Tag Archives: inflation

MEN MORE LIKELY TO DIE

Medical staff speak with a male patient infected by the COVID-19 coronavirus at Red Cross Hospital in Wuhan in China’s central Hubei province on March 10, 2020. (Photo by STR / AFP) / China OUT (Photo by STR/AFP via Getty Images)

What will be the outcome of the coronavirus?

The virus will pass eventually.   But the economic damage is something that could be with us for many years.   We may never recover.

In the Great Depression of the 1930’s, unemployment reached 25%.   Today, it’s already 10-13% and growing.  We may even reach the highest figure the US ever experienced, the 1896 Depression when 50% of the people were unemployed, at a time when government did not provide unemployment benefits.  That year saw the biggest turnout ever for an election, 80%.  The population was roughly 75 million.  According to Wikipedia:

“Since the onset of the Panic of 1893, the nation had been mired in a deep economic depression, marked by low prices, low profits, high unemployment, and violent strikes.   Economic issues, especially tariff policy and the question of whether the gold standard should be preserved for the money supply, were central issues.”

I do not have to tell you how devastating this would be.

One thing is for sure, it’s unlikely we can go back to the way things were.

The United States Is not specifically mentioned in biblical end time events.   These take place in the Middle East and Europe.   China is also not mentioned, except (maybe) where an army of 200 million men comes from the East.  (Revelation 9:16)

So, for the US to be out of the picture, it must come down as a nation.   An economic collapse could fit this scenario.  In the last twenty years, the US economy has suffered serious impact three times – 9/11, the Great Recession of 2008 and now the coronavirus pandemic.   It’s as if God is warning us.   We recovered from the first two.  It does not follow that we will recover from the third.

The big problem is the borrowing.  The stimulus, as it’s being called.  It was big news a few years ago when our national debt reached one trillion.  Now, we add trillions without a second thought.  With the national debt now running at $23 trillion, an additional two trillion of stimulus money doesn’t sound like much.  But a second, third and maybe even fourth round might be needed, adding as much as 8 trillion to our debt.

There will come a point when the rest of the world will no longer accept dollars as payment for anything.   There will also come a point when we won’t be able to pay the interest on the debt.  Inflation may also be a major problem, with many items already costing more.   Worst case scenario – the dollar may become worthless!

A second concern should be the military.  I was struck earlier this week by reports that the US has two aircraft carriers in the Pacific, and both were incapacitated by an outbreak of the coronavirus amongst their crews.   It reminded me of the events of December 1941.   At that time, Britain was the greatest naval power and still the #1 nation in the world.   But, after Japan attacked Pearl Harbor, it went on to sink the British battleship Prince of Wales and the battle cruiser Repulse, on December 10th.   Nobody realized at the time that this was the end of British naval supremacy, after more than 200 years.

This is how quickly and unexpectedly a nation can fall from preeminence.

EUROPEAN UPHEAVAL

The second development that may come from the coronavirus is significant upheaval in Europe, the second major area of biblical prophecy, after Jerusalem.

Already battered by the refugee problem, Brexit and the rise of populism, Europe has been unable to make a difference with the virus now sweeping the continent.  There is increasing talk of Europe breaking up, with arguments over money being a major cause.

For Europe to make the biblical changes foretold, the EU is most likely to fall apart, leaving some nations to rally around Germany, the continent’s dominant power.

Revelation 17:12-14:   “The ten horns which you saw are ten kings who have received no kingdom as yet, but they receive authority for one hour as kings with the beast.  These are of one mind, and they will give their power and authority to the beast.   These will make war with the Lamb, and the Lamb will overcome them, for He is Lord of lords and King of kings; and those who are with Him are called, chosen, and faithful.”

These ten will be led by Germany, the modern descendant of Assyria (Isaiah 10:5-8).

MR     

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Men are proving much more susceptible to the coronavirus than women, dividing opinion as to whether it is linked to behavioral factors such as smoking and drinking – or biology.

