The Global Crash - Humpty Dumpty Has Fallen Off Again
When it comes to the global economy, Humpty Dumpty has fallen off the wall again - and all the king's horses and all the king's men are trying to put Humpty back together again. As far as the economy is concerned, Humpty is a frequent faller. Each time he falls off the wall, all the king's horses and the king's men, pick him up and put him back on again. Each time he falls off, he is exponentially the worse for wear, and all the more difficult to repair.
One would think that Humpty would have learnt, by now, how to stay on the wall. Or is it all the king's horses, and all the king's men fault? Could it be they don't know how to fix Humpty properly? Could it be that the economy is like the nursery rhyme - except that in this case, the king's horses and the king's men won't admit that Humpty cannot be fixed? Do they simply put poor old Humpty back on the wall - knowing full well that he'll fall off again?
More than twenty years ago I was waiting for a plane, in a small airport, in a foreign country. There were two other passengers nearby, speaking English. On such occasions, the commonality of language draws people together and I joined their conversion. During the course of our polite chit chat, one of the men handed me his business card. It said: "Vice-President, Citibank , New York ." At this particular time, Humpty Dumpty had just taken one of his periodical tumbles off the wall - it was just after the global stock market crash of 1987 - and global economies and all matters financial were of topical interest. It isn't every day, that one meets international bankers from New York - so I took my chance - I asked him: "is the global economy sustainable, or must it ultimately fall?" The question took him by surprise, he paused - I was aware that he was carefully deliberating. Was he going to fudge it? Or was he going to give me an honest answer? Finally he said: "it can be delayed, but it is inevitable." In other words Humpty is doomed, and the nursery rhyme is right. One day it will be impossible to pretend that Humpty is fixable. Has that day arrived?
The name Joe Biden is a name that we are going to be increasingly familiar with. He is the new Vice-President of the United States . Joe has a reputation for speaking impulsively off the cuff. During the presidential campaign he was speaking at a Democratic Party fund raiser in Seattle . He is worth listening to, because his impulsive nature drops a few gems occasionally. On this occasion, he dropped a whole treasure trove of gems. Even Joe realized the gems on offer, on this particular evening, were more valuable than most, because he added this precious comment: "I probably shouldn't have said all this because it dawned on me that the press is here." For the purposes of our investigation as to the stability of Humpty on the wall, Joe's comment on the global crash is the most precious gem of all. Commenting on Humpty's current prone position, Joe said: "This is more than just a capital crisis, this is more than just markets. This is a systemic problem we have with this economy ." Thanks Mr. Vice-President, we will underline that last sentence - and we are confident we are not misrepresenting your intentions when we do so. But we do have a suggestion for you Joe: maybe next time you think the press is not there, you could tell us exactly what the "systemic problem" is. Then again, would the press report it - probably not.
So, if Joe's not going to elaborate on what the systemic problem is - we'll have to work it out for ourselves. But first of all, what is a systemic problem? Well the answer can best be described as a building with a major flaw. Something like a skyscraper with a bomb in it. Even worse, a bomb in a skyscraper, with a timer in the bomb - and as time ticks by, the inevitability of the explosion becomes more and more certain.
The "systemic problem" is introducing money into the economy as debt - and then charging interest on it. Mankind can only create one thing out of nothing, and that one thing is money (and/or credit). This thing called "money" (and/or credit) is created out of nothing and then introduced into society as a debt. Under current fiscal policy, someone (or something) has to borrow the money into existence, otherwise it cannot be created. In addition, whoever (or whatever) borrows the money, is also, contracted to pay interest on the created funds or the deal will not even be considered. With this arrangement certain scientific and mathematical certainties kick in. It is these scientific and mathematical certainties, these laws of inevitability, which start the timer ticking in the bomb. It is these laws of inevitability that constitute the "systemic problem" - it is these laws of inevitability that keeps pushing Humpty Dumpty off the wall, and it is these laws of inevitability that allows my mathematically enlightened banker friend, from New York , to be able to say with conviction: "it can be delayed, but it is inevitable."
