Can the Financial Flames Be Stopped?
The economy wasn’t a big deal. Not as long as there was bread and circuses. The generous welfare system, the wars, and the public spectacles kept the masses distracted. Colossal-sized debt paid for colossal-sized public projects. People lived rich.
But when it came time to pay back the debt, the empire was in trouble.
Rome began cheating its creditors by taking the gold and silver out of its coins. Before long, Roman money was worthless—and Rome’s wealthiest families were ruined. Society disintegrated. Unemployment and widespread food shortages ravaged the populace, soon after which the citizens of Rome had new taskmasters—the barbarians at the gate.
Is America Rome? Prosperity is still widespread today. But with unemployment rising and the dollar’s value falling, more and more Americans are feeling the pinch personally. The parallels with Rome are ominous—and we shouldn’t expect the trend to reverse course.
How to Make $3 Trillion Vanish
Here is the sad fact: U.S. taxpayers have committed more than $8.7 trillion to fixing the economy, and we haven’t even made a noticeable dent!
Take a few seconds to reflect on what $8.7 trillion means.
If you took the total cost of the Marshall Plan, the Louisiana Purchase, the race to the moon, the savings and loan crisis, the Korean War, Vietnam, the Iraq wars, nasa’s all-time budget—and adjusted them all for inflation into today’s dollars—you would come to only $3.9 trillion. You could even throw in every dollar spent on World War II, and you still would only get to $7.5 trillion!
“It seems safe to say that, adjusted for the usual government underestimates, by oh, mid-2010 the bailout will have cost more than all of American history combined,” quipped columnist Mark Steyn. “And by then we’ll probably need a new round number.”
To be fair, only around $3 trillion has been spent or lent already. The majority of the rest is money the government has said taxpayers will pay to guarantee banks and other financial institutions in the case that they fail or find out their investments are worth less than they are pretending their value is.
The fact remains: $3 trillion has vanished with no visible improvement in the lives of anybody besides some lucky bankers, who are the proud new owners of $18 billion in bonuses—paid for by the people that politicians claim the bailout is supposed to be helping: taxpayers.
Now, with the latest $780 billion stimulus package, taxpayers are expected to foot the bill for hundreds of billions more.
Wait a Minute … We’re Already Broke
But that is not the most dangerous aspect of this stimulus bill. Nor is the fact that politicians justified borrowing $300 million in this supposed economic bill to go toward sexual health, $245 million for Hollywood movie producers to buy film, $650 million to help people convert to new television sets, and a veritable smorgasbord of other special-interest pork—somehow tying it in with “fixing the economy.” It is not even the fact that government economists were so desperate that the government planned to borrow money to pay people up to $15,000 to purchase homes.
No, the most dangerous aspect of this stimulus bill is that it distracted from the fact that America isbroke.
We act as if we have $8.7 trillion to spend in the first place.
The rage is to “spend, spend, spend”—yet there is barely a voice asking the burning question: Where is the money going to come from? America was already broke even before the financial landslide started hitting Wall Street last September!
The simple truth is that most politicians don’t have a clue about how to fix the economy. That’s because they don’t understand the real cause of the problem.
Is Prosperity the Problem?
Economist Roger Babson became famous for warning that America faced “the worst business depression that our generation has ever experienced.” That was in 1920 and early 1921. When he predicted it, people were amazed because America seemed to be at the height of prosperity. Babson knew something they didn’t.
“The test of a nation is the growth of its people—physically, intellectually and spiritually,” Babson said in 1960. “Money and so-called prosperity are of very little account. Babylon, Persia, Greece, Rome, Spain and France all had their turn in being the richest in the world. Instead of saving them, their so-called prosperity ruined them.”
Prosperity ruined the Roman Empire, and it is ruining America too.
