For the first time, Federal Reserve officials are using the word ‘deflation’ in their discussions about the economy and where it is headed. The word has also enjoyed a growth in usage among business reporters:

“Federal Reserve officials on Thursday downplayed the consequences of the falling U.S. dollar, underscoring that deflation is still a threat, especially with commercial real estate prices falling.”

Deflation is inflation’s evil twin.  Inflation is bad news because it raises prices.  Inflation is the result of too much money chasing too few goods, causing prices to spiral upward until the bubble bursts and prices have to fall back to earth.

The effect the bursting bubble has on the economy is called ‘recession’ because the economy is receding, like waves receding on the shoreline.

Deflation is what happens when prices begin to spiral downward.  Deflation sounds like good news, especially if you are on a tight budget.

Rapid weight loss sounds good to a dieter, too.  Until it turns out to be because of cancer.   That is what deflation actually is — a kind of economic cancer. 

Deflation is generally the result of excessive production capacity leading to an oversupply of goods relative to demand.

Too many goods chasing too few dollars results in falling prices.  But falling prices reduce returns on investments, reducing the investment pool. 

As prices continue to spiral downward, consumers begin to hang onto cash, rather than spend it,  knowing that if they wait, the prices will fall still more. At that point, we’ve moved from dieting to a wasting disease. 

It stops being a good thing.

Deferred purchases lead to more inventory.  Too much inventory means idle factories and worker layoffs, which in turn further reduce domestic demand.  The cycle functions much like an economic cancer, a wasting disease that continues to consume its own body.

Unchecked inflation leads to economic recession.  Unchecked deflation leads to economic depression.  That is why deflation is the evil twin.   Instead of receding, the economy is deflating.  

The 1929 Stock Market Crash was caused by exactly the same forces that caused the Crash of 08. High consumer debt, ill-regulated markets, foreign trade imbalances, growing wealth inequality and government interference with market forces.

In response to the Crash, the Hoover administration passed protectionist trade policies, similar to the Obama administration’s “Buy American” clauses in the TARP bill

In 1929, federal government expenditures only equalled 20% of GDP. 

In 1933, to avoid defaulting on the US national debt, the Roosevelt administration confiscated all the private gold in the United States which was then shipped to Europe to satisfy America’s creditors. 

Government spending resulted in a brief period of economic improvement — a ‘dead cat bounce’ that ended with the Recession of 1937. By 1939, the size of the federal goverment had tripled. 

Federal Reserve Chairman Ben Bernanke acknowledged last year that the Federal Reserve policies of the time, were actually responsible for both the depth and severity of the 1930’s Depression. 

(Then, following last year’s crash, he embarked on exactly the same course.)

Business leaders complained that the Roosevelt administration was too cozy with labor and the union movement and that his policies were anti-business.  It was an historical mirror-image of the current administration’s.

They argued the New Deal had been very hostile to business expansion, had encouraged massive strikes which had a negative impact on major industries such as automobiles, and had threatened massive anti-trust legal attacks on big corporations.

In the current situation, the government bought the corporations and, in the case of GM and Chrysler, effectively turned them over to the unions.  

It’s been said that the definition of insanity is repeating the same mistakes over and over, hoping that this time they will bring a different result.   By that definition, the current administration is as mad as a hatter.

But if the historical parallels hold, there will be one bright spot.  Between 1930 and 1935, the illegal alien population actually reversed itself as they began heading in the other direction.

Not much of a silver lining, but we have to grab ’em where we see ’em.

Assessment:

According to Bible prophecy,  the only world superpower in existence during the Tribulation Period is the revived Roman Empire under antichrist.  

Russia is a major power, but it one of four major sphers of power. And there is no regional or global power resembling the United States in evidence.

The USSR collapsed in 1991, just as the European Union was beginning its planned political integration.  The United States was at the zenith of its power and influence when it took on the role of mediator between Israel and the Arabs at the Oslo signing in 1993.

By 2001, it was reeling from the attacks of September 11.  By 2009, its military forces are in disarray, its economy is on life support, its dollar is collapsing and its position as the world’s remaining superpower in dire jeopardy.

Every bit of this was prophesied by the Bible to occur in a single generation, somewhere in time.  The benchmark against which end times Bible prophecy is measured is the restoration of Israel.  Until Israel resumed her seat at the table of nations, Bible prophecy was in suspended animation.

The moment that Israel raised her flag, the rest of the players began taking their places.  On January 1st, 1948 nothing was in place.   By year’s end, everything was in place.

The 1948 GATT Treaty created a global economic system. The 1948 Berlin Airlift began the Cold War that shaped every subsequent political alliance and policy decision for the next forty years.  The 1948 Benelux Treaty started the drive toward European Union.  

Red China,  North Korea, the Seven Dragon Nations, India, Pakistan, Burma, Northern Ireland . . . they all sprang into existence at the same point in history. 

So did UFO’s, killer smog, and the first Supreme Court decision banning school prayer in the United States.

So what does this all have to do with current economic situation?  Bible prophecy depicts the restoration of Israel as the seminal event that starts the countdown to the 2nd Coming of Christ.  

I believe Bible prophecy also depicts the collapse of the global economy as the seminal event that starts the countdown to the end of the Church Age and the onset of the Tribulation Period.  

Once the slide begins, it will continue until economic and military superpower passes to Europe.

It took from 1929 to 1933 to force the US to the point of confiscating private gold to satisfy its debts and forestall national bankruptcy.  Using those historical figures as a benchmark, we should hit that point about the same time as the next presidential election cycle in 2012.

Except this time, there isn’t enough gold in the entire world to satisfy our creditors, answering the question, “Why isn’t America mentioned in Bible prophecy?”

But I don’t want to leave you terrified.  I want you to see what it means.  The economic slide has begun, but look at where it is leading.  Straight to the Rapture. 

“Oh no, not the Rapture again!  You’ve been telling me “it’s almost here!” for more than eight years and it is STILL ‘almost’ here.”

That’s exactly the way the Lord outlined it.  The signs are coming fast and furious, just as He said they would. 

The global deception is rampant, there are more false Christs out there than there are ‘Smiths’ in a New York phone book,  we’re neck-deep in wars and rumours of wars, on edge over global warming, falling space rocks and the next pandemic. . .

But not yet.  There is still much to do. 

Don’t despair.  And don’t give up sounding the alarm.  The scarier it gets, the more we are reassured. The Lord is holding off until the last possible moment, not willing that any should perish, but that all should come to repentance.

The Rapture is a secret event that takes place without any warning signs at all. 

“Therefore be ye also ready: for in such an hour as ye think not the Son of man cometh.”

 The signs of the last days are not to warn us — we’re already saved. What can the world do to us? 

The signs are given us for use in warning others. 

“Son of man, I have made thee a watchman unto the house of Israel: therefore hear the word at my mouth, and give them warning from Me.  Yet if thou warn the wicked, and he turn not from his wickedness, nor from his wicked way, he shall die in his iniquity; but thou hast delivered thy soul.” (Ezekiel 3:18-19)

Time is short, but the job is enormous.  We still have plenty of work left to do. There really isn’t time to be scared. 

The Lord’s coming back.  Quick!  Look busy!