is there a hyperinflationary crisis ahead?

7/28/2019 Is There a Hyperinflationary Crisis Ahead?

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Is There a Hyperinflationary Crisis Ahead?

Question. I heard that after deflation, America may become hyperinflationary. What's thedifference between inflation and hyperinflation? What should we do if it happens to us?

Inflation

I have heard the same thing as you. Once we get past a depression-like deflation we willlikely enter a hyperinflatioary depression. Neither is very desirable. But, God promises totake care of His own (see Philippians 4:19).

When inflation reaches double digits as it did in the 1980s it is considered "highinflation." This was during a time when bank CDs and money markets paid around 18%

interest. However, we also paid high rates for home loans and credit cards. But, homeprices were reasonable compared to today.

During the 1980s neither did Americans carry much credit card debt, so we were in bettershape. We also went through an energy scare during the 1980s. Many of us waited inlines around the block to buy gasoline for our cars at a nearby gas station. It sometimestook 3-4 hours to fill up the gas tank.

1980s Superinflation

Extremely high inflation is called "Superinflation." It occurs when annual rates of

inflation rise to between 50-200%. This has happened many times in Mexico, LatinAmerica, Israel, Russia and other parts of the world.

Definition of Hyperinflation

There is no standard definition of hyperinflation. But, most feel hyperinflation is whenrates rise between 15-30% per month. Hyperinflation has nothing to do with megainflation. Rather, it is a loss of faith in the local currency.


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This drastic increase often occurs when people are desperately trying to move theirmoney out of the local currency because they are aware that it is unstable and losingvalue. Citizens know that they stand to lose almost everything in a hyperinflationaryspiral. It is shocking and frightening to watch.

Argentina's Example

For example, this happened not too long ago in Argentina when residents tried to movetheir money from local banks to banks in neighboring countries like Brazil.

To stop the movement of money out of the country the government closed manyArgentinean banks or placed daily or weekly limits on withdrawals to around $200 perperson for several months. Many families were driven to desperation as they lost theirhomes and lifelong savings. The government's policies had failed.

Is This Our Future?

It's helpful to know what happens to regular citizens in a hyperinflationary crisis because,yes, it could happen to Americans in the not-too-distant future. We are seeing warningsigns of it now.

Country after country is declaring that they are diversifying out of the dollar because they


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prefer being paid in euros or yen or other currencies rather than dollars. This is becausethe dollar is unstable for them. So let's take a look at what monetary "instability" doesand what causes it.

Printing Money instead of Taxing Citizens

Many governments know that citizens won't accept higher taxes to fund a war, pay fordefense equipment, or to help create higher salaries and benefits for government workers.So instead of raising taxes they print more money.

Raising the Debt Ceiling in Congress

The governments do this by creating more debt through computer-entries. This is whyour U.S. administration constantly insists that Congress "raise the debt ceiling" ongovernment spending. (This is true for Republicans and for Democrats, by the way -inflation is an equal opportunity employer).

Debt Entries are I.O.U.s

Now please listen carefully. If you understand this you will know far more than theaverage American. These computer-entries of debt are what form the United States"dollar" - which is really an I.O.U. Treasury bills and dollars are debt creations of theU.S.

Dilution of Money

Like diluting coffee with water, printing more money (creating more debt) dilutes thevalue of the dollar. Things become more expensive because it takes more dollars to payfor the same things. (It is not because companies just arbitrarily raise prices).

Utility companies raise our monthly rates to keep up with the falling dollar. Healthcareinsurance premiums cost more and more. Food prices go up. Clothing and shoes becomeexpensive even when we buy them from Wal-Mart. Gasoline keeps going up. States andcities keep tacking on fees. Postal stamps keep creeping up, and on and on.

That is the reason gold and silver prices zoom up. It simply takes more dollars to buy thesame things.


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A Hidden Tax to the Citizenry

All of this is a "hidden" tax. We have been experiencing this hidden tax in America for along time, but it has been especially pernicious the past few years. It is beginning to raise"alarm bells" in seasoned financiers and economists.

