Financial Destruction of America

America has long been the safest place on earth for foreign investors’ money. But what happens if they take their money elsewhere?
From the November 1998 Trumpet Print Edition

American Treasury bonds are backed by the “full faith and credit” of the United States government. Whenever there is economic turmoil in the world, many investors make a “flight to quality” by investing in America’s bond market. American Treasuries (bonds, bills and notes) are a “safe haven” for foreign investors in the present nightmarish world of collapsing global economies.

But what if that all changes? Can it change? As many international journalists are quick to point out, we Americans deceive ourselves by arrogantly thinking we are invincible.

In the August 5 USA Today, an eye-opening article by Rich Miller states (emphasis mine throughout), “Ratings agency Fitch IBCA warned Tuesday that the USA is living beyond its means and said a weaker stock market and dollar would likely be the result.” If we honestly assess today’s global economic news, anyone should recognize that America is most likely going to experience the same kind of precipitous stock-market fall and currency devaluation being seen in Southeast Asia and Russia.

In spite of recent stabilization in the U.S. stock market caused by the Federal Reserve lowering interest rates, the value of the “almighty dollar” has begun to fall like a rock off a cliff. In a nasty reversal, Japanese investors have watched the value of the foreign-currency mutual funds, stocks, bonds and cash accounts drop sharply as the dollar fell as low as 111 yen in Asian trading October 9, from a high of over 145 yen in August. Such dramatic losses can quickly turn foreign investors away from America in search of more stable investments.

The article continues, “While reaffirming the USA’s top-tier AAA credit rating, Fitch voiced concern that the economy as a whole is becoming too dependent on foreign capital to finance [its] growth…. The USA became a net debtor nation—owing more to foreigners than foreigners owe it—in the late 1980s after years of big trade deficits. Those deficits now look set to balloon again as the Asian crisis slashes demand for U.S. exports.”

The U.S. owed the rest of the world $1.3 trillion at the end of 1997 over and above its national debt of $5.5 trillion. “Behind America’s deepening debt: a paltry domestic savings rate. That means the government and U.S. companies need foreign capital to keep going…. So far, that has not been a problem. Foreign investors, attracted by America’s exceptional economy and frightened by the Asian crisis, have poured money into the USA. In the first quarter [of 1998], they invested a record $29 billion in U.S. stocks…. But Fitch…says that can’t go on forever…. A lot of countries around the world have found you get yourself in an uncomfortable position if you rely on foreign capital too much.”

A Moody’s Investor Service executive summed it up by saying, “A big sell-off of U.S. Treasury bonds by foreign holders is not a threat if U.S. investors are prepared to step in and buy what’s sold. But if they’re not, watch out.”

Loss of Confidence in America

Americans will not be able to “step in and buy” the Treasury bonds which finance our national debt and keep our government running. They can’t! As Fitch Managing Director Lionel Price said, “The [U.S.] population as a whole is spending all its income. The economy needs savings, and it’s being sucked in from abroad.”

The New York Times of August 7 sarcastically spelled it out: “The world economy is spinning crazily on the axis of the unsustainable Japan-U.S. relationship. They sell to us. But we can’t afford to keep buying. So we borrow from them with the money they earn from selling to us.”

For the last 15 years, America has been on this unsustainable financial high that was and is made possible only by the injection of enormous amounts of foreign money into American bond and stock markets. But that will come to a screeching halt as soon as the American dollar and markets lose their “reserve currency” and “safe haven” status.

The Dictionary of Economics pointedly defines reserve currency as “a currency used as foreign exchange reserves [savings] by other countries…. Reserve currency countries receive cheap loans from the holders [through bond sales] while the system lasts, but their currencies are exposed to severe speculative pressure if confidence in them declines….”

Confidence is a very fleeting and uncertain thing. It is based on trust, which can be betrayed easily and just as easily shattered. Confidence can be likened to a gossamer balloon blown about by the winds of whimsy. Likewise, investor confidence is nothing more than a delicate balloon waiting to be burst by the buffeting gales of economic crises.

What could cause the beginnings of a loss of confidence in America? In the middle of August, a senior currency strategist at the Deutsche Bank in London made the comment that the dollar’s fluctuations—at least against continental European currencies—are “a reflection of President Clinton’s problems, which Americans shrug off but foreigners take more seriously. Foreigners see it as weak president, weak dollar.”

On the international level, strength of character is equated with strength of economy, and both are extremely lacking today in America! Regardless of the “full faith and credit” of the U.S. government, global investors are becoming increasingly aware that an investment in America is no longer an investment in strength. There is only an illusion of strength being propped up by foreign capital.