While it has been widely reported that the elderly and those with underlying medical conditions are most at risk from Covid-19, emerging data from around the world has revealed that the virus also discriminates by sex.

First seen in China, where one analysis found a fatality rate of 2.8% in men compared with 1.7% in women, a similar pattern has emerged in France, Germany, Iran and South Korea.   (The Week, 3/27/2020)

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CORONAVIRUS ENDS ISRAELI DEADLOCK

In the end, it took the coronavirus to break the year-long deadlock in Israeli politics.   Prime Minister Benjamin “Bibi” Netanyahu will still face corruption charges, but he has yet another new lease on political life, as he and political rival Benny Gantz cut a deal yesterday:   Bibi will continue as prime minister, with Gantz serving as either defense or foreign minister, until September 2021 at which time Gantz will take over as prime minister.

It’s a full about-face for Gantz, who had previously vowed never to serve under a prime minister facing formal corruption charges.  But Gantz’s inability to form a coalition government of his own, and the need for an “emergency unity government” in the face of the coronavirus crisis, forced his change of heart.

“These are not normal times and they call for unusual decisions,” Gantz explained, much to the anger and dismay of some of his political allies.  The virus outbreak has also delayed the opening of Netanyahu’s trial until May 24.   (Gzero, 3/27/2020)

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ANTI-CHINESE AID

The German government and the EU Commission are taking up positions against Chinese aid, in the combat against the Covid-19 pandemic.   In view of the fact that Italy, for example, is receiving systematic support from Beijing, after the EU’s refusal of aid, “controversial debates on how to deal with China” are pending, according to the German Defense Ministry.   EU Foreign Affairs Commissioner Josep Borrell detects a “global battle of narratives.” Beijing is waging a “struggle for influence” with “politics of generosity,” which the EU must counteract.   Since China succeeded in containing Covid-19, it has come to the aid of a growing number of countries around the world.   Western powers, which have traditionally been using their assistance for consolidating their global influence, are unable to control the virus and some are requiring assistance themselves.   For the aftermath of the pandemic, experts are predicting “a changed world order” with the East Asian countries as the “new global health powers.”  (German Foreign Policy, 3/29/2020)

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NEW YORKERS FLEE CITY

Many New Yorkers are fleeing the city as it becomes the global centre of the pandemic, but upstate locals have not been entirely welcoming, writes Adam Gabbatt.   The spread of the virus at the city’s Riker’s Island jail complex is a “public health disaster,” the jail’s top doctor has said.   The New York governor, Andrew Cuomo, warned on Wednesday that his state and the US would never “get back to normal” after the crisis, but instead “get to a new normal.”

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California’s Curve

The Golden State was quick to lockdown and appears to have flattened its Covid-19 curve.   But it still lags behind in testing.  (The Guardian, 4/2/2020)

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OFFER OF IRANIAN HELP FOR US

On March 31, 2020, the Iranian news outlet Khabar Online tweeted a video featuring a reporter wearing a face mask standing in front of a shipping truck.   The reporter said:   “This is the aid shipment that the Iranian nation is sending to the oppressed American nation… The Jihadi students will be giving this shipment to the party that is responsible for America’s interests in Iran, which is the Swiss Embassy.”  A sign on the truck read: “Humanitarian Health Aid Produced by Iranian Students to Americans.”    The same source later tweeted that the Swiss embassy refused to accept the shipment.  (MEMRI 4/2/2020)

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SANCTIONS HURT EFFORT TO STOP VIRUS

US sanctions on Iran, to which German enterprises are obliged to conform, are in fact seriously hampering the fight against the Covid-19 pandemic, according to UN General Secretary António Guterres, who is campaigning for an immediate suspension of the sanctions. The boycott measures had already caused serious damage to Iran’s health system prior to the outbreak of the pandemic, depriving, for example, cancer patients of desperately needed medicine.   Now they are blocking deliveries of Covid-19 test kits that are inexpensively produced in Germany.   Iran is one of the countries hardest hit by the pandemic.   The numbers given in yesterday’s official statistics – around 27,000 infected, a little more than 2,000 deaths – are considered far too low.   Iranian experts fear an increase in deaths into the 6 or 7-digits.   Washington, with absolutely no intention of at least suspending the sanctions to enable the fight against the pandemic, imposed even new punitive measures a few days ago.   Berlin remains inactive and silent.     (German Foreign Policy, 3/27/2020)