False Weights & Measures a form of Robbery

For governments to dilute currency through the addition of debt and to take real metalsout of coinage is a form of robbery according to the Bible. Proverbs 11:1 says,

"A false balance is abomination to the Lord: but a just weight is his delight."

Proverbs 20:10 continues:


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"Divers weights, and divers measures, both of them are alike abomination to the Lord."

That's pretty strong language against rulers who falsify the measurement of their"currency." Proverbs 20:23 warns,

"Divers weights are an abomination unto the Lord; and a false balance is not good."

Unequal weights and unequal measures in the Bible refer to the loaded scales a dishonestmerchant might use to cheat his customers. His scales may be rigged to measure moreweight and higher costs to the customer.

Food manufacturers do something similar when they make smaller containers to hold themilk you buy, ice-cream, cereal boxes and so on.

Dross

Ezekiel tells the Israelites that they are like this. "And the word of the Lord came untome, saying, Son of man, the house of Israel is to me become dross: all they are brass, andtin, and iron, and lead, in the midst of the furnace; they are even the dross of silver"(Ezekiel 22:17-18).

Removing Silver from Coinage

When a government removes real silver from its coinage such as our government did toour dimes, quarters and fifty-cent pieces in 1967, it has increased the "dross." This, too, isa form of robbery.

It causes our currency to become like "funny" money - or "fiat" paper - and like uselessmetals - or worthless money based upon nothing of value. In fact, Rome devalued thecurrency and many feel this contributed to the fall of the Roman Empire.

Removing Copper & Nickel from Coinage

It does not escape our notice that the copper in our pennies and the nickel in our nickels is


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worth more than the pennies and nickels themselves!

Recently, the government made a law that Americans may not melt down nickels orpennies to sell nickel or copper. Now do you understand why?

It stands to reason that the government will soon remove even copper and nickel from thecoinage. This, too, is robbery - or false weights and measurements which is surelydispleasing to the Lord. In modern terms we call this "debasing" our currency.

Irritating to Foreigners

This does not escape the notice of foreigners, either. As they accept U.S. dollars for theiroil or manufactured goods, the dollars are losing value and not buying as many things asit once did.

As the euro rises against the dollar foreigners must use more and more of these dollars to

buy European goods or other things.

Rebirth of the Roman Empire?

For example, when the euro first traded in the year 2000 the dollar was worth about $1.30while the euro was worth around 80 cents. Americans could buy almost two euros for theprice of $1.00.

Isn't that amazing?

Now the opposite is true. The dollar has fallen in value against the euro so that the dollaris now worth about 80 cents to the euros' $1.36 (the values are unstable and changing).

It affects Americans because now it costs almost twice as much to travel to Europe, tobuy European cars or to purchase manufactured goods. It takes more dollars to buyEuropean airline tickets, hotel bills, food, gas and other items.

Because of this we may be witnessing the rebirth of the Roman Empire prophesied in thebook of Daniel. It may be that America must decline and lose some of its power in orderfor prophecy to begin to be fulfilled. At least, that's one way to look at it.

Eroding Account Values

For those foreigners who accept American dollars in payment for oil or goods, their bankaccounts become less valuable. Because of the constantly eroding value of their dollarsthey don't want to accept dollars in payment anymore.

Can you blame them?

As foreigners try to divest themselves of dollars and refuse more dollar-denominated


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payments, the value of these accounts erode even more. It is a vicious cycle. We can'treally blame them for feeling "cheated." We would feel that way, too.

Funny Money

Because fewer and fewer foreigners are buying our Treasury bills and notes, thegovernment must print more and more "fake" money to pay the interest on these currentdebt instruments. Our government is diluting the coffee with water - printing money topay for increasing debt - to pay for the interest due on T bills that foreigners don't wantanymore.

Our government calls printing money to pay its own debt "monetizing the debt." If you orI do it it's called "fraud/forgery." At any rate everything costs more and more. In reality, ittakes more dollars to buy the same things - but I'm sure you understand by now.

12 Marks per Coin in 1919 Germany

At some point governments lose control of their money-printing schemes as they engagein this kind of dishonesty.

