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Written by Jim Jordal   
Friday, 09 January 2009

A "PERFECT STORM" OF DEBT

By Jim Jordal

Babylon hath been a golden cup in Jehovah's hand, that made all the earth drunken: the nations have drunk of her wine; therefore the nations are mad.  Babylon is suddenly fallen and destroyed: wail for her; take balm for her pain, if so be she may be healed.  We would have healed Babylon, but she is not healed: forsake her, and let us go every one into his own country; for her judgment reacheth unto heaven, and is lifted up even to the skies.

From the prophet Jeremiah’s diatribe against the Babylonian economic and political system that afflicted his world; and a prophecy against all such future domination systems, Jeremiah 51:7-9 (ASV)

 

Perhaps you remember from several years ago the movie A Perfect Storm, portraying a terrible storm over the Grand Banks fishing area off the eastern coast of North America. Despite repeated storm warnings, fishers continued far beyond the bounds of reason in search of the "big" catch. When the storm hit many were overwhelmed and some lost their lives.

Perfect storms are relatively rare since they take place only when several meteorological conditions (each of which would not cause a serious storm by itself) converge into a terrifying monster storm. Since this same unfortunate combination of conditions can and does occur in other areas of human life, the "perfect storm" becomes a metaphor for converging conditions leading to greatly magnified outcomes. Such a phenomenon now threatens U.S. financial structures because of exponentially multiplying debt amid a host of other negative events.

Begin with our already monstrous national debt that at this writing approaches $11 trillion. Add to this state and local government debt of another $2 trillion. Then home mortgage debt of about $10 trillion. Then personal and credit card debt of several trillion. Then business debt of more trillions. Then trillions more in foreign debt owed to the suppliers of all the things we cannot live without. Then more money for after-care for the hundreds of thousands of service veterans killed or wounded in our wars, not to mention the astronomical figure of trillions in derivatives and other commercial debt instruments. And I’m sure I’ve missed trillions more.

Now project what demographers tell us about the future into this picture. According to the U.S. Treasury Department and the Office of Management and Budget (OMB), Medicare and social security programs for retirees will exceed tax revenues by over $40 trillion over the next 75 years. Then there are trillions more in future medical costs due to the current epidemics of obesity, addiction, and Alzheimers. And the trillions needed for repair and improvement of our aging infrastructure. And on and on.

President-elect Obama recently announced a $1.2 trillion federal deficit for 2008, with trillions more to be added in the future. Is there any hope, or is America headed toward Third World status as a perfect storm of debt overcomes our financial, governmental, and business institutions? Are we to be crushed under mountains of unpayable debt?

The standard economic answer to the societal problems associated with public debt is that we must "grow the economy" so as to increase government tax revenues enough to service, and possibly even pay down, the debt. That’s worked several times in the past, most notably during the budgetary surplus years just before George Bush took office. But times have changed since then.

The debt problem we now face is a perfect storm because it has so many contributing factors that previously existed, but have never before come into confluence. We cannot face a storm of this magnitude using existing strategies. A new, yet very old, approach is needed.

The present world economic system (Babylon) that creates domination of the many by the few is doomed. As the old order collapses (as it is now doing) it will be replaced by God’s system of Jubilee economics. A cornerstone of the Jubilee system is that debt, public or private, is treated as what it really is: an enslaving transfer of resources from those average persons who take on the debt to the few people and institutions at the top of the income stream fortunate enough to hold the debt

Jubilee provides for periodic forgiveness of debt as well as prohibiting abusive use of interest. Already, forward-thinking Americans are suggesting return to what the Constitution specifies--issuance of debt-free money by Congress directly into circulation in the economy.

If you want to see the present financial problems disappear, try supporting what God says rather than what already-failed economic policies suggest.