As some readers will recall, I occasionally base blogs on pertinent articles printed in Foreign Affairs, the bi-monthly publication of the Council on Foreign Relations (CFR). This is one such blog. In the November-December issue of Foreign Affairs, there is an excellent and insightful featured article by C.Fred Bergsten, a former Assistant Secretary in the Treasury Department and currently Director of the Peter G. Peterson Institute for International Economics. His article is entitled “The Dollar and the Deficits,” and the publication’s cover states that his article explains “Why Washington must reduce deficits, balance the budget, and embrace a falling dollar—or face another crisis.” His article offers an excellent analysis of the mismanagement of the U.S. economy by the U.S. Government, and since his article comes with a CFR imprimatur, it gives us an insight into probable policy changes the CFR has planned for us in the future. I highly recommend the article, which is enclosed below as a link.

Mr. Bergsten notes that “new policies…should be initiated promptly,” and that “This is not just an economic imperative but a foreign policy and national security one as well.” Think about those words. He is saying that the USA’s ability to conduct an independent foreign policy and adequately defend itself depends on getting America’s financial house in order. He warns that a “sudden stop in lending” by foreigners to support the skyrocketing U.S. debt levels will not only “drive the dollar down…,” but could also “bring on a hard landing for the United States—and the world economy at large (emphasis added).” In other words, unless major policy changes bring some fiscal sanity to the U.S. Government’s economic decisions, we could face another global economic/monetary crisis.

He adds that unless the USA takes significant actions to control its budget and trade deficits, “the international economic position of the United States is likely to deteriorate enormously.” Notice that word “enormously.” Also ask yourself how likely is it that our current profligate leaders (President Obama, Secretary of the Treasury Geithner, House Speaker Pelosi and Senate Majority Leader Reid) will take the necessary steps needed to control budget deficits and restore fiscal sanity to U.S. government fiscal policies? I think the chances are slim and none, unless some major crisis wakes them up and forces them to do so.

The article admirably calls for a return to balanced federal budget, and specifically calls for “containing the cost of medical care, reforming social security, and enacting new taxes on consumption.” He very accurately warns that “The U.S. Government’s continued failure to responsibly address the fiscal future of the United States will imperil its global position as well as its future prosperity.” This makes utter sense, but try to explain this to the average member of Congress who cares only about greasing the skids for spending in his home district and winning reelection. Making hard choices does not usually win votes among today’s voters who are mostly ignorant that America’s “gravy train” cannot continue much longer. If the USA doesn’t get its own financial house in order, I think it is only a matter of time until foreign nations impose some financial disciplines upon U.S. recklessness. Mr. Bergsten makes the accurate observation that America’s fate is “already largely in the hands of its foreign creditors” and he mentions China, Japan, Russia and the oil-exporting nations as the primary ones.

This article has scathing criticism for the “stupid” subprime loans made by U.S. financial institutions and the sins of the U.S. regulators who were “lax to the point of indifference.”  His article argues that a lower dollar is inevitable, and a multi-polar currency system is likely.

Among his suggested solutions are a shift from income taxes to consumption taxes (i.e. a national sales tax, gas taxes, value-added taxes), requiring a mandatory savings plan for American citizens (Australia and Singapore are cited as already having such a program), and implementing “pay-as-you-go” rules in Congress. That latter idea is a great one, but try getting a spendthrift Congress to impose fiscal discipline on itself!

This article is worthwhile for all readers of this blog. Mr. Bergsten makes sense, but it is hard to imagine how this current Congress can be trusted to do anything as logical and sane as Mr. Bergsten suggests. If Congress refuses to take the necessary steps to restore fiscal discipline to U.S. Government policies, another global crisis is inevitable. The only question is when it will strike. Revelation 17 and 18 prophecy that the current “globalist” (see Revelation 18:3) system of commerce and finance will collapse during the latter days of this age. This prophecy calls our current globalist system “Babylon the Great.” Revelation 17:9-16 prophesies that “seven heads and ten horns” will ally themselves together to bring down the current global financial system which enriches only the insider elites who run and rig the system (Revelation 18:3 and 9). Revelation 17:16 foretells that when the current system collapses, the seven heads and ten horns will “make her [Babylon the Great] desolate, and naked, and shall eat her flesh, and burn her with fire.” That sounds like a very “hard landing” is in store for the current system.

Who are the “seven heads and ten horns (a description which implies some overlap in these entities)? I cannot say for sure, obviously, but if I was forced to make a guess now, I would have to select a grouping of “seven “and “ten” which are recognizable in our modern world. I’d have to guess the G-7 nations and the nations of the modern “ten” tribes of Israel. These groups do have an overlapping nature as some modern nations of the ten tribes of Israel are in the G-7 nations. However, future events may indicate a different alignment. We may not have a lot of years to wait and see how this prophecy gets fulfilled. If you wish to learn more why Revelation’s prophecy refers to our current global economic/financial system as “Babylon the Great,” you can see the answer in my article “What Kind of Captivity?” at the articles link at this website’s homepage.