HOW ECONOMIES BEGIN

Times are changing rapidly. Long established economic principles are dissolving, and new economic theories are born every day. The old "classical" economists are shaking their heads as they discover they no longer know what is happening. They realize the "traditional" techniques of restoring the economy no longer work. The ideas behind cost-push and price demand no longer hold true because we see that prices can rise while production falls off. Employment declines in one segment of the economy while wages rise in another. Why? What can we expect in the future?

Attitudes and Actions

Too often we react to events around us without understanding what is really happening and why. Overreaction is the norm, and in nearly any crisis the sequence of events is predictable—alarm, temporary panic, then apathy and disinterest.

We tend to look at the future with anxiety and worry. God says that worry is a sin. What is worry? Taking on a responsibility that belongs to someone else.

Unlike the majority of the population (who are not attuned to God's financial plan), we don't have to worry about circumstances. God has revealed in His Word what has happened and will happen. Parts of the Bible are history, parts are current events, and portions of it are prophecy. Through His Word God tells us what to expect in this economy and how to respond.

I did say respond as opposed to react. When we respond to something, we bring in the information, check it against known values, and act accordingly. When we react to something, we bring it in, amplify whatever we receive, and put it back out. That is not what God wants for us.

As we look at the economy today and where it may be headed tomorrow, we need to view it from God's perspective. The most important part of that perspective is the imminent return of Christ. When we hear that Christ may return during our time, we say that we believe it. But when God's plan is beginning to be unveiled to us, many refuse to accept it. Seemingly, we react as the early Christians did in Acts 12.

Peter had just been imprisoned and was to be executed. The Christians who traveled with him had retreated to his house to pray. They stayed that entire evening, praying that God would release Peter unharmed.

Then God performed a miracle and Peter walked out of prison a free man. He went to where the small group was praying and knocked on the gate.

A young girl answered and swung open the gate. There stood Peter. Shocked at the sight of him, she rushed back to the group saying, "Come quickly, Peter stands at the gate!" And what did they do? They chided her. "No, Peter can't be here," they said. "We're praying for him in prison."

Nevertheless, there he stood. They had prayed for a miracle. God had granted their prayer, and yet they didn't have enough faith to believe it.

Sometimes we are the same way. We say that we believe the Second Coming is near, but when we see the imminent signs, including the changing pulse of the economy, we refuse to accept it.

The Economy

Isolating the economy from any other event, a prudent observer would say that we have a problem. Notice that the United States economy and most of the world's economy is very unstable.

The value of the U.S. dollar is shrinking on the world market. Consequently, most other countries that have depended on our stability in the past are pushed to virtual bankruptcy. The economic balance has shifted to the Mideast cartel where little money is actually necessary. What does all this mean? Where are we headed?

Obviously, inflation is growing. In recent years it has increased at an alarming rate, whereas real production has dropped off. Major industries are pursuing a self-preservation attitude—some of them to the brink of disaster. Prices continue to soar while real production declines. Thus a new term has been coined, "inflationary recession" (prices increase while output declines).

Inflationary recession is not unique in the world economy, but it is unique in the United States. For years we touted our fiscal controls in the belief that it couldn't happen here. It was believed inflation could be halted simply by reducing the money supply, and recession could be controlled by the opposite technique. This is no longer credible. If we enter an inflationary period and begin to control the money supply, the economy immediately slips into a recession. Then, in order to get out, it is necessary to flood the market with additional money which, in turn, fans the fires of inflation even further.

Economic Trend

These events should alarm economic decision makers, because they verify that the highly publicized controls no longer work. The trend toward economic collapse —runaway inflation followed by major depression—seems irreversible.

Lack of fiscal discipline and sound management is partly responsible for the trend. These inadequacies reflect an economic system created by popularity. Politicians who make decisions based on what is popular rather than what is financially sound have virtually bankrupted us.

It is hard to visualize the kind of political climate necessary to reverse this trend.

Rather than working on a feasible solution to our problems, government officials quibble about which group should get the most handouts. They grant price supports to one group, unemployment benefits to another, and gratuities to many people who are undeserving. They provide grants to New England ski resorts because of insufficient snow one year, then support beaches in the South because of too much rain. They pay people not to grow products in a time of shortage, apply price supports to foods when they begin to drop, and then complain of runaway inflation on these same products.

The Federal Reserve System cuts off credit to industries that are profitable, protesting that they should become self-sufficient without credit, when for forty years the system promoted the use of nothing but credit. Nor is the "average" American guiltless either. Most families today live on the brink of disaster. The excessive use of personal and business credit has weakened the already shakey family structure. All of these factors contribute to an almost uncontrollable economy.

Understanding the Economy of Today

In order to understand where our economy is, it is necessary to understand what an economy is. Let's go back to an earlier time and see how an economy comes into existence.

For simplicity's sake, let's look into a community where people were basically barterers. Residents of the community include Dan Dairyman, who raised cows; Frank Farmington, who raised corn, wheat, and...