Once a loss of confidence occurs, the reaction is similar to the effect of adultery in many marriages today—victims of such a breach of trust start looking for a way out, and many times they take every financial advantage they can on their way out the door. Through such devices as credibility-destroying scandals, a mountainous and expanding national debt, a hugely overvalued stock market, record-low-yielding bonds and other “confidence shakers,” America is becoming increasingly vulnerable to the devastating effects of foreign capital flight.

Look at Russia’s continuing dilemma, where foreign investors expected a 100 percent return on investment, but now will be lucky to receive 20 cents on the dollar! Investors, in droves, have pulled up stakes and run in sheer panic! The resulting catastrophe shows that foreign capital flight implodes an economy, drying up the international loans and credit needed for survival, leaving nothing but a devalued and bankrupt skeleton with vultures picking the last shreds of financial meat off the bones!

Financial Feeding Frenzies

Jesus Christ, in Matthew 21:12-13, called many of the currency speculators (the “moneychangers”) of His day nothing but thieves, and in the last 2,000 years that has become even more accurate. Trillions of dollars per day are exchanged on today’s world currency markets. That amount of money attracts every kind of con-artist and crook known to mankind. And every possible innuendo and financial sleight-of-hand is used to take advantage of the naïve and inexperienced.

The economic problems plaguing Hong Kong reveal the financial blood-sucking and highly speculative advantage-taking which has been at the heart and core of the Asian, and now global, financial meltdown. The Economist of August 22 states, “The [Hong Kong] monetary authority’s aim [by intervening in their falling stock market] was to slap down hedge funds [speculators] that had been shorting shares (selling borrowed shares in the hope of buying them back later at a lower price). As central bankers see it, these funds have been playing a no-lose game. First they short shares. Then they sell Hong Kong dollars [causing a surplus and thus lower value in the HK dollar], which, under the rules of the territory’s currency board, automatically shrinks the money supply [takes HK dollars out of circulation to end the surplus] and pushes up interest rates. The higher rates then suck money out of the stock market [into then higher-interest bonds, for example], driving [stock] prices down and creating profits for the short-sellers….”

Once the scent of blood is in the nostrils of currency speculators, the piranhas of the worldwide monetary system, there is no mercy shown to the hapless victim. Any dirty trick in the book is used, as efficiently as razor-sharp teeth in a feeding frenzy, to strip every ounce of value possible from an economy and its currency.

When a greed-driven feeding frenzy begins, ever-increasing numbers of investors begin pulling their money out of the ill-fated economy for fear that their money will also be consumed by the voracious financial predators. The more successful the attacks, the quicker foreign capital flees in panic, until finally nothing of value is left to consume and no international credit dares to make itself available to try to save the economy and currency from collapse. And so the financial feeding frenzy proceeds around the globe from victim to victim to victim until the momentum of the frenzy itself is strong enough to topple even the strongest economies.

Nightmare Scenario for U.S.

Reuters News Service on August 24 released a story entitled “Global Meltdown Poses Nightmare Scenario for U.S.” It stated, “A nightmare scenario is threatening to unfold for the global economy that could be beyond the reach of U.S. policymakers.

“The financial crisis that started in Asia last year once looked manageable, but analysts warned on [August 24] it may turn into a global epidemic. Billions of dollars in international emergency aid have failed to contain the turmoil. There is hardly an emerging market left that has been spared. Russia’s economy is crumbling fast, and now Latin America threatens to become the next victim.

“‘This is a serious global emergency,’ said Greg Mastel of the Economic Strategy Institute, a Washington-based think tank. ‘It’s foolish to think that this problem is going to go away overnight.’ [U.S. Treasury Secretary Robert] Rubin has warned time and again that U.S. prosperity and jobs, among the greatest achievements of the Clinton administration, could be at risk if Asia’s economic sickness infects other emerging economies.

“The speed with which it is spreading around the globe has left U.S. policymakers scrambling for new solutions. But as they struggle to keep up with the crisis, officials are running out of fresh ideas. ‘I don’t think there’s really much left that Washington can do,’ said Jay Bryson, international economist at First Union Corp. ‘Nothing really sticks out that they haven’t tried yet.’…

“An IMF-led $23 billion bailout package for Russia, concluded a month ago, unraveled faster than Washington could have forecast even in its worst-case scenario. What’s more, the IMF’s kitty has been all but emptied out, leaving the international community ill-prepared financially for whatever problem might spring up next….