It is these laws of inevitability that dictate the following: 1. Humpty Dumpty will only stay on the wall if there is constant economic growth and expansion. 2. There can only be constant growth if more and more borrowing takes place at an exponential rate. 3. There can only be an exponential rate of borrowing if more and more borrowers can be found. 4. The system collapses and implodes in on itself, when the limits of growth have been reached (i.e. when the supply of borrowers is exhausted).
For the past few years, you may have noticed how easy it was to get a loan. There were even ads on TV enticing the unwary with wayward words like: "Bad credit rating? No problem, come to us." In America , if you had a pulse, you could get a loan. Lending agencies even encouraged people to lie on their loan applications. They had a name for these applications - they called them "liars loans." And the more you lied the more money you got. And they had another name too: they called these loans "sub prime" - which means, below that which was normally acceptable - in other words the normal rules of banking and financial prudence were thrown out the window.
Why was this happening? It was happening because they were running out of fuel for the fire. The economy can be likened to a bonfire which keeps everybody warm. But the bonfire will only keep going if there is a constant supply of fuel. Money is the fuel. But it can only be thrown on the bonfire if someone is prepared to borrow it. If the borrowers cannot be found the fire goes out and everybody gets cold. This is the "systemic problem" - and it has huge consequences for everyone in society. It inevitably creates a culture of winners and losers. It creates a culture where everyone is in competition against each other for a limited pool of resources. This competition prevails right down to the first building block of society - the family. Each family member is competing with the other family member for a share of the limited resources. Disputing over money is cited as the leading cause of divorce all over the world. And this is just the beginning of the societal fissures caused by the "systemic problem" of money introduced as debt, with interest.
Ancient wisdom foresaw this problem. The Bible has always condemned the lending of money at interest (see Exodus 22:25 ; Leviticus 25:35-36, etc.). There is a very good reason for this prohibition, because it leads to bondage and slavery. The Bible clearly sets forth the consequences of debt with interest: "The rich rule over the poor, and the borrower becomes a slave to the lender" Proverbs 22:7. For hundreds of years Christianity took this biblical prohibition seriously and money lending at interest was considered a grave sin. It is not inaccurate to say, that, what was formerly considered disreputable is now according a status of respectability, in direct proportion to the diminished status of Christianity and the diminished status of the Bible, in Christianity.
Are we likely to see a change in the banking and financial structures that prevail because of this recent crises? Not likely! We will undoubtedly see many superficial and cosmetic changes. Promises will be made, such as more and better regulations. We may even see global/internationalist monetary and political institutions put in place, maybe even a cashless society. But the "systemic problem" will remain. Money introduced as a debt with interest is just too profitable to give up. Ultimately, it will lead to one last humungous crash which the ancient wisdom also foresaw: "Go to now, ye rich men, weep and howl for your miseries that shall come upon you. James 5:1. Please look up the rest of this passage and compare it with Revelation 18:1-24 - the Bible prophecy tells us that the economies of the world will come crashing down.
Perhaps the situation that we have before us today is the beginning of the end. Perhaps all the delaying tactics have been exhausted. Perhaps the burden of debt has reached its global incapacity factor, and this time there is no solution. Perhaps this is the time for the fulfillment of another Bible prophecy: ".and upon the earth distress of nations, with perplexity.Luke 21:25 [the word "perplexity" in the Greek can be understood as meaning that the nations of the earth have run out of resources - it is a reference to economic perplexity and distress - in other words the world has reached the limits of economic expansion - no way forward - no way out - no solution].
When it comes to earthquakes, science and crises management agencies in many nations around the world, are constantly warning us that "the big one" is coming. If science was to examine the mathematical principles in play in the banking and finance world, they would be telling us that the "economic big one" must be on its way as well. Whether this current crisis will develop into "the big one" is yet to be determined. One thing we do know: the laws of inevitability ensure that the "the big one" will come - "it can be delayed, but it is inevitable." Humpy Dumpty will fall off the wall one last time - and all the king's horses and all the king's men won't be able to put Humpty Dumpty together again.