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TO THE POINT

  • The price of West Texas Intermediate crude oil dipped below $20 a barrel, nearly its lowest point in 18 years.  Demand has slumped amid the coronavirus outbreak and a price war between Russia and Saudi Arabia.   Brent crude, the international benchmark, also fell below $23 a barrel.
  • Kim Kielsen, the prime minister of Greenland, announced a prohibition on the sale of alcohol in Nuuk, the capital of the autonomous Danish territory.   The move was motivated by an attempt to reduce violence against children in their homes now that schools are closed because of covid-19.   Nearly a third of people living in Greenland suffered sexual abuse as a child  (The Economist, 3/30/2020)
  • America’s death toll from the coronavirus pandemic rose past 3,000, with a record 540 new cases recorded on Monday.  At that rate it will overtake China’s official count at some point today. The USNS Comfort, an oil tanker converted into a floating hospital, drew cheers from New Yorkers as it docked in midtown Manhattan.   Field hospitals are springing up elsewhere in the city, to cope with the surfeit of covid-19 patients.  (The Economist, 3/31/2020)
  • In his memoirs, Jean Monnet, one of the founding fathers of the European Union, wrote:   “Europe will be forged in crises, and will be the sum of the solutions adopted for those crises.”   With crisis currently gripping the continent, those multilateral solutions are proving hard to come by.   (Joe Evans, Deputy News Editor, The Week, @TheWeekUK)

Encouraging words for a time like this:  “Be strong.  Take courage. Don’t be intimidated.  Don’t give them a second thought because God, your God, is striding ahead of you.   He’s right there with you. He won’t let you down; he won’t leave you.”  (Deuteronomy 31:6)

 

THE DEATH OF FREEDOM

A person does a cartwheel in Oxford Circus during rush hour as the spread of the coronavirus disease (COVID-19) continues, London, Britain, March 23, 2020. REUTERS/Dylan Martinez

We have less freedom today than we have had in over 400 years.   And we’ve all consented to this loss of freedom.

Freedom of assembly and the freedom to worship have both suffered.  Even the freedom to go out for a meal or a drink.    Nor can we shake a friend’s hand or give a hug.   Again, with our consent.

As one British paper put it:  “It is no exaggeration to say these are the most extreme powers ever used against citizens in peace time Britain.”

It’s understandable.  We want to live.  We want to survive the coronavirus.

But will we ever get these freedoms back?

Most importantly, what will be the next crisis that makes us so quick to jettison our freedoms?

MR       

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“A heart attack is occurring in the economy”  (Sky News comment, 3/20)

This was a comment about the British economy, but it describes every country right now.   So, let’s take a look at some of the economic consequences of coronavirus.

Argentina’s new government will today publish GDP figures for last year, with economists warning that the covid-19 pandemic could be about to send the country into a deep recession.   GDP is forecast to have contracted by 2.1% in 2019.   But what matters now is the dire situation to come.   One former central banker predicts that the country’s economy could shrink by up to 4% in 2020.   Though weighed down by high inflation and heavy debt, President Alberto Fernández’s government is implementing fiscal stimulus measures worth billions of dollars.   Its treasury minister, Martín Guzmán,  warns that the covid-19 crisis means that it is now impossible to say when, and how, Argentina can return to growth.   That was Mr. Fernández’s primary goal when he took office just four months ago, an aim that looks harder by the day as infections mount in the country.     (The Economist, 3/25/2020)