“The Asian crisis already has caused the U.S. trade deficit to soar, and all that combined with a collapse of wobbly Latin American economies might all of a sudden ring closer to home than most Americans would like. ‘It’s like hurricane Bonnie,’ said Mastel, referring to the storm [which recently smashed] the eastern U.S. seashore, ‘These problems are not of our own making, and they are beyond our power to eliminate.’”

Can America Really Be Next?

The WSJ of July 7 predicts, “Just when it looked as if the U.S. economy may have escaped serious harm from the one-year-old Asian financial crisis, economists see trouble ahead: They say the brunt of the crisis will hit the U.S. during the next six to nine months [by the end of 1998 or the first quarter of 1999].

“By an overwhelming majority, the 55 economists participating in The Wall Street Journal’s latest semiannual forecasting survey named the Asian crisis as the major threat facing the U.S. economy and believe that a deep and prolonged recession in the world’s most populous continent [Asia] will prompt U.S. companies to slow production and reduce employment levels.

“‘The Asian crisis is off the radar screen of history in its seriousness, scope and eventual potential to do severe damage to the [U.S.] economy,’ says Alan Sinai, chief global economist at Primark Decisions Economics Inc. ‘We see a scenario of falling export sales, rising inventory levels and slower domestic sales as American consumers substitute imports for domestic products. Corporations will respond to the weakness by cutting back on workers.’”

Another major problem is surfacing in that America’s dependence on foreign capital to finance her ever-widening trade deficit comes at a time when foreign investors are buying fewer Treasuries.

Sales of U.S. bonds finance America’s national debt and provide the government with operating capital. That sad state of affairs has been going on for the last 15 years. Yet that is all changing. Foreign investors’ appetite for Treasuries is falling along with U.S. bond yields, or returns on investment. In the first quarter of 1998, foreigners purchased a net $11.8 billion of Treasuries. As recently as the fourth quarter of 1996, that figure was $92.7 billion.

With a growing current account (trade) deficit expected to reach in excess of $200 billion in 1998, compared to $155 billion in 1997, America needs to attract growing quantities of foreign capital, but in the face of declining confidence in America’s President and in its stock and bond markets, as well as the USA’s inability to end her own and the world’s falling economic conditions, it is becoming much more difficult to attract foreign investors to America’s life-blood, the U.S. Treasury bond.

Where the Money Is Headed

News reports around the world are headlining the fact that American and foreign investors alike, flush with cash, are betting on the rising star of Europe. Industry Week of July 6, in an article entitled “U.S. Slowing and Europe Growing,” talked “of Europe overtaking the U.S. to become the long-term-growth-rate leader among the world’s industrialized economies.”

Most of the 55 economists (30 of them) mentioned above in the July 7 WSJ semiannual forecasting survey “believe that Europe will be the fastest-growing international market in the next 12 months.” An American economist with typical arrogance and naïveté is quoted in that issue as saying, “The U.S. might suffer harm by losing some of its reserve currency status, but we should more than offset that by selling to a strengthening customer [Europe].”

The Far Eastern Economic Review of August 27 says, “The fact that the euro will be the currency of the world’s most important and powerful trading and economic bloc—backed by an independent central bank—will inspire confidence.” The article then all but blames the ongoing Asian financial meltdown on America by saying, “It’s a question of rebalancing global monetary relations…. There is an imbalance between the United States’ economic and commercial role and the influence of the dollar. And this imbalance creates instability—of which the recent Asian experience is one example.”

Another article in that same Far Eastern Economic Review states that the advent of the euro “signals a seismic shift in the world economic system—the kind of reordering that comes about only a few times each century and which hasn’t been seen since 1972, when the Bretton Woods system of fixed [currency] exchange rates collapsed.” The article says later that “thinking and dealing in euros…could quickly erode [Asia’s] heavy reliance on the dollar.”

Investor confidence is aimed at a German-led Europe, the new darling of the monetary world, and away from America, the self-centered, overconfident and spendthrift wench. The powers of Europe will control world economies and will produce confidence in her to the point of awe. Flying on the heels of that confidence in Europe will be investor capital, seeking the highest possible return on investment, regardless of consequences for the rest of the world.

Foreign capital flight is on the horizon for America, yet Americans, in all their haughtiness, refuse to see it coming. America is going to be blind-sided and totally shocked when she is rejected by the investors of the world. In fact, foreign capital flight is one of the primary mechanisms whereby America will be abandoned by her former “lovers.”

The Fall of Israel

The identity of biblical Israel is one of the major keys to unlocking the truth of your Bible. In this 20th century, the Church of God has proclaimed that identity to the world for over 60 years. Without an understanding of the identity of biblical Israel, approximately 90 percent of your Bible will be a mystery to you. Primarily, America and the British nations around the world are the modern-day descendants of ancient Israel. To receive more on the fascinating truth about this subject, please write for your free copy of The United States and Britain in Prophecy by the late Herbert W. Armstrong.

