The Accelerating Trajectory of Doom (print version)

Preface

From early on, the Watchtower introduced Jehovah’s Witnesses to the notion that the system of things under Satan’s control is really composed of three main spheres of influence, namely: government, religion and so-called big business. Appropriately, Jehovah’s Witnesses are most informed about religious affairs; and to a lesser extent political developments, particularly as they may impact our work or as they relate to Bible prophecy. However, big business also exerts a tremendous influence over mankind.

As an example of the sort of influence Wall Street has, consider the impact the stock market crash of 1929 had and how the ensuing Great Depression brought the "Roaring 20’s" to a screeching end.

Since the time of the Great Depression, and particularly in recent years, the financial system has become increasingly more sophisticated and complex. Through Wall Street-owned media, the dominant financial institutions exert an increasing influence over the world. Financial news and stock market tickers are all-pervasive. Exotic new financial instruments, like currency swaps and off-balance sheet over-the-counter derivatives, simply did not exist a few years ago. It has been said that very few people in the business even fully understand the financial system in all of its complexity. However, in spite of its complex and opaque nature, people are much more trusting and dependent upon the system now than ever before. Few people seem to realize the precarious nature of the world’s financial system.

For that reason it seems timely to take a closer look.

A Typical Collapse Function

In 1995, the controversial physical economist, international statesman, and executive editor of EIR, Lyndon LaRouche, published what he called the Triple Curve collapse function, which diagrams the projected, inevitable, collapse of the present global financial system.

The sharpest ascending curve of the diagram represents financial claims against the underlying economy in the form of credit issuance, stocks, bonds, derivatives, and all forms of debt. The second ascending curve, trailing, represents the monetary aggregate to facilitate and service the financial claims—what we call money. The third descending curve typifies the real economy as measured in terms of actual physical consumption and output, per household, per square kilometer; such as infrastructure, manufacturing, education, health care, farm production, transportation, energy consumption and production and everything else that goes into keeping a complex civilization functioning.

The fourth line—the straight line—represents time. As the diagram projects, as time goes on, all three trajectories steepen into nearly vertically opposed directions; with the paper assets ascending vertically and the physical economy downwardly. The Triple curve is not an actual chart, such as most people are familiar with that track the ups and downs of stocks or whatever; instead it is a predictive model. The question is does it actually predict?

Well, consider three charts (below) that track the growth of total credit market debt outstanding, financial sector debt and consumer debt. Each of these debt curves are represented in the Triple Curve as the red line.

Please note that the graphs above measure debt in the billions of dollars. However, the granddaddy of all debt curves is the chart below that tracks the growth of financial derivatives measured in trillions of dollars! Please be reminded that the entire world GDP is only $40 trillion; with underlying derivatives claims outstanding rapidly approaching $200,000,000,000,000! (No doubt a harbinger of things to come, the recent Enron-style sudden implosion of the Italian food producer Parmalat was a result of being on the wrong end of exotic derivatives bets.)

Source: Richard Duncan, "Asia, its reserves and the coming dollar crisis"

Now, the chart immediately above tracks the actual growth of reserve assets, or so-called monetary aggregate as represented in the Triple Curve model by the yellow line. The chart (taken from Financial Sense website) indicates that except for the little glitch in 1998-99, which no doubt reflects the Russian debt-default and subsequent near-seize-up of liquidity in the LTCM collapse, monetary output is steepening into near vertical ascent—as the Triple Curve model predicts.

According to Financial Sense website, global monetary expansion is occurring at the astounding rate of one-million dollars per minute around the clock! The author of Financial Sense, Jim Puplava, rightly makes a comparison to the Weimar Republic; when, in 1923, the hyper-inflated German currency (Click on link hold your mouse over the Reichsmark and watch it inflate!) suddenly went on a similar hyperbolic trajectory into sheer worthlessness.