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For years Germany has run the tightest of fiscal ships, frustrating many in the euro zone and beyond.   Then came covid-19.   Today the Bundestag will approve a €156bn ($168bn) supplementary budget for 2020, under which Germany will issue new debt for the first time since 2013.   The borrowing breaks Germany’s “black zero” balanced-budget policy and exploits an emergency rule in the constitutional “debt brake.”   Yet it is just one part of Germany’s response.   The government has expanded Kurzarbeit support (in which the state partly covers the lost wages of workers who have their hours cut), extended various loan guarantees and even earmarked funds for direct investment in companies.   The package amounts to a potential €750bn, and more may follow.   The scale of the response has surprised observers—but at European level less is happening.   Germany, and the euro area’s other hawks, remain implacably opposed to debt mutualization.   (The Economist, 3/25/2020)

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Today’s meeting of the Bank of England’s Monetary Policy Committee should have been the first with Andrew Bailey in the chair.   But the new governor found himself presiding over an emergency meeting last week, amid what he described as “borderline disorderly” market conditions.   In common with other central banks, the Bank of England is aggressively easing monetary policy to react to a rapid economic slowdown due to the spread of covid-19.   Despite interest-rate cuts, £200bn ($232bn) more quantitative easing (amounting to some 10% of GDP) and more direct support for private-sector lending, the bank is more worried about undershooting its inflation target than overshooting it. Today’s consumer-price statistics show inflation running at 1.7%, below the 2% target.   More monetary easing is likely, but with interest rates already at 0.1%, an all-time low, fiscal policy will have to do most of the heavy lifting.  (The Economist, 3/25/2020)

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Coronavirus lockdown measures implemented in the UK may trigger an economic downturn that could kill more people than the virus itself, a new study warns.

Philip Thomas, a professor of risk management at Bristol University, says that a fall in GDP of more than 6.4% could lead to a devastating recession in which “more years of life will be lost . . . than will be saved through beating the virus,” reports The Times.  (The Week, 3/25/2020)

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The worst outbreak of Coronavirus in the Middle East, so far, is in Iran.  Thousands have died and tens of thousands have been exposed to the virus.   An overlooked developing crisis parallel to Iran’s is the situation of the country’s neighbors across the Persian Gulf.

Beyond the civilian element affecting Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE; tens of thousands of American military personnel are also stationed in these countries.   Once facing the Iranian threat and ISIS, they are now involved in combating the invisible enemy:   Covid-19.      (Greg Roman, MEF, 3/20)

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This is an emergency, track everyone:   If there were ever a time to set concerns about privacy aside, this is it.   Giving public health authorities access to everyone’s location data gives them a better chance of tracking down people who have been in contact with confirmed cases – and helps ensure that those who are already sick stay in quarantine.   Right now, governments need all the help they can get.   Give them the data.   Debates about the privacy implications can wait.

China is in this camp. So are other countries in Asia, like South Korea and Taiwan, that have had better success containing the epidemic – although it’s still too early to say whether access to mobile phone location data was the deciding factor.   (Gzero, 3/25/2020)

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A SURPRISING LETTER FROM HOLLYWOOD

Dear Mr. President, @realDonaldTrump

I wanted to thank you for ur recent decorum, sincerity, & care towards us.   You’re taking charge & leading in a manner needed & wanted for this country.   I highly commend you for ur boundless energy & willingness to solve problems.   Thank you!