Isaiah 46:10 says that God foretells the future of mankind. II Peter 1:20 states that “no prophecy of the scripture is of any private interpretation.” And John 10:35 tells us that “scripture cannot be broken.” God’s word stands as the only guide to sure truth! Understanding that truth requires a humble mind which is yielded to being taught.

Jeremiah 4:30 reveals God’s word concerning a time when Israel will try to make herself appear financially attractive to other nations, but all in vain. God says, “And when you [Israel] are plundered, What will you do? Though you clothe yourself with crimson, Though you adorn yourself with ornaments of gold, Though you enlarge your eyes with paint, In vain you will make yourself fair; your lovers will despise you; they will seek your life” (New King James Version).

America is rapidly entering a time when she will need to entice her “lovers” back to her with high interest rates and other economic premiums which will cost the U.S. hundreds of billions of dollars. Just look at Russia and the many other nations which have recently spent their wealth in futile attempts to attract foreign capital back to their shores. Why would anyone think America is different? To do so is nothing but vanity. America is not immune to the lessons of history, nor able to defy the prophecies of the Living God!

Jeremiah 30:12-15 clearly reveals why America and the nations of Israel receive this fierce punishment. “For thus says the Lord [to Israel]: Your affliction is incurable, Your wound is severe. There is no one to plead your cause, That you may be bound up; You have no healing medicines. All your lovers have forgotten you; They do not seek you; For I [God] have wounded you with the wound of an enemy, with the chastisement of a cruel one, for the multitude of your iniquities, because your sins have increased. Why do you cry about your affliction? Your sorrow is incurable. Because of the multitude of your iniquities, because your sins have increased, I have done these things to you.”

National sins and leadership scandals are a stench in the nostrils of the Eternal! And what is worse is that the people of America don’t care as long as their gods of money and economic well-being are satisfied. But the riches of this world are going to be stripped from Israel to leave her bare and naked in all her shame! (See Ezekiel 7:19; Luke 23:30 and Revelation 6:15-16.) God’s word says that soon their false gods will desert them, and, along with the rest of the world, they will be throwing their money into the streets and crying out for death to end their torment!

Ezekiel 16:35-39 describes Israel’s desolation. “Now then, O harlot [Israel], hear the word of the Lord! Thus says the Lord God: Because your filthiness was poured out and your nakedness uncovered in your harlotry with your lovers, and with all your abominable idols, and because of the blood of your children which you gave to them, surely, therefore, I will gather all your lovers with whom you took pleasure, all those you loved, and all those you hated; I will gather them from all around against you and will uncover your nakedness to them, that they may see all your nakedness. And I [God] will judge you as women who break wedlock or shed blood are judged; I will bring blood upon you in fury and jealousy. I will also give you into their hand, and they shall throw down your shrines and break down your high places. They shall also strip you of your clothes, take your beautiful jewelry, and leave you naked and bare.”

Israel, led by America, is going down if she doesn’t repent. God is her judge, and He will not be denied! His prophecies are true and will surely come to pass! Because of America’s meteoric fall from unprecedented heights, all nations on earth are about to go through a time of world trouble like no other time has been or ever will be (Matt. 24:21; Dan. 12:1).

God has promised in His word that, if America does not repent, He will drive her down into the dirt so that she will finally repent and see herself for what she really is: as Isaiah 40:15 says, nothing but a drop in the bucket of history!

God’s Mercy Extended

After the lessons of these terrible times are written in the annals of human history, God, in all His mercy through His Son Jesus Christ, will show mankind the way to perfect peace and economic well-being.

Gone will be the cunning and predatory currency speculator. Gone will be greedy investors, willing to do anything to net a profit at the expense of others. Nations and people will learn the loving way of “give” and will reject the selfish way of “get.”

Jesus Christ is going to return to this earth in only a few years to teach mankind the way of God’s loving government. All of mankind who learn those marvelous lessons from God will finally find the harmony and happiness that has eluded us throughout history!

Mortgaging the Nation

The origin of the fiat money system.
From the November 1998 Trumpet Print Edition

The global fiat money casino known as the international financial system originated, in its modern form, in England. Before sailing for London to replace the Catholic James II on the English throne, William III received a loan of 2 million Dutch gulden to take him across the channel. Safely on the throne, the new King nevertheless found himself short of money to finance his war against Louis XIV. Unable to ask the English Parliament to vote him the money because the war, though important for Holland, was of no interest to England, William persuaded the Government to accept the offer of a loan of £1,200,000 made to him by a Mr. Paterson, acting on behalf of a private syndicate, the composition of which has remained obscure.