For example, in Germany, 1919, it took 12 marks to buy a silver one-ounce coin. BySeptember of 1922 it took 1,899 marks to buy that same coin. After raging hyperinflationin 1923 it took 543,750,000,000 marks to buy the same one-ounce silver coin.

Of course, this kind of hyperinflation led the German people to such desperation that theyturned to the promises of new prosperity from Adolph Hitler. Hyperinflationary woesoften lead to tyrants and the rule of dictators.

Unpatriotic?

Sadly, American Christians are sometimes almost willfully ignorant about the actions ofour own government toward its currency and its citizenry. This could lead to extremelydifficult times for believers and their churches.


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Church people tend to view those who teach the truth about economic history asunpatriotic or disloyal to our founding fathers' values and our country.

But, nevertheless we encourage our readers to become informed and engaged instead -"as wise as serpents and innocent as doves" (Matthew 10:16). Our loyalty must always be

to God first.

Signs of Increasing Inflation

As Christians we need to understand what is happening and we must learn what to dowhen inflationary problems turn into a hyperinflationary crisis. Wouldn't it be better ifbelievers could show themselves leaders instead of victims in such circumstances?

Signs of the End Times?

In one sense we are fortunate because we already know there will be terrible inflationworldwide due to a prophecy in Revelation 6:6: "A quart of wheat for a denarius..."

A denarius was equal to a day's pay. So this prophecy foretells that a worker will barely

have enough to eat let alone pay for his family's needs, shelter, medical care, collegetuition, or cable TV.

Velocity of Money Rising Among the Wealthy

One of the first signs of currency instability we will notice is that wealthy people begin toturn over their cash rapidly by buying and selling works of art, real estate, vintage cars,collectibles and rare coins.


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By selling their collectibles they are trying to preserve the purchasing power of theirsavings by moving it into real goods and hard assets - even if they don't really understandwhy they are doing it. What they are doing is to raise the "velocity" of the money supply -the rate at which money exchanges hands.

Middle Class Velocity

Soon the middle-class finds itself doing similar things. They quickly find that ordinarybills begin to become unmanageable in the first stages of hyperinflation.

Utility bills triple, quadruple, and become totally unaffordable. Power companies turn offmany families' electricity and water in these cases.

Credit Companies

Credit companies repossess cars and furniture in a ruthless manner. The variable rates oncredit cards climb and climb until they are as high as 600% or more in a hyperinflationarycrisis.

Please don't make the mistake of thinking this can't happen to us. For just one small delayin payment or one missed bill, rates have already risen to 32% for many Americans.

In Israel and Russia rates have climbed as high as 1600% during a crisis. Citizens justquit answering the phone to bill collectors, and lock their doors. They sit in the darkbecause their power has been turned off, and they hope for the best.

When hyperinflation begins variable interest rates become extremely unstable. For thisreason we suggest that readers pay down credit card debt as much as possible.

Life Insurance & Medical Care

In hyperinflation insurance premiums skyrocket so that most people quickly drop theirpolicies - whether life insurance, home insurance, or car insurance.

Medical care becomes unaffordable or unavailable. People drop their healthcareinsurance. Ordinary drugs become so high priced that neighbors set up tables sellingmany common prescriptions on the black market.

Garage Sales & Flea Markets

Flea markets and garage sales become popular methods to buy clothing, furniture, coffeepots, toasters or books. Pawn shops flourish and many homes go up for auction.

Staples such as coffee, vegetables, fruits, bread, milk and meats sell for ridiculous prices.For instance, a whole chicken which sells for $5.00 in the morning sells for $60 by


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evening.

Churches Depleted

Churches suffer, too, in hyperinflationary crises. Heating and air-conditioning costs cansky rocket to the point where donations and tithes no longer cover the costs.

What will you do in such a case? Should you close the doors?

We suggest that pastors and elders, deacons and congregants be ready to work closelytogether to clearly state their problems and work out shared solutions in the event of ahyperinflationary spiral. Does the church attempt to maintain too many cars or buses?


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Can it streamline or ration the need for gasoline and transportation?

Can congregants volunteer to help maintain the facilities? Is it possible to let professionalcleaners go while members clean restrooms, vacuum, and straighten Sunday schoolrooms?