— Kirstie Alley (@kirstiealley) March 24, 2020

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TO THE POINT

  • LAGOS — A jihadist group ambushed and killed around 70 Nigerian government troops in Borno state, in the north-east of the country.   The guerrillas used rocket-propelled grenades to attack a vehicle full of soldiers; they also took several captive.  The group they belong to split off from Nigeria’s homegrown Boko Haram in 2016, and now considers itself an Islamic State affiliate. (The Economist, 3/25/2020)
  • BERLIN – A court in eastern Germany convicted eight far-right extremists who were accused of planning to violently overthrow the state.   The regional court in Dresden on Tuesday convicted one of the men on a charge of forming a “terrorist organization” and the other seven of being members of the group, called Revolution Chemnitz.   Five of the man were also found guilty of a serious breach, while one was convicted of bodily harm.  The court sentenced the defendants to prison terms that ranged from 27 months to 5 ½ years.  (Lansing State Journal, 3/25/2020)
  • UNITED NATIONS — UN Secretary-General Antonio Guterres urged leaders of the world’s 20 major industrialized nations on Tuesday to adopt a “wartime” plan including a stimulus package “in the trillions of dollars” for businesses, workers and households in developing countries trying to tackle the coronavirus pandemic.   He said in a letter to the Group of 20 leaders that they account for 85% of the world’s gross domestic product and have “a direct interest and critical role to play in helping developing countries cope with the crisis.”  (Lansing State Journal, 3/25/2020)
  • LONDON – Prince Charles has coronavirus.  Prince Charles, 71, is displaying mild symptoms “but otherwise remains in good health,” a spokesman said, adding that the Duchess of Cornwall, 72, has been tested but does not have the virus.   Charles and Camilla are now self-isolating at Balmoral.   Buckingham Palace said the Queen last saw her son, the heir to the throne, on 12 March, but was “in good health.”   The palace added that the Duke of Edinburgh was not present at that meeting, and that the Queen was now “following all the appropriate advice with regard to her welfare.”
    A Clarence House statement read:   “In accordance with government and medical advice, the prince and the duchess are now self-isolating at home in Scotland.  “The tests were carried out by the NHS in Aberdeenshire, where they met the criteria required for testing.  “It is not possible to ascertain from whom the prince caught the virus owing to the high number of engagements he carried out in his public role during recent weeks.”
  • Germany is the only country in Europe to have currently rejected China’s offer of support in combating the Covid-19 pandemic. According to China’s President Xi Jinping, he informed Chancellor Angela Merkel that the People’s Republic of China “is willing to provide help within our capabilities,” if Germany “is in need.”   Over the past few days, Beijing has sent aid supplies and – in some cases – teams of doctors to provide practical on-site assistance to several European countries including Italy, Spain and France.   Berlin has ignored the offer of support, even though there is, for example, a glaring shortage of respiratory protection masks in Germany.   More than 80 percent of Germany’s registered doctors are complaining that they cannot procure sufficient protective clothing.   Serious accusations for failing to take preventive measures are being raised against the German government, which has been emphasizing that it is “well prepared.”   Leading German media are denouncing China’s aid as a “propaganda campaign” and accuse the country of being “the cause of the pandemic.”  The only thing missing is the use of Trump’s label of a “Chinese virus.” (German Foreign Policy, 3/24/2020)
  • A growing number of businesses and individuals worldwide have stopped using banknotes in fear that physical currency, handled by tens of thousands of people over their useful life, could be a vector for the spreading coronavirus.   Public officials and health experts have said that the risk of transferring the virus person-to-person through the use of banknotes is small.   But that has not stopped businesses in the US from refusing to accept currency and some countries from urging their citizens to stop using banknotes altogether.   (Times of Israel, 3/20/2020)

 

ECONOMIC PROSPECTS NOT BRIGHT

John McLaughlin

PBS’s “McLaughlin Group” (www.mclaughlin.com) remains the best political discussion of the week. John McLaughlin has the chair, with three regular guests and one visitor. This week’s program was particularly good.

The first item discussed was the US economy.   The program began with President Obama lauding the accomplishments of his Administration in this area. Economist Robert Gordon of Northwestern University was then quoted.

Whereas the CBO (Congressional Budget Office) predicts an average growth rate of 2.1% over the next ten years (down from the 3.5% averaged since World War II), Professor Gordon predicts 1.6%. The reasons he gives are that the baby boomers are leaving the work force; new hires will not fully replace them, so less will be produced. He also predicts the national debt will increase to 87% of GDP by 2024, 9% higher than the government’s estimate.