The proposal in question was that a corporation to be called the Bank of England should raise the sum from the public and lend it on to the King at 8 percent per annum plus £4,000 a year by way of expenses. Since these terms were somewhat more favorable than could have been obtained from the goldsmiths of the city of London, the offer was accepted.

Overnight, the Bank of England, a private corporation, became the beneficiary of a number of privileges, the most important of which was that it was entitled to issue notes under the “common seal” of the Crown and the Bank up to the value of the loan and on the security of the Government. Thus, when a holder of the Bank’s notes presented them to be cashed, the Government would be obliged to raise the same amount in taxation, in order to refund the Bank. This meant that the Bank used the wealth of the nation as guarantee for its notes—which, as Mr. Paterson subsequently explained, were made by it at zero cost (apart from the cost of printing and paper). “The Bank hath benefit of the interest on all the moneys which it creates out of nothing,” he added.

The author Christopher Hollis, writing in The Two Nations [London, Routledge and Sons, Ltd., 1937, on pages 30 and 33-34], explained that “the £1,200,000 was easily subscribed. The Bank, however, did not hand over the whole sum to William in cash. It handed over £720,000 in cash and the remaining £480,000 in notes ‘under their common seal.’” Since the Government then began using the Bank’s notes, the Bank of England gained prestige, and was the possessor of £720,000 in notes “under their common seal” and £480,000 in cash. Hollis continued: “Now William, in the difficulties of previous years, had been reduced…to issuing tallies in lieu of payment of his debts. The Bank now determined to use its spare cash and notes to buy up these tallies at a considerable discount, usually of 7 percent.” Thus the Bank acquired at no cost to itself the title to real wealth in the amount of £480,000 in notes lent to the Government and the additional amount of the tallies bought up with more notes. Before long, the Bank began to print notes beyond the authorized amount of £1,200,000, issuing them signed by the Bank of England’s cashier alone, instead of jointly with the Crown “under their common seal.” Bishop Berkeley described this scam as a “a public cheat,” but the Bank got away with it—as the Crown was preoccupied, indifferent to or ignorant of what was going on, or else considered itself powerless to intervene.

Accordingly, in 1696, within two years of the Bank’s foundation, although the King had only received £1,500,000 (the original £1,200,000 plus £300,000 borrowed in Holland), he was now in debt to the Bank in the sum of £3,034,576 16s 5d. In the meantime, by August 1695, the price index has risen from 100 to 137. By 1698, the National Debt totalled £16,000,000, and it went on increasing thereafter. As Christopher Hollis pointed out, “As an abstract proposition in financial theory…the King might have cancelled the privileges of the Bank and have filled the gap with paper money of his own. But…by the Bill of Rights in 1689, he was prevented from doing this without the consent of Parliament—which meant in practice without the consent of the Bank of England.”

Previous practice had been for the sovereign to make the nation’s money, in amounts corresponding to the estimated needs of the economy, and to spend or issue it into circulation. Under the new system introduced at the end of the 17th century, the King not only authorized the banks to make the nation’s money, but also agreed to borrow it from them at interest to finance his administration. The interest would be paid by the taxpayer; and since the money paid by the bankers was guaranteed by the wealth of the nation, the taxpayer ended up paying interest on what was really his own property.

Thus the revised system effectively mortgaged the wealth of the nation to the bankers, placing the Bank of England effectively in charge of economic policy, and firmly establishing a monetary system based on usury.

System Failure!

As we advance toward the close of 1998, global economic peril looms large on the horizon. Will 1999 be the year of the big crash?
From the November 1998 Trumpet Print Edition

1998 will go down in history as a record-breaking year. Record-high temperatures warmed the globe during the first half of the year. The El Niño and La Niña effects produced records in all types of weather around a world battered by hurricanes, tsunamis, tornadoes, floods, ice storms and devastating drought.

As the year reached its apogee, a storm of a different nature threatened to break records on a grand, global scale. The year which produced the biggest-ever corporate merger (Amoco/BP) and the world’s biggest-ever corporate collapse (Brunei-based Amedeco) felt the ground swell of an economic tsunami.

