The Coming Economic Collapse (Written in March of 2008)

I wrote this article in March of this year; I thought it would be good to revisit it (in its original form) simply as a reminder that what is happening now in the financial sector did not come out of the blue.

One would think economic news would take a backseat this week, but to the contrary, it may make big news. As Christians we should strive to be aware of what is coming so as to be in better shape to handle things and to provide guidance and help to others. There is an ominous storm brewing on the financial front. Just as the Federal Reserve once again tricked the masses into thinking all is well economically through actions not taken in forty years on Friday; the atomic bombs of economic implosion were detonated. Clearly we are dealing with a classic example of “peace and safety” being propounded by the media while sudden destruction is looming just ahead.

There is no way I can begin to express the severity of the current economic situation in this country except to say I would not be posting this at this time if it were not extremely urgent. What lies ahead in the coming weeks has the potential to cripple millions of households as they will no longer have enough money to buy food, gas and pay the mortgage. Credit is tightening at this very moment and the birth pangs getting ready to be felt in this world will cause it to literally stagger. My purpose in writing this is to help us all get prepared now while we still can so we can help others very soon.

Let us say that I gave you $1000 ten years ago. With that $1000, you could have purchased over 3 ounces of gold. The price for an ounce of gold in March of 1998 was $300 per ounce. Five years later, in March of 2003, the price for an ounce of gold had only gone up $50 to $350 per ounce. Even in March of 2005 gold was only $420 per ounce. That means only three years ago, your $1000 could purchase two and one third ounces of gold.

Today, gold is trading for $1002 per ounce. Your one thousand dollars could not even buy one ounce of gold today. This is a terrifying reality. What this means is that the value of the dollar is falling so quickly that soon it won’t be worth the paper it is printed on.

In March of 1998 oil traded at $15 per barrel and the average cost for a gallon of gasoline in this country was $1.06. One year later, oil still traded around $15 per barrel but the cost for a gallon of gas had dropped to 96 cents. Even in March of 2004, oil traded at only $30 per barrel and gas averaged $1.78 per gallon. Now, four years later, oil trades for $110 per barrel and gasoline averages $3.27 and is climbing daily.

Wheat historically trades at $3 to $7 a bushel. But this week, futures of spring wheat — which produces the flour used in hearth breads, rolls, croissants, bagels and pizza crusts — were close to $18 a bushel on the Minneapolis Grain Exchange. They climbed as high as $24 in late February. Everywhere wheat is used, the price for the end product is rising dramatically. A recent article documented some pizza parlors being hit with a 250% increase in the cost of wheat for dough in one week.

The huge trucks that transport everything from vehicles to candy bars across this country every day have been paying around $3.70 or more for diesel fuel for many months. As more and more money has to be used for fuel costs, the cost of shipping has to be increased for trucking companies to stay in business. These increased shipping costs are then passed along to the consumer by way of higher wholesale and retail prices. It is inevitable that we are going to see dramatically higher prices for EVERYTHING simply because of the shipping costs.

Yesterday the government had the audacity to release figures supposedly showing very little inflation during the month of February. Perhaps that might be true, but if so, it was only because we had a month of stable gas prices. The first two weeks of March have more than made up for February. The price of gasoline has skyrocketed and along with it so has the costs of just about everything else.

This past week, the Federal Reserve Board announced they would pick up the bad loans from many huge banks at a cost of over 200 billion dollars. Then yesterday they had to inject billions more into just one financial institution to keep it from going bankrupt. Behind the scenes, the people who control the money supply just keep giving orders to print more and more money to starve off the inevitable collapse of this nation’s economy.

Every time the Government prints more money to bail out someone or to “bless” us with a gift as we are to receive in May or June, the dollar loses more and more of its value. You can’t just keep printing more “funny money” that is not backed by gold without it reaching the point where it becomes worthless. Every country that has fallen into the trap of doing this has faced economic disaster. The United States of America will be no different.

Let us assume you are a good steward of your finances. You go to the grocery store on Monday and the bread that had cost $2 last week is now $3. Suddenly you must find an extra $1 to make up the difference. No big deal unless all over the store many more products have jumped in price. By the time you go to check out instead of your grocery bill being $50 it is now $60. Somewhere you must find an extra $10 or put some of your items back.