Robert Samuelson of the Washington Post wrote:

“If he’s right, this could be our next nasty economic surprise . . . the prospect now is for years of modest to, in Europe, non-existent growth.  How will political systems cope?  Will class warfare intensify as groups battle harder for bigger shares of a stagnant pie?  Without an expanding economy as a shock absorber, will racial, ethnic, generational and ideological conflicts worsen?   . . . prolonged sluggishness would turn the economy into a zero-sum game, where one group’s gain is another’s loss.  This is no formula for social peace.”  (Washington Post, 9/22/14).

This all led to an interesting discussion. “Are we in for a decade of political and social unrest?” asked host John McLaughlin. Conservative Pat Buchanan’s response was: “More than a decade . . . the share of the labor force that is working is dwindling . . . the baby boomers were the best skilled and best educated generation ever . . . Millions of folks are coming in from the Third World who lack the skills, education, and abilities that are needed.”

Liberal Eleanor Clift predictably felt that the exact opposite was the case and that the economy is all set for a wonderful decade. She added that “the dollar is the indispensable currency” – on this last point, she was correct.

Journalist Tom Rogan (National Review and The Daily Telegraph) felt that “the biggest issue is the national debt.” Rising debt threatens social security and Medicare.

Pat Buchanan pointed out that “real wages have been stagnant since 1974.”   Mort Zuckerman (publisher of US News and World Report) added: “In the last half a dozen years, real wages have gone down by about $4,500 per year.” Buchanan felt that “neither party will deal with social security, Medicare and Medicaid,” government programs whose costs keep rising way above the annual rate of growth in the economy.

Zuckerman mentioned a recent poll that showed that “78% of Americans have no confidence that Washington can ride to their rescue.”

Host John McLaughlin quoted a recent poll that showed 58% of Americans feel the need for a third party. Eleanor Clift quoted Shakespeare to sum up the attitude of most Americans: “A pox on both their houses,” a condemnation of both political parties. Pat Buchanan observed: “Our system is breaking down.” Mort Zuckerman added that ‘we’ve had five years of low growth.”

This is clearly not a rosy picture of America’s future.

The same day the McLaughlin Group was recorded, The Economist was working on a leader warning of the danger of deflation, the worst thing that can happen to an economy.

Western countries have had low inflation rates for over a decade now.

Falling prices at first seem benign but can soon turn deadly. At the time of writing, gas prices in the US are falling, which is making everybody happy. But a fall in gas prices means that demand for oil is dropping and this means that economies are slowing down. This will increase unemployment, which will mean a further drop in demand, which will lead to more unemployment, etc. And so it goes on in a downward spiral.

Some countries are already showing the first signs of deflation. Italy, Spain, Greece, Sweden and Israel are five western countries where inflation is below zero. Deflation can easily follow, warns The Economist in “The Dangers of Deflation” (10/25). A twisting of the title of Edgar Allen Poe’s famous 1842 short horror story, “The Pit and the Pendulum,” The Economist’s sub-title is “the pendulum swings closely to the pit.”

The world is dangerously close to a deflationary downward spiral.

 

LESSONS FROM WEIMAR

Weimar_Republic_1919-1933-300x225

At the birth of the euro, The Economist magazine reminded readers that one of the great lessons of history is that paper money eventually always fails.

That doesn’t just go for the euro – it applies to dollars and pounds, too.

One way it fails is through hyperinflation.

We tend to think that hyperinflation only happens in banana republics like Zimbabwe, Ghana, and Argentina, forgetting that we also like bananas.  It can happen here, too.

It happened in Germany.

After fighting and losing World War One, Germany entered a period known as the Weimar Republic.  Its constitution was written in Weimar, a city 50 miles from Leipzig.

The victorious powers made the great mistake of forcing Germany to pay reparations after the war.  The French, in particular, insisted on their neighbor paying for everything – even invading the German industrial heartland, with assistance from Belgium, in 1922.  If the Germans wouldn’t hand over their wealth, they were simply going to take it!

All the main participants in the war suffered greatly.  This does not include the United States, as America was only a factor in the closing months of the conflict.  The established order in Russia, Germany and Austria-Hungary was overthrown, replaced by chaos and confusion.  Serious financial problems also developed as somebody had to pay for the war.