Economists realize that monetary excess always leads to inflation. It is an incontrovertible law of economics. So, easy money and credit always leads to runaway inflation at some point. But, according to official statistics there is not even a hint of inflation, let alone hyperinflation—at least not as measured by the consumer price index. For example, the December report put inflation in the United States at a 38-year low; with little or no rising prices forecasted for the future. But, that is very misleading; as those inflation statistics only cover consumer prices—excluding food and fuel costs! However, in the real world people consume food and fuel to stay alive; and the underlying prices at the raw materials level are surging dramatically and at some point will inevitably explode into hyperinflating consumer prices.

For example, in recent months the price of steel has skyrocketed 60%. Companies that produce products made of steel are alarmed. Copper has soared to an eight year high. Soybeans have surged to a 15 year high. Surging lumber prices are driving up costs of home-builders and furniture-makers. Gasoline prices in the United States are at or near record highs. And then, non-tangible things like health care costs are rising rapidly. So are college tuition fees.

Meanwhile, despite daily reports of economic recovery, the underlying economy is steadily collapsing. (Represented by blue line on the Triple Curve) For example: industrial production in the United States is said to be in a state of virtual freefall. The United States budget deficit is setting off alarm bells around the world. The U.S. trade deficit continues to set new records, which is an indication that the nation can no longer support itself and must rely on outsourcing jobs to exploit cheap labor, as well as importing more cheaply produced goods from abroad.

Not only that, but nearly all the states are facing Depression-era budgetary crises and bankruptcy due to a collapsing tax base.

And just for added drama, Federal Chairman Greenspan recently let the cat of the bag that the Social Security system is virtually bankrupt. He also created quite a stir by stating that certain mortgage entities posed the systemic risks to the financial system. (Systemic risk is banker-speak for the dreaded collapsing house of cards scenario.)

But what should all of this mean to us?

So, what does all of this mean? Where are we headed? The Author of the Triple Curve states that the financial system has now entered into the final phase of disintegration. He predicts that the dollar will collapse before the end of the year and that the only undecided outcome is who is going to "eat the paper"—meaning, who is going to absorb the loss—the international financial system or the nations of the world?

Certainly, we do not have to be economists to know that taking on debt beyond our ability to repay is not something that can go one indefinitely. There is always a day of reckoning—a day of settling accounts. As regards the global system, upon which our very lives depend, the analogy seems appropriate that the parasitic, usurious financiers have, at long last, nearly sucked their host dry.

From a prophetic prospective, there are strategic turning points in history that help us locate ourselves in relation to God's unfolding purpose. For example, the Hebrew prophets foretold that Babylon would become a forge hammer in Jehovah's hand that he would use to smash apostate Jerusalem and the nations of the ancient world.

However, prior to Babylon's ascendancy, Egypt was one of the dominate regional powers; and in an attempt to preempt the expansion of the Babylonian empire, Pharaoh Necho led the Egyptian armies north to the Euphrates River—to a place called Carchemish. However, his military excursion failed and the Egyptian army suffered a terrible defeat. Jeremiah 46:1 records the outcome of the battle of Carchemish: "This is what occurred as the word of Jehovah to Jeremiah the prophet concerning the nations: For Egypt, concerning the military force of Pharaoh Necho the king of Egypt, who happened to be by the river Euphrates at Carchemish, whom Nebuchadrezzar the king of Babylon defeated in the fourth year of Jehoiakim the son of Josiah, the king of Judah."

The defeat of Pharaoh Necho at Carchemish meant that there was no longer any southern buffer against the aggressive Babylonian Empire. It marked a strategic turning point when the Chaldeans began to serve as Jehovah's appointed Executioner. Through Jeremiah, God goes on to speak of Egypt's demise, saying: "And that day belongs to the Sovereign Lord, Jehovah of armies, the day of vengeance for avenging himself upon his adversaries. And the sword will certainly devour and satisfy itself and take its fill of their blood, for the Sovereign Lord, Jehovah of armies, has a sacrifice in the land of the north by the river Euphrates."

Biblical history has a way of repeating itself. Today, the United States is the foremost champion of freedom and human rights. American political institutions stand as a buffer against the more animalistic impulses of empire. The significance of the impending collapse of the dollar-centric financial system is that it has the potential to destroy the last impediment to the imposition of a