On the day the US House of Representatives voted to vastly increase the US national debt and spending levels, Russian Prime Minister Vladimir Putin called the USA a “parasite on the world economy ” because its massive debts “threaten the global financial system” (see link below). He also charged that the USA “is not living within its means.” In this charge, Putin is absolutely correct, as many print and electronic articles have abundantly documented. Putin also was “insistent” that the globe “should be seeking new reserve currencies for trade and savings.”
I think Putin speaks for much of the world investment community in his charges against the USA’s mismanagement of its finances. Resentment against the USA’s obscenely high levels of debt are growing in many nations, as previous blog posts have documented. Putin is not alone in his assessment. Yesterday, I listened to Rush Limbaugh for a time on my car radio, and his comments were in the same vein as Putin’s. Limbaugh called the USA’s financial system a “ponzi scheme,” and somberly added we face a “scary situation” in the uncontrolled spending and debt levels of the federal government. He warned of an “ultimate, inevitable collapse” of the US financial/monetary system at some future point. He also correctly noted that the money being borrowed and spent by the federal government is “not real.”
Allow me to give my layman’s assessment/opinion of how the US government “handles” its finances. The US government spends over a trillion dollars more per year now than in takes in. The US government has no reserves worth mentioning so it is spending money it does not have. There aren’t enough lenders in the world who trust Uncle Sam any longer to loan it the money it needs to pay for its excessive spending so the US Federal Reserve Board lends the federal government money to cover its deficit. However, the problem is that the money lent by the Fed to the federal government doesn’t actually exist. It is “lent into existence” by the Fed which creates the money out of thin air. Therefore, the USA is spending vast sums of “pretend” money which the Fed pretends is real when it loans it into existence. The Fed and the US government cross their fingers and hope the American people and the rest of the world agree to accept all this “pretend” money as “real” money. No wonder Limbaugh called the US financial system a “ponzi scheme.” It reminds me of the tale of “The Emperor’s New Clothes.”
For those of you who thought the Congress and Obama actually did anything to solve the debt crisis, I hate to disillusion you but you deserve to know the truth. The action passed by Congress and signed by Obama authorizes the federal government to increase spending by trillions of dollars over the next ten years and this spending will be done with more “pretend” money that the Fed will create out of thin air. Putin and Limbaugh are both right in their harsh assessments of the US financial system.
Most Americans think that when Congress and Obama passed a “spending cut” that they are reducing the actual numbers of current dollars being spent. They want you to assume that, but that is not the case. The federal government automatically locks in huge spending increases each year via “baseline budgeting” which locks in trillions of dollars of extra spending to fund the current level of government programs and services. This has been explained on a number of conservative radio talk show programs, and one mentioned the automatic increases would amount to something like $8 trillion over the next ten years. The “cuts” approved by Congress are not cuts to the current actual level of federal spending, but rather to the projected increases in government spending which are already locked in due to baseline budgeting. So, the bill approved by Congress and signed yesterday by Obama does nothing to solve the US debt crisis. Congress and Obama simply “punted” the problem into the future past the next election date to help themselves politically.
The world’s nations and investors see that Congress and Obama simply expanded the “ponzi scheme” already in progress. Nothing meaningful changed. I expect that this cynical action by Congress and Obama will intensify behind-closed-doors discussions among the world’s nations to come up with a substitute for the US dollar as a global reserve currency.
Rush Limbaugh’s assertion that an “ultimate, inevitable collapse” lies ahead of us totally agrees with Bible prophecy. Revelation 17-18 foretell that at whatever time God chooses to allow it to happen, the current global banking/financial system (called “Babylon the Great” in Revelation 17-18) will experience a sudden (and perhaps violent) collapse. Revelation 17:16 prophesies the collapse of the current Babylon the Great system (also called “the great whore” in this prophecy) will occur when “seven heads and ten horns” overthrow it on the world scene. The nations or entities which overthrow the current global financial/monetary system will do so in a manner which “makes her desolate and naked…and eat[s] her flesh and burn[s] her with fire.” That sounds like the overthrow will have violent effects. The current financial system almost collapsed in Autumn, 2008. We are living on borrowed time. I do not know whether the collapse will come in months or years, but it will come.
For more information about the ancient origins of the modern banking system and why it is called “Babylon the Great,” please read my article, What Kind of Captivity? For an in-depth look at how the modern financial system could collapse in light of biblical prophecies, I invite you to read my article, Is Babylon the Great about to Fall…Ushering in a Global “Beast” System? To ensure that you make prudent preparations for you and your family to make it through the prophesied collapse of our current global financial system, I strongly urge you to read my article, Should Christians Prepare for Coming Hard Times?