By mid-September, U.S. Federal Reserve chairman Alan Greenspan, who only weeks previous had touted the strength of the U.S. economy as the stock market ran the gamut of its 1990s bull ride, used very measured terms to touch on a creeping fear in world financial markets. Commenting on the evident deepening of global financial turmoil, Mr. Greenspan declared, “The crisis in emerging market economies is now pressuring Latin America. There is little evidence to suggest that the contagion has subsided. The collapse of the Russian economy reveals evidence of a deepening of the contagion, leaping from Asia.” Then, mindful that finance ministers worldwide would be wracking their brains for ways of limiting the effects of this “contagion” on their national economies, Mr. Greenspan issued a note of caution. “Policy makers are warned to be sensitive to deepening signs of global distress.” Finally, as if to inject a note of reality into those economies which have seemed, to date, least affected by the “Asian contagion,” the Fed’s Chief cautioned, “It is impossible for Europe and America to remain an oasis of prosperity in such an emerging situation.”

In an unprecedented move, finance ministers of the major nations and representatives of all the world’s major economic policy formulation bodies (the World Bank, the IMF, the G7 and G22), met in October to consider ways and means of dealing with the emerging, global financial crisis.

An Ominous Equation

Take the attributes of the East Asian financial meltdown, add in the Russian economic collapse, the domino effect on Latin American economies, the looming year 2000 computer problem and the impending introduction of the euro in January 1999; factor in the proven ineptness of world leaders in dealing with this international socio-economic cauldron, and the result of this unhappy equation is the prospect of unprecedented global instability.

The congruence of this extraordinary and unprecedented combination of special factors, following decades of worldwide economic growth and comparative stability, suddenly stares the U.S. bleakly in the face. As some economic pundits have put it, these are “uncharted waters.”

No one predicted nor prepared for such a world scenario. Wasn’t this to be, following the cessation of over 40 years of cold war, a new world order? Was not this to be the decade of convergence, to use the economists’ buzz-word, with all its promise of progress toward equality, the generalization of international health, wealth and happiness?

Well! Although a fundamental tenet of the economist and the futurist is eternal optimism, the hard experience of man, documented through millennia of histories, is another matter. Economic theorists, it seems, tend to neglect the fact that so many things can go wrong in this world—revolutions, coup d’etats, war, ethnic cleansing, natural disasters, crime, the resistance of deeply rooted cultural and religious practices which impinge on economic progress, plain bad government—all these are the unknowns. It is such influences which ultimately reach out to impact the world’s stock markets, creating the greed- and fear-driven bull and bear markets which produce the boom and bust cycles of this world’s economies.

The China Factor

Earlier this year, Economic Intelligence Review editor and publisher Christopher Story stated, “The entire cycle of currency depreciations can be traced back to the huge devaluation of the Chinese yuan in January 1994—an aggressive and unfriendly ‘beggar-thy-neighbor’ devaluation by any standard, probably motivated by political as much as by economic considerations…” (Economic Intelligence Review, Jan.-Feb. 1998).

The result of this action is now plain for all to see. On October 23, 1997, the Hong Kong stock market crashed, creating a powerful flow-on to East Asian stock exchanges. The much-touted tiger economies of East Asia, having gone into free fall, are now caught in a slough of deep recession, with IMF policies having actually worked to exacerbate their negative condition. Japan admits that it faces its worst financial crisis since World War II and, in fact, latest figures show her national economy bordering on depression.

One obvious consequence of all this is the flight of capital from East Asia pouring into U.S. dollar holdings. The risk in this is that, should U.S. interest rates run firm, the dollar will be driven further upwards, driving Asian currencies further down in terms of the dollar. This would then further destabilize the world trading system, as the U.S. and Western economies attract a flood of low-priced Eastern goods. The result would be closure of non-competitive domestic industries in the West. This is a sure recipe for global economic disaster.

The Euro Risk

Germany’s Bundesbank has issued its verdict on the European Economic and Monetary Union (EMU). Clearly, from all reports, it believes that the EMU will be a disaster. What is most apparent to the Bundesbank leadership is that most nations accepted for European monetary union have fudged their financial figures to gain entry to EMU.

“Thus even the best-managed EU Governments will need ten years of fiscal balance or surplus even to bring their public-sector debt positions within the limit of 60 percent of GDP required by the European Union’s collective treaty. In other words, the start-up conditions breach the considered and agreed Treaty requirements so comprehensively that there can be no prospect of the Euro Zone surviving peacefully over the medium term” (Economic Intelligence Review, May-June 1998).

The brilliant British economist Peter Jay has described EMU as “Europe’s engine of destruction.” A few astute observers have noted that, despite the drop in the value of gold, leading European central banks have been hoarding the yellow metal. One reason for their retention of bullion stocks may well be as a hedge against the prospect of a euro collapse, providing a support for new national currencies.

