U.S. Fiscal Cliff: The World Watches
The world is watching as the United States approaches its fiscal cliff. How much longer will unsustainable solutions work to avert global disaster?
The United States remains a key pillar of the global economy; hence the world’s attention is focused on how the U.S. intends to avert what has become known as the “fiscal cliff.”
Defining the fiscal cliff
Business Report defines the fiscal cliff as “a toxic mix of government spending cuts and expiring tax cuts due to come into effect at midnight on Dec. 31” (Dec. 3, 2012).
“If this happens,” continues the newspaper, “the U.S. economy is likely to head straight for another recession. … If it goes unresolved, the financial turmoil of 2008 will look like a walk in the park.”
Rana Foroohar maintains that “the smart money says a deal has to get done. But Washington isn’t good at smart” (Time, Dec. 3, 2012).
I have heard the opinion expressed recently that the fiscal cliff is not a problem—Republicans are bound to work with Democrats to cobble together a temporary solution, because it is stupid to highlight a major crisis just after an election. The thinking is that they will agree to a deal now that doesn’t really solve the debt issue but just delays the inevitable till closer to the next election!
How long will magic solutions work?
The economic crisis of 2008 is still very much on people’s minds around the world. Its “magic solutions” (like quantitative easing) and the ever-present danger of a “double-dip” recession have haunted the world’s economic policymakers, investors and consumers ever since.
It seems likely the European Union will come up with a solution for its delinquent states (“Greek Deal Sends Eurozone Into Recovery Room,” Business Report, Dec. 3, 2012). Similarly, the United States will hopefully broker a deal to avoid the fiscal cliff, and China’s growth will likely get back on track.
Why do I think this? Because central banks and other economic policy leaders have shown that they will “do whatever is necessary” to avoid a repeat of 2008. The U.S. Treasury will continue to pump money into its economy. They believe it worked before, so they are not about to let go now!
So then, what’s the problem?
History has shown that you can only get away with so much for so long before retribution strikes. The piper must be paid! In this case, the price for pumping money into the economy is likely inflation.
You can’t keep making money out of thin air without making each dollar worth less. It’s like stealing from Americans’ savings accounts and cheating people and nations around the world who have loaned money to the United States. Eventually prices and interest rates will naturally rise—or everything will blow up.
Boom and bust
Yet in spite of all the doom sayings and dire warnings we read, stock markets around the world are booming. Why?
Some would say: “Stock markets lead the economy by six months to a year.” Yet booming stock markets are only sustainable if there is a corresponding increase in productivity.
Take a party balloon. It blows up fast in the beginning, but then seems to swell more slowly with each blow, until that final puff that ruptures the entire balloon!
Who knows when that may happen? One thing is clear: It’s unlikely any government now or later will allow any air out of the balloon.
Blessings and curses
Economists and governments around the world have missed one vital fact: There is a God who has ultimate control over world affairs. Those who obey His beneficial laws can receive His blessings, and those who break them—who steal and cheat and lust and sin—will receive curses.
Unless there are major changes in policy and behavior, the question is not whether the U.S. economy will collapse. The question is when.
Americans in particular have grown used to living in a blessed land. The promise of Deuteronomy 28:13, even if the majority is ignorant of it, is taken for granted: “The LORD will make you the head and not the tail.”
But people around the world today have never really understood God’s involvement in blessing peoples and nations. Governments are seemingly bent on proving that alone they simply do not have the solution to the world’s woes.
Deuteronomy 28:15 carries a very stern warning to us all, as God is not a “respecter of persons” (Acts 10:34): “If you do not obey the voice of the LORD your God, to observe carefully all His commandments and His statutes which I command you today … all these curses will come upon you and overtake you.”
“The LORD will send on you cursing, confusion, and rebuke in all that you set your hand to do. … The LORD will make the plague cling to you. … The LORD will change the rain of your land to powder and dust. … The LORD will cause you to be defeated before your enemies” (Deuteronomy 28:20-25). A stern warning indeed!
But it gets worse: “A nation whom you have not known shall eat the fruit of your land and the produce of your labor, and you shall be only oppressed and crushed continually” (Deuteronomy 28:33).
But we see no evidence that the governments of today have any knowledge of these warnings of the Lord, much less belief that the God of the universe does exist and will not be denied!
What should you do?
Mark 1:15 instructs us to “repent, and believe in the gospel.”
God longs for us all to turn to Him. He is waiting for all people to acknowledge and repent of their sins, although only a few have their ears open to His call to repentance at this time. “On this one will I look: on him who is poor and of a contrite spirit, and who trembles at My word” (Isaiah 66:2).
“In all your ways acknowledge Him, and He shall direct your paths” (Proverbs 3:6).
The wonderful news is that a better world is at hand, and that we can be a part of it! Jesus Christ is poised to return to this planet, and He will usher in a time when there will be no more war, starvation or economic disaster. How important is it, then, to turn to the Lord while He may be found?