“Can you realize how fast events are happening in the world?
“You have seen that the U.S. dollar—long thought of as the stablest currency in the world—is in immediate jeopardy of being devalued!
“That means that it will take you more dollars to buy the same amount of imported goods. If the dollar is devalued, inflation will almost surely result—and eventual economic collapse for the United States.
“Those of you who truly believe the prophecies of your Bible know such economic collapse is prophesied to happen!
“And now, in almost daily news, comes the frightening development of a rush on gold …. What does this all mean? It means that at any time now, you could suddenly awake to find you have only about half the ‘money’ you thought you possessed—or that your purchasing power has been drastically reduced, overnight!
“Should the dollar collapse, it could well mean a repetition of the disastrous depression that strangled the economic world in 1929!
“The final crisis is fast descending upon us.”
Those words sound like they could have been printed this month. The dollar is dropping to all-time lows. America is, in fact, experiencing the early stages of a dollar collapse.
But Herbert W. Armstrong, editor in chief of the globally circulated Plain Truth newsmagazine up until his death in 1968, wrote those words 40 years ago.
Following Mr. Armstrong’s lead, and interpreting current events in light of Bible prophecy, the Trumpet has continued, from its earliest editions, to warn that the age of the dollar is almost over—and warn readers that this is a precursor to the biblically prophesied downfall of the United States.
Now, that prophecy is coming to pass. America’s economy truly is on a downward slope, sliding toward a cliff.
The most visible sign that America is heading toward collapse is probably the decline of the dollar. But why is the dollar falling? One big reason is billowing debt.
American society is critically reliant upon borrowed money to maintain its standard of living. Federal, state and municipal governments borrow to finance budget deficits and spending; consumers increasingly borrow for daily needs as well as wants; and now, recent headlines reveal that America’s biggest banks, such as Citi Group, Washington Mutual and Charles Schwab, are borrowing billions from the Federal Reserve Bank to stay afloat. The whole economy is propped up by ever greater amounts of debt.
Total U.S. debt now stands at approximately $48 trillion. If future liabilities such as Social Security, Medicare and government pensions are included, America’s total debt would double to around $100 trillion.
Warning signs of too much debt have been evident for many years, although it is only now, with the falling dollar, that many other news sources are emphasizing it. The Trumpet has highlighted this unsustainable trend for more than a decade, but even before us, Herbert W. Armstrong warned of the same. In a letter dated Oct. 25, 1985, Mr. Armstrong wrote that “the U.S. and the entire world face a grave economic future from the burden of mounting debts.”
This is what the Trumpet said in 1997 concerning the danger that America’s debt, especially foreign debt, posed to the economy: “The inherent dangers for a country operating in this way should be obvious to any clear-thinking person. Countries, just like individuals, can become addicted to credit! In order to maintain a high standard of living, America has become increasingly dependent upon foreign credit to pay its bills, piling debt upon debt, until it has mortgaged itself to the hilt!” (“America’s Economy—Hanging From a Thread,” August 1997).
America’s foreign debt load has more than doubled in the decade since that was written.
The article went on to explain why this situation is so hazardous. “The primary danger is that addiction to foreign credit finally gives foreigners complete control over the debtor nation! A variation of the ‘Golden Rule’ says, ‘He who has the gold, rules.’ Or as Almighty God, the master economist of the universe, tells us in Proverbs 22:7, ‘The borrower is servant to the lender.’”
In that 1997 article, author Tim Thompson compared America’s debt-dependent society to the whitewashed tomb of Matthew 23:27. “It is beautiful on the outside—it has the appearance of wealth and wellbeing—but inside it is ‘full of dead men’s bones, and all uncleanness’—it is a financial nightmare built by hypocrites and filled with all rottenness!”
As Mr. Thompson pointed out, borrowed money can give the appearance of prosperity—but appearances don’t mean much. Just because you drive a Mercedes or wear a Rolex doesn’t mean you are rich—it may mean that all your credit cards are maxed out and you have a second mortgage.
America’s wealth illusion is becoming transparent. The debt has grown so massive that the nation’s international trade partners are beginning to question America’s creditworthiness, a trend the Trumpet foresaw in 1995. At that time, we wrote that confidence in America could be seen in the value that foreign nations place on the dollar. “Confidence in America is falling,” we warned (“Decline of a Dollar, Decline of a Nation,” May 1995).
Foreign Capital Flight
But what happens if America loses the confidence of the world—if it becomes regarded as a credit risk with the potential to renege on its debts? A November 1998 Trumpet article answers the question. “America has long been the safest place on Earth for foreign investors’ money. But what happens if they take their money elsewhere?” (“Financial Destruction of America”).
The article continued: “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. …
“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’ [trade partners]” (Jeremiah 4:30; 30:14, 24).
This past August, America got a taste of foreign capital flight. Its lenders decided to take their money elsewhere. Investments totaling a record-breaking $163 billion fled the U.S. that month, according to Treasury Department figures. And for the first time since 1998, foreigners on balance sold U.S. government treasuries. Asian investors alone, including Japan ($23 billion) and China ($14.2 billion), dumped $52 billion.
