By Don Koenig
This article has been on my website for years. Since the economic wheels started coming off it has been downloaded many thousands of times. In case you have not read my 25 articles on World Trends and Bible Prophecy. This article on world debt is a sample.
The Coming Economic Crash Caused By World Debt
[By Don Koenig - 2000 with 2008 update]
Almost every nation of the world has such severe debt that just making the interest payments takes a large amount of their financial resources. Much of this world debt is owed to world bankers that then dictate their own economic policy to these countries. These policies do not favor the poor.
The largest economy in the world is the United States. The US government is currently 10 trillion dollars in debt and that is projected to go to 11 trillion or more in two years. Paying the interest on that huge debt in future years will cost about as much as what is spent on national defense (using modern historical interest rates and the cost of defense under normal peace time conditions).
The United States is now by far the biggest debtor nation in the world. For many years we have been importing hundreds of billions more dollars in goods and services than we are exporting each year. In 2005 through 2008 the trade imbalance averaged well over 700 billion dollars per year! Trillions of US dollars are now in the hands of foreign investors who at any time could dump the dollar causing a devaluation of the currency.
Just a few years ago, the US government was forecasting surpluses of trillions of dollars based on the stupid assumption that there would not be a downturn in the economy for decades. This foolish assumption was of course proven wrong and deficit spending has returned to well over “four hundred billion dollars” a year. The only reason the United States is not feeling the pinch of spending beyond its means has been the record low interest rates. The low interest rates were brought about by Federal Reserve manipulation to stimulate the economy but interest rates now will rise. Soon all who need loans will be making higher payments and the US government will be paying much more to service the national debt.
Debt and unfunded liabilities promised through entitlement programs is now over 50 trillion dollars. This amount of money in non inflationary dollars is impossible to raise! Thus, the U.S. is now technically bankrupt. In order to keep up the facade that the US is solvent for even another decade or two one or more of the following must happen.
1. Taxes must be raised.
2. Government spending will have to be drastically cut.
3. Deficit spending will dramatically increase.
If taxes are raised, it will kill the economy and the debt load will get worse and not better. Spending will not be drastically cut because these types of cuts would never get through the political system. Therefore, massive deficit spending will take place. The monetary system will be inflated so that this debt can be paid by using a dollar worth only a fraction of what it is today. This means a much weaker dollar in the future and much higher prices for all goods and services imported to the United States (in short it means we should expect hyper-Inflation). The recent rise in all commodity prices might just be the start of what is to come.