System Breakdown

The UK and U.S. stock markets were pumped up powerfully over the past 20 years, shrugging off regular corrections until September this year when the U.S. stock market commenced its roller coaster ride in the wake of reality dawning following the East Asia, Russia and Latin America collapses. The world shudders under the pressure of this bursting fiscal balloon. Global economic chaos looms ahead of us all. What will be the outcome? Have we forgotten recent history? Should a global financial collapse occur, we ought to

remember that under similar conditions Adolf Hitler came to power and launched this world’s most devastating war.

As Peter Jay has stated, “There is a possibility of a breakdown in existing economic systems in the West, leading maybe to anarchy, maybe to governments ruling more by strong-man tactics. What would our daily life be like if that forecast were fulfilled?” (The Crisis of Western Political Economy, p. 58).

Your Bible predicts such a scenario. In Revelation 18 we read of a powerful geo-political power, described as a “beast,” influenced by a great false church, typed as a whorish woman, which will dominate world trade. Herbert W. Armstrong predicted that, just as a similar “beast” power rose out of the great depression of the late 1920s and early 1930s to wreak havoc on the earth, this beastly power would, in the future, arise with even greater force. He further predicted that this powerful ten-nation combine would arise out of great social and economic depression. That is exactly in line with Mr. Jay’s scenario. Stand by for the fulfillment of these remarkable prophecies of your Bible. The world is indeed on the brink of catastrophe!

The Solution

What will solve this world’s economic and financial woes? Peter Jay puts it this way: “I have come to the conclusion that the problem lies right in the very heart and nature of the type of economic system which we are trying to operate, and that once one has perceived this one realizes that one is confronted with an infinitely more serious problem than it would be if it were merely a matter of bad management or bad luck” (ibid., p. 31).

Mr. Jay hits the problem right on the button! But he, like all world economists and financial commentators, fails to come up with a replacement to the current world system of trade and economics. The International Monetary Fund and the World Bank have met to consider this vexing question, yet, predictably, with little result.

A fundamental problem that all wrestle with is the fact that economic performance, culture and religion are inextricably linked. As David Landes has noted, any changes in one will work back on the other. At the source of these converging influences on our world economy lies human nature. Our systems of finance, economics, politics, societal organization and administration are set to ultimately fail, for they are rooted in a nature that feeds on vanity, jealousy, lust and plain greed.

Only a system founded upon an opposite nature, which engenders a global human attitude of humility, generosity, self-control and an innate desire to produce and give goods and services to the collective benefit of all mankind, will succeed, grow and yield profit for all.

A pipe dream? No! A godly vision! A vision which is shared by those who support the publication of this magazine. A vision which grows in the minds of a scattered band of people, from all walks of life, all classes and creeds of mankind. This dedicated body of loyal supporters share a great common hope of a future, founded upon a world government which will enforce a perfect economic system in this world for 1000 years of growth and stupendous prosperity. Write now for your copy of Isaiah’s End-Time Vision, grasp the vision of that future and start training now to install that perfect system under the loving and authoritative reign of its perfect Creator (Isa. 9:6-7).

THE EU’s new prize

From the November 1998 Trumpet Print Edition

On September 5, the Maltese electorate ousted their socialist government, formally led by Alfred Sant. The Labor Party leader was previously voted in during elections in October 1996. Replaced now by the conservative leader of the Nationalist Party, Eddie Fenech Adami, Mr. Sant’s anti-European Union Labor Party will sit in opposition to the pro-EU conservatives. Shortly before his taking office as Malta’s new Prime Minister, Fenech Adami renewed his commitment to pursuing EU membership.

Throughout history, Malta has been a strategic Mediterranean sea gate to numerous nations under which it has suffered invasion and forcible possession. The Maltese people’s stoic endurance under the Nazi siege during World War ii was recognized by King George vi in his awarding the whole island nation the George Cross for bravery.

The real power brokers in the EU recognize Malta’s importance as a strategic Mediterranean gateway. Already they are moving to give Cyprus, a crucial gateway for Europe to the Middle East, early entry to the European Union.

With both Cyprus and Malta in the EU camp, it would only remain for the Union to take over Gibraltar from British control for them to possess the three prime choke-points controlling access to and the movement of shipping throughout the entire Mediterranean. The liberal-socialist government of Tony Blair yet may prove to be the facilitator of this handover of the final link in this chain of Mediterranean sea gates formally possessed by Britain [biblical Ephraim] in fulfillment of the promises of God to the seed of Abraham (Gen. 24:60).

[Factual errors concerning the awarding of the George Cross appeared in the original version of this article. The correct details appear in the above text.]

A Nation of Cowards?