Should plans for building new facilities be postponed for awhile until the crisis is over?Perhaps the funding of new Bibles, literature, and books should be postponed. Maybethere are writers and talented teachers who can print their own materials for Sundayschools and Bible studies. These are decisions that must be shared amongst churchmembers.

Depleted Savings

There are many citizens in hyperinflationary crises who run through their entire lifesavings in just a few weeks trying to pay for ordinary services. This can happen before

people have time to think through what is occurring.

Oftentimes panic sets in as shoppers rush through a store trying to grab things before theybecome unaffordable. Perhaps churches and their communities could work together tofind solutions to these problems.

Guarding Against Panic & Fear

Panic and greed and fear are things we must guard against. At such a time we would bewise to remain calm, sit still, and to think through our priorities.

Enlisting the aid and advice of other Christians could be helpful. For instance, relianceupon prayer and God, and a focus on maintaining life-saving prescriptions, clean water,and food staples should be the first concern for most of us.

We must remember that "For God has not given us a spirit of fear, but of power and oflove and of a sound mind"(2 Timothy 1:7).

Could Hyperinflation Hit America?

Once we understand that there is no way to pay off America's debt, then the reality ofpossible hyperinflation becomes feasible. Our unfunded liabilities such as Medicare andSocial Security raise the nation's debt to 100 trillion! Even if Congress seized all of ourretirement funds, instituted 95% taxes and took other unpopular measures we still couldnot pay off our astronomical debt.

So our government has a choice: We can renege on our national debt. (That's what"banana republics" do). Or we can dilute the value of our money supply by printing moremoney. Can you imagine how far the government must "dilute" the money to make 100trillion "cheap" debt? That's hyperinflation!


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What to Do to Prepare?

A hyperinflationary crisis is a chaotic time which ruins the hard work and savings of acountry's citizens. If you feel that America could succumb to such a scenario it would be

wise to pray and ask God what He wants you to do to prepare.

- For example, some have put 10% or more of their assets in precious metals (gold andsilver) as a hedge against currency devaluation.- Others keep a portion of their savings in foreign currencies.- Some purchase long lasting canned and dried foods.- Others keep a well-stocked "Joseph's Closet" filled with foodstuffs and clothing atchurch and home.- Some plant their own vegetable gardens and fruit trees to supplement store boughtgoods.

Proverbs 21:20 advises:

"There is precious treasure and oil in the dwelling of the wise, but a foolish man

swallows it up."

This suggests that a wise person lay aside some of his wealth for the future and forunexpected times of need. It could include following the guidelines of the Red Cross andHomeland Security to have provisions and vital medications in a safe place in the eventof a disaster.

In any event, a very wise man once said that everyone should prudently diversify hisassets: .

"Give a portion to seven, and also to eight; for thou knowest not what evil shall be uponthe earth." Ecclesiastes 11:2

"Give a portion to seven or even to eight" means that we should diversify our assets inseveral ways - not putting all of our funds in a bank or a brokerage firm, for example. Ifwe listen intently, God will lead us and guide us through troubled waters.


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References:

Kotlikoff, Laurence. 2004. The coming generational storm. Cambridge, MA: MIT Press.

McAlvany, Don. 2005. Pondering the unthinkable: An American hyperinflation.

Panzner, Michael. 2007.Financial armageddon. N.Y.: Kaplan.

Swanson, Gerald. The hyperinflation survival guide: Strategies for American businesses.

Wiedemer, David and Robert, Cindy Spitzer.Aftershock.New Jersey: John Wiley & Sons.

Williams, John. 2010 update. Hyperinflation special report. Shadow Government

Statistics.

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Moreover, brethren, I declare unto you the gospel which I preached unto you, which alsoye have received, and wherein ye stand; By which also ye are saved, if ye keep in

memory what I preached unto you, unless ye have believed in vain. For I delivered untoyou first of all that which I also received, how that Christ died for our sins according tothe scriptures; And that he was buried, and that he rose again the third day according to

the scriptures: (1 Corinthians 15:1-4). In the end, this is all that truly matters.

is there a hyperinflationary crisis ahead?

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