europe may well propel the rise of the Beast power that the Bible warns about.
The USA has repeatedly proven that economic pressures result in its increasing its debt. This has worked for a while, but the time will come when it will end in disaster. And it WILL NOT take as long as it took the old Roman Empire to collapse!
Around 605-625 B.C. Habakkuk wrote a short book of the Bible that has a lot of implications for the time that we are now in. Notice something that God said in it:
5 “Look among the nations and watch — Be utterly astounded! For I will work a work in your days Which you would not believe, though it were told you. (Habakkuk 1:5).
Many, including a COG I was once part of, claim that Habakkuk was prophesying only something for the past that has already been fulfilled. And if you only look at verse 5 of chapter 1 that looks reasonable. Yet, notice that the above is also repeated in the New Testament:
40 Beware therefore, lest what has been spoken in the prophets come upon you:
41 ‘Behold, you despisers,
Marvel and perish!
For I work a work in your days,
A work which you will by no means believe,
Though one were to declare it to you.'” (Acts 13:40-41)
There was something for Habakkuk’s time and something for a later time.
Getting back to Habakkuk, here is some of the shocking things God had him write down specifically related to the end times:
2 Then the Lord answered me and said: “Write the vision And make it plain on tablets, That he may run who reads it. 3 For the vision is yet for an appointed time; But at the end it will speak, and it will not lie. Though it tarries, wait for it; Because it will surely come, It will not tarry. ( Habakkuk 2:2-3)
So what did Habakkuk see in this vision that is so bad people should run/flee who read it?
Notice that the prophecy that is being discussed is specifically for the appointed time of the end. It is a prophecy for our time–and will affect the proud. What will happen is so bad “That he may run who reads it.” What is so bad? Habakkuk continues with the following:
4 “Behold the proud, His soul is not upright in him; But the just shall live by his faith.
5 “Indeed, because he transgresses by wine, He is a proud man, And he does not stay at home. Because he enlarges his desire as hell, And he is like death, and cannot be satisfied, He gathers to himself all nations And heaps up for himself all peoples. 6 “Will not all these take up a proverb against him, And a taunting riddle against him, and say, ‘Woe to him who increases What is not his — how long? And to him who loads himself with many pledges’? 7 Will not your creditors rise up suddenly? Will they not awaken who oppress you? And you will become their booty. 8 Because you have plundered many nations, All the remnant of the people shall plunder you, Because of men’s blood And the violence of the land and the city, And of all who dwell in it. (Habakkuk 2:4-8)
Actually, with an admitted debt of over $29 trillion dollars and plans by President Joe Biden to increase that much further, the USA has increased pledges more than any nation in the history of the planet. And on a per capita basis, the United Kingdom is one of the most indebted nations on the earth itself.
Since the prophecy in Habakkuk 2 will be fulfilled at the time of the end (cf. “The message was true, but the appointed time was long…in the latter days, for the vision refers to many days yet to come”, Daniel 10:1,14). Daniel 8:19, 11:27,29,35 uses the same Hebrew term for “appointed time” as Habakkuk 2:3, while Daniel 10, using a different term, ties the latter days to the time in Daniel 8:19. Habakkuk 2 was not fulfilled in its entirety anciently. Also, it makes little sense that Habakkuk would be directed towards the modern nation of Israel as it does not have enemy creditors. It must be a nation or group of nations with some prominence at the appointed time of the end. As far as “violence of the land” as a contributing factor, this would seem to include crime, military missions, and perhaps riots/civil unrest, but might it also include promotion of violent sports?
I, personally, have taught the end time risks of Habakkuk 2 longer than any living COG leader that I am aware of. And the only Church of God group that I am aware of that has been boldly teaching about this warning in Habakkuk 2 for years is the Continuing Church of God. The end time applicability of Habakkuk 2 was even in the first edition–January-March 2013–of our Bible News Prophecy magazine; and the headline shown on the front cover was “Habakkuk’s Warning is for Us Today.”
The Laodicean groups that I am aware of are NOT teaching this. We in the Continuing Church of God expect to tell people WHEN it is time for the Philadelphians to flee. Jesus specifically told the Laodiceans, in a prophecy, that they needed to repent (Revelation 3:19) or face consequences (Revelation 3:14-19, and that they would be rewarded for repenting (Revelation 3:20). The Laodiceans are Church of God Christians “who keep the commandments of God and have the testimony of Jesus Christ” (Revelation 12:17).
The time will come when the economy of the USA will be totally devastated and those who ignore Habakkuk’s warning will suffer because of it! The time will come when people will NOT value ‘make believe money.’
It happened to Rome.
Does the USA have any hope?
Yes, national repentance:
14 if My people who are called by My name will humble themselves, and pray and seek My face, and turn from their wicked ways, then I will hear from heaven, and will forgive their sin and heal their land (2 Chronicles 7:14)
But at this stage, that does not seem to be likely.
The Bible points out that the descendants of Jacob and Joseph are God’s people (Psalm 77:15; see also Anglo – America in Prophecy & the Lost Tribes of Israel). But, instead of repenting, the USA has been pushing a pro-homosexual, pro-abortion, pro-violence, and pro-debt message. The shock that will come to the USA and the rest of the world (Revelation 13:4) will not just be the end of the USA’s financial dominance, but the end of it militarily (Daniel 11:39).
Hosea prophesied that because the Israelites rejected God’s instruction, “the Assyrian shall be his king, because they refused to repent” (Hosea 11:1–5). The final time of the Gentiles is getting nearer (see also When Will the Great Tribulation Begin? 2016, 2017, or 2018?).
While the Bible shows that Assyrian Europe will also eventually be punished for what it will do to the USA (e.g. Isaiah 10:12), the Bible shows that the USA will be punished first (Isaiah 10:5-11; see also Anglo – America in Prophecy & the Lost Tribes of Israel).
The solution to the problems in the USA is not investments in the dollar of the USA–which will one day fail–but the coming Kingdom of God. Notice what Jesus taught:
19 “Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal; 20 but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. 21 For where your treasure is, there your heart will be also. (Matthew 6:19-21)
31 “Therefore do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ 32 For after all these things the Gentiles seek. For your heavenly Father knows that you need all these things. 33 But seek first the kingdom of God and His righteousness, and all these things shall be added to you. (Matthew 6:31-33)
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