From the November 1998 Trumpet Print Edition

“In January 1996, Assistant Secretary of Defense Chas. W. Freeman Jr. warned senior Chinese officials that the United States would respond militarily to a Chinese attack on Taiwan. According to Freeman, the Chinese responded, ‘No you won’t. We’ve watched you in Somalia, Haiti and Bosnia, and you don’t have the will’” (John A. Gentry, “Military Force in an Age of National Cowardice,” The Washington Quarterly, Autumn 1998).

America is called the world’s only superpower. Many nations have looked to the U.S. for protection. But that trust is rapidly fading.

Nations like China know that Americans are too fearful to fight. We no longer believe that “the mission comes first.” We do all we possibly can to avoid any human casualties. We do this to the point where we have become a nation of cowards.

Adolf Hitler preyed on that kind of weakness before World War II. In fact, Winston Churchill believed that weakness CAUSED World War II!

So few nations opposed Hitler that he thought he could conquer the world. He almost did!

Weakness only encourages strong, dictatorial leaders. (Please read the article in this issue on Winston Churchill.) How can we correct this deadly disease of a broken WILL?

“It seems unlikely that we will alter our basic course during the Clinton administration—or before a major military defeat” (ibid.). Mr. Gentry is saying it will probably take a major military defeat to correct the deep-seated problem of our fear. But in this nuclear age, a major military defeat would probably mean our nation’s destruction!

There is a marvelous solution to this problem, if only we would listen to God’s warning. God even prophesied about our broken will. What’s more, He had a strong hand in producing this broken will. It is actually connected to God!

The book of Daniel is an end-time book of the Bible (Dan. 12:4, 9). Daniel said that the books of Moses also contain prophecy for this end time (Dan. 9:13).

Let’s look at one of those prophecies: “And I will break the pride of your power” (Lev. 26:19). This chapter is called the blessing and cursing chapter. We should be living in the midst of God’s abundant blessings. Instead, we are being cursed by the living God! Our broken will is one of those curses!

What a curse to have a broken will in a world full of dangerous, dictatorial leaders. We simply cannot survive unless the problem is corrected.

God knew that we would have great power—that we would be the world’s only superpower—but lack the WILL to use that power.

Read, in the preceding verses of that chapter, about our sins. Then you will see WHY God has broken the pride of our power, or our national will. The U.S. is a major part of end-time Israel (write for our free booklet The United States and Britain in Prophecy.)

We gained our freedom through much bloodshed and courage. And our freedom cannot be sustained by cowards. We can easily deceive ourselves. But our enemies know the truth and will one day soon put us to the test!

The further we get from God, the more cowardly we become. The closer we are to God, the more we manifest courage.

God wants us to avoid a major catastrophe. We can do so only by heeding His warning message.

God has broken our national will. Only God can heal it. That is the sobering truth.

God sees our broken will. The world sees it. But do WE see it? And if we do, are we willing to let God show us how to correct it? May God help us to choose the way of blessings and not the path of curses. Our future is in our own hands!

Cosmic dust devil

From the November 1998 Trumpet Print Edition

November 17 and 18, many satellite engineers and communications companies will have a watchful eye on the heavens. That’s when the earth passes through this cosmic cloud of debris, causing an event called a Leonid meteor shower.

Space-based communications platforms, navigation systems, scientific experiments and military spacecraft all will face their greatest threat in two separate waves of inbound space dust traveling over 155,000 miles per hour. The particles, smaller than a grain of sand, pose no threat to the surface of earth (they will burn up in the atmosphere miles above the ground). But for satellites in orbit, they pack the same destructive punch as a bullet fired from close range.

Nobody can say for sure how many of the more-than-500 satellites currently in orbit will be affected; speculation runs the gamut from conservative warnings to doomsday predictions. The United States House of Representatives Committee on Science issued a recommendation stating, “While it is very unlikely that the storm will have any major effect on satellites, the ‘A-team’ of controllers should be on duty during the time of the storm, and operators should check the state of health of their satellites frequently, looking primarily for electrical anomalies and glitches. It was also recommended that, if possible, satellites be oriented so that sensitive components are shielded from the oncoming stream of particles, and that recovery plans be in place should there be a spacecraft system failure during the storm.”

The meteor storm of 1998 should prepare the engineers for the second wave due to hit in November 1999. The timing of that wave comes at an unsettling time—just weeks before the year 2000 (Y2K) computer glitch. Disaster could abound if Y2K has the comprehensive impact many are predicting, especially if the problem is compounded by loss of spacecraft in the Leonid meteor shower. If the meteors wreak serious damage, the resultant loss of communications will only deepen the impact of Y2K.