Tuesday, June 29, 2010

Inflation or Deflation?

Pundits are expecting a second-dip recession for the world economy but they are divided as to what will cause it. European leaders are anticipating the risk to be inflation and U.S. leaders think it will be deflation. Thus Europe is cutting back on governmental spending and taxes while the U.S. leaders want to do just the opposite.

The economic crash that happens during the Tribulation will certainly start out being an inflationary problem… “a quart of wheat for a denarius, and three quarts of barley for a denarius” (Revelation 6:6, NKJ). A denarius was a day’s wage in biblical times. Thus at the beginning of the Tribulation demand for what people need like food will exceed supply. But there is also Revelation 18:11, “the merchants of the earth will weep and mourn over her, for no one buys their merchandise anymore.” This certainly sounds like a deflationary problem where supply outstrips demand.

The Bible does tell us that the Roman Empire will revive in the time leading up to the Tribulation so this would tend to indicate that the European response to cut spending is the more correct one. If we are close to the Tribulation then their inflationary expectation is the correct view of the world economy. The fact that the U.S. must wane as an economic superpower is reinforced by our government having exactly the wrong view of how to deal with the coming second-dip recession.

The Bible also tells us that God will reward those who make the effort to avoid inflation over those who think indebtedness is the solution to looming deflation. Proverbs 22:7 says, “the rich rules over the poor, and the borrower is servant to the lender.”

Collectively this tells me that the Europeans have a more correct read on the world economy and the U.S. is wrong. Europe's star is rising while America's is fading making way for the Revived Roman Empire and the coming global government. Also, what the pundits are pretty much agreed on is that the world economy is headed for a second-dip recession and the best we can do is avoid making it worse.

The only consolation to suffering through these birth pangs is that followers of Jesus will be with the Lord during the Tribulation. I can’t help but look forward to that Day.

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