And what will be the effect? Visualizing this eventual probability, the Trumpet wrote in 1997: “And now there is going to be a heavy price to pay. … For Japan and other foreign creditors to sell extensive amounts of U.S. treasury bills would be similar to a bank cutting off the credit line of a heavily indebted individual who relies on borrowed money to pay his bills, and then demanding immediate repayment of the outstanding loans. That is exactly the position in which the United States finds itself! Simply put, if early repayment of these loans are demanded through a massive sell-off of foreign-owned bonds, the United States would be unable to pay the face value of the bonds, let alone the interest! There is a mortgage on America—and foreigners hold that mortgage …” (op. cit., August 1997).
In January 1998, we wrote that “the foreign-financed U.S. national debt is America’s Achilles’ heel! … [F]oreign financing of a country’s deficits, or national debt, is a time bomb just waiting in the shadows, ready to destroy a country financially when the lender countries … stop lending” (“Asian Financial Meltdown”).
Evidence today is vindicating the above statements. This past August, two Chinese government officials highlighted how China could use its massive U.S. dollar holdings (which include hundreds of billions in government treasuries) as a political weapon to influence the U.S. One Chinese cabinet-rank minister went as far as saying that America’s debt should be used as a “bargaining chip” to influence trade talks. Another Chinese official warned that China could set off a dollar crash if it so desired. Chinese state media referred to the country’s stockpile of U.S. dollars as its economic “nuclear option,” capable of destroying the dollar at will.
In early November, a Chinese central bank vice director warned that the dollar was losing its luster as a reserve currency and that China might start diversifying its currency reserves—selling its dollars and U.S. treasuries, for example. The announcement roiled financial markets, causing a drop in the dollar’s value and a 350-point plunge in the Dow Jones industrial average.
But as foreign investment has begun to leave America, other countries—especially in Europe—have begun to benefit from all that foreign money looking for a new home.
The Rise of Europe
When the euro was launched nine years ago, many critics said it could never share the field with the dollar, pound or yen. Critics and analysts, while focusing on the many obstacles that a culturally fragmented Europe would need to overcome, largely overlooked or dismissed the economic strength a united Europe could exert if monetary union succeeded.
But because of our reliance on Bible prophecy, the Trumpet stands out as a voice that consistently and correctly predicted the rise of the euro and a European empire.
In May 1998, when many thought the euro would not be a viable currency, the Trumpet wrote the following concerning its launch: “The most profound and significant event since the fall of the Berlin Wall is about to break on to the world scene. It is an event which will change the whole framework of existing global political, economic and financial cooperation” (“EMU Takes Off”).
Earlier, in August 1997, the Trumpet asked, “[I]f the Japanese and other foreign debt holders pull out their support of the United States and the U.S. collapses financially, how will those investors attempt to keep themselves from financial collapse? The answer fits perfectly with Bible prophecy, which indicates they will probably put their money with the new economic superpower, which will be forced into a meteoric rise because of the fall and failure of the present economic superpower America, when it is abandoned by its economic ‘lovers.’
“Unknown to virtually everyone on Earth, America is being replaced in its role as the world’s sole-surviving superpower. Today, even as you read this article, a religio-political machine … is on the rise in Europe.
“Do we begin to catch a glimpse of imminent global economic upheaval? Can we see the competitive spirit with which the euro is being implemented? Can we see how the pullout of Japan as America’s financial underpinning could open the door for the euro to become the dominant international currency? … Once this occurs, the new euro will probably be catapulted into prominence and increased value, all the while climbing higher as it pushes the dollar deeper into the financial abyss!”
Today the global shift in investment from the dollar to the euro is stopping the mouths of critics. Europe and the euro are on the rise—largely because of the weakness of America and its dollar. The euro has risen 62 percent against the dollar since 2002.
As the Trumpet reported in November/December 2007, even former U.S. Federal Reserve Bank chief Alan Greenspan sees the possibility of the euro replacing the dollar as the world’s reserve currency. Greenspan warned in a September 2007 article in the German magazine Stern that both private investors and central banks were beginning to dump dollars in favor of the euro, narrowing the gap between the number of dollars held by foreign central banks as compared to euros. Greenspan also noted that the greenback didn’t actually “have all that much of an advantage” over the euro anymore and that in terms of cross-border trade, the dollar accounts for 43 percent, while the euro is used in a close 39 percent of exchange.
The world’s economic landscape is drastically changing. The dollar is on the verge of collapse, foreign investors are beginning to abandon the U.S., and investor confidence is shifting to Europe. The Trumpet has been warning of these events for decades. Future world events are not secret. The Bible reveals them and makes them plain.
Watch global trends! The dollar’s recent depreciation is only the beginning of many more biblically prophesied events that will drastically impact the Western world. As the parable of the fig tree tells us in Matthew 24:32-35 concerning end-time events leading up to the return of Jesus Christ, “when you see all these things, know that it is near, even at the doors.”