On the way home you must get gas. Instead of it taking $40 to fill up the tank, now it takes $50. Once again, from some source an extra $10 must be found. Once home you get the day’s mail. You open the electric bill to find out there was a dramatic price increase and instead of your bill being $100 it is $125. Once again, from some source, an extra $25 must be found. At the bottom of the stack of mail is the credit card bill.

Every month you had been able to pay off the balance in full to avoid finance charges. This month’s charges were $400. In one day you just got hit with needing $45 to keep up with price increases. You make the decision to only pay the minimum of $30 on the credit card so as to have the “extra” money to pay for food, gas and utilities. In effect, you take out a loan for $370 at anywhere from 10 to 25% interest depending on the card. I think you know where this leads.

Inflation is an animal most people under 40 know little about. The last time we had a bad experience with inflation in this country was in 1980. If you were too young to pay bills back then, talk to someone who had to deal with 13.5% inflation. This period of high inflation was triggered by the Iranian hostage crisis and the corresponding hike in the price of crude oil. In late 1979 gold sold for $200 per ounce. Within a few months it was selling for $700 per ounce. On a graph, gold is doing the exact same thing since September of last year as it did in 1980.

If the experts are right, and I think they are, we will all be paying between $4 and $5 for a gallon of gas by May. We also could be paying $5 for a loaf of bread and $15 for a cheese pizza. Now is the time to prepare for what lies ahead. Now is the time to free up any cash that is available so as to have that “extra” when prices start shooting up. Now is the time to eliminate high interest debt even if it means tapping into the ridiculously low interest rates available to people with good credit and income.

Now is the time to make a plan. What expenses can be eliminated with the minimum of hardship? Now is the time to make provisions for elderly parents and grandparents. Find comfortable assisted living type situations now before the prices go through the roof. Now is the time to re-evaluate your investments and make sure your money is someplace YOU believe it is safe and not where your broker wants you to put it.

We are one major natural disaster away from economic devastation. If we were to have an early season Katrina type hurricane hit the Gulf Coast where most of our oil refineries are located; we could easily see gas hit $6-7 per gallon. If England used US dollars, the price of a gallon of gas right now would be just under $10. Are you prepared to spend $100 or more every time you fill up with gas? Can you imagine the hardship if this happens?

I do not share these things to inspire fear but to inspire action while we still have time to act. Americans are notorious for loving to stick their heads in the sand and pretend things are “not so bad” even though they are horrendous. Americans are notorious for being lulled into a false sense of security thinking their jobs or nice little IRA nest eggs will be their sufficiency if the economy collapses. Americans are notorious for procrastinating and putting off doing anything to prepare for potential economic disaster.

Spiritually, the times ahead are guaranteed to get worse and worse, for the Bible says so. Spiritually, this once great country will be brought to its knees because of its idolatry and moral filth. There is no question as to IF, the only question is WHEN. Anyone so naïve as to think this country can keep going economically as it is now for any length of time is sadly mistaken. The so called experts can smile and say “don’t worry”, but keep in mind most of these people are sold out, lock, stock and barrel to the devil and will say whatever he tells them to say.

Finally, if you happen to have some “extra” money, as crazy as it sounds, it might not be too late to invest in gold. In September of 2007 (six months ago), gold was selling at $650 per ounce. By December 31 it was selling at $850 per ounce. Today it is selling at $1002 per ounce. As long as the United States Government keeps printing more and more money, the dollar will keep falling steadily lower and lower. The lower the dollar falls, the more dollars it takes to buy gold, oil and wheat. Considering just about every day the Federal Reserve decides on another major hand out; I don’t think there is much chance the dollar is going to go up anytime soon.

God is our sufficiency and not the government, pension plans, IRAs, jobs or nest eggs. God will provide for His own, but there is no assurances that He will provide on the grandeur level most of us are used to. As 1 Timothy 6 says; “having food and clothing let us be content”. As long as we have a roof over our heads, food in our stomachs and clothes on our backs, we should be the most contented people on earth. That is how we must think or else when things get bad, we will be in no better condition than the world.

God needs His people to be smart and alert to what is happening. I pray that we all take heed to the economic storm warnings that have been issued. Preparation eliminates fear and breeds confidence. I pray that we can weather the upcoming storm and provide safe shelter to those who don’t. This is our hour to shine if we’re ready.