In most countries it was the working class that had to foot the bill.  In Germany, it was more the middle class.  Successive Weimar administrations – and none of them lasted very long – gave in to the workers’ demands rather than try to enforce fiscal discipline.   Additionally, Germany had the most generous welfare benefits in the world at the time, introduced by Otto von Bismarck in the 1880’s.  Together with reparations, the result was a high rate of inflation.

Hyperinflation is when inflation gets out of control and prices are increasing at more than 50% a month.  Very quickly, that becomes 50% per week, then 75% and 100%.   Eventually, workers have to be paid hourly in wheelbarrows full of money, which then has to be spent quickly before prices go up even further.

Weimar-MArk

The fixed-income middle class, professionals on salaries or pensions, soon suffers.   Skilled workers can often barter their skills for food.  In an attempt to control inflation, mistakes are made – freezing rents, for example, with resultant negative effects.

This was Germany in the early 1920’s.  By 1923, the situation was out of control.

The Downfall of Money explains all this very well.  The book is written by an Englishman named Frederick Taylor.  It shows clearly how World War One led inevitably to World War Two, via hyperinflation and the rise of right-wing parties, culminating in the Nazis coming to power.

When economies collapse, people look for simple solutions – jobs and food are far more important than constitutional niceties and democracy. 

The parallels in the United States and Great Britain today are disturbing.

Our governments are recklessly over-spending, borrowing to excess.  The US is printing an extra $85 billion per month, “quantitative easing” as it’s called.  This is enabling some to take advantage and make a lot of money, while the vast majority is finding it harder and harder to make ends meet.

Part of the justification involved in QE was the fear of deflation after the financial crash of 2008.  The value of homes dropped dramatically in the crash; some commodities have been dropping as the global economy enters a slump.  Deflation is the worst thing that can happen to an economy.  It’s almost impossible to stop the downward spiral.

Hyperinflation is the second worst thing that can happen.  One can lead to the other.  As central banks print money to avoid the one, it can inadvertently get out of control and hyperinflation can take over.

The end result is that almost everybody loses everything!  Those that gain by taking advantage of the situation also lose as the people will turn on them as they did in Germany.

“The Germany of the inflation was paradise for anyone who owed money.”  (The Downfall of Money, by Frederick Taylor, page 206)  A high rate of inflation reduces the amount of debt people owe.  “By the same token, this was a very bad time for creditors of all kinds, for savers, and for investors depending on a fixed return.  That meant large numbers of the old German middle and upper middle classes suffered a drastic, even catastrophic, fall in their standard of living.” Appropriately, chapter 21 of the book is titled:  “The Starving Billionaires.”

Inflation is not something new.  The prophet Haggai wrote about it 2,500 years ago.

“You have sown much, and bring in little; you eat, but you have not enough; you drink, but you are not filled with drink; you clothe yourselves, but no one is warm; and he that earns wages earns wages to put it into a bag with holes.”  (Haggai 1:6)

We all hope that hyperinflation is not the consequence of over-spending by the US, UK and other governments.  But it’s difficult to see how it can be avoided.  It seems as if the only way we can create greater wealth today is by printing more money – a recipe for inflation.  In turn, inflation can quickly get out of control, soon turning into hyperinflation.

It can all happen very quickly as it did in Zimbabwe a few years ago and in Germany in the 1920’s.

A spiritual lesson we should remember in these turbulent times is found in Matthew 6:19-21:  “Lay not up for yourselves treasures upon earth, where moth and rust does corrupt, and where thieves break through and steal.  But lay up for yourselves treasures in heaven, where neither moth nor rust does corrupt, and where thieves do not break through nor steal.  For where your treasure is, there will your heart be also.”

The Economist was correct with its warning of all currencies eventually collapsing.  It’s only a matter of time.  The accumulation of wealth may seem important, but clearly we need to be prepared for losing it all as did millions in Germany.  As Jesus Christ pointed out, treasures in heaven are more important and more reliable than treasures on earth!