Historian J.P. Bauzon, in his book Roman Civilization, notes that in Rome, by “the third century, the silver coins had become copper pieces washed in silver, and issues of gold had virtually ceased.” Little by little, the Roman emperors cheated their citizens and creditors, paying bills and debts with coins that had reduced precious metals content. Debasing the coinage ruined the prosperity of its citizens.
America is doing the same thing today. The dollar has lost 95 percent of its purchasing power since the establishment of the Federal Reserve in 1913. And America continues to debase its currency in order to pay its bills. Every time you hear a politician use the term stimulus, or bailout, or borrowing, or monetizing, or quantitative easing, what it means is that the government is devaluing the currency a little more. Every dollar of debt makes the greenback worth a bit less. The dollar’s purchasing power is being compromised. When the current short-term dollar rally runs out of steam, expect the price of commodities and other imports to jump again.
In America, prosperity is no longer synonymous with actual wealth. Prosperity goes by an entirely different name today: debt!
It was the same in Rome.
What Won’t Save Us
“As an almost unavoidable corollary of the huge Roman fortunes, went the accumulation of debts. … Even men of grave and respectable habits caught the mania of their age, that of living beyond their incomes,” wrote historian William Stearns Davis. “The typical Roman of birth and fashion, [was] regularly in debt, and frequently on the brink of ruin” (The Influence of Wealth in Imperial Rome).
Just as in ancient Rome, America’s standard of living is financed by debt. The economy is financed by debt—even our so-called bailouts and stimulus packages are financed by debt. America is addicted to debt. Debt is burning America.
More borrowing and spending cannot fix the problems caused by too much borrowing and spending.
“Money will not save us,” warned Babson. “We must be filled with the desire to render service, to seek strength rather than security, to put character ahead of profits.”
Character ahead of profits. How many economists do you hear speaking like that today?
“Only a sane, spiritual revival which changes the desires of our people will save us,” Babson said.
Saving instead of spending, producing instead of consuming—these are badly needed reforms. But the ultimate source of America’s economic problems is a deeper fundamental problem. As Babson said, a whole new way of thinking is needed.
America Is Rome on Fire
The origin of America’s whole economic crisis can be characterized by three words: fraud, greed, and corruption. Ironically, today’s bailouts are more of the same.
If you can honestly express the idea that the fundamentals of our economy are sound, despite America’s very visible collapse, then you are welcome to join the chorus of commentators and citizens who believe we are just one more spending bill, one more decision, one more quarter, one more election away from economic stability. But if your honesty dictates that you admit the obvious, that our economic fundamentals themselves are the problem, then you know America is Rome on fire.
America’s financial core—its biggest banks—are charred cinders. Now the flames are moving toward the commercial and residential sectors. Almost 600,000 jobs were lost in January. Around 1.5 million were lost during the last quarter of 2008. Mass unemployment is on the way. The backdraft will be huge.
Bread and circuses will not be enough.
Long foodlines are coming to America. Social unrest will grow. The fire has passed the point of containment.
Only by understanding the cause of the problem can it be fixed. Borrowing and spending vast amounts of money may be part of the cause of America’s economic problem—but as Rome found out, it is certainly not the solution.
The real solution, as Babson said, must be spiritual. The only way that people, and therefore a nation, can enjoy real lasting prosperity is if they follow God. In Deuteronomy 28, God describes the many national blessings for obedience. But as a warning, God also lists the economic curses for disobedience. It is those curses that are now ravaging America.
God is a merciful God. He measures out His punishment a little at a time, giving us time to turn from our wrong ways. But as long as America continues its godless pursuits, as long as it looks to money to solve its problems, then the financial flames and the other curses described in Deuteronomy will only intensify.
Nevertheless, God wants people to prosper. And despite America’s rapid decline, individuals still have the opportunity to be blessed. You can be protected from the financial inferno sweeping the nation. But it involves living a certain way of life. To learn about it, order a free reprint of our article “How You Can Prosper in a Recession!” and a free copy of the book Mystery of the Ages by Herbert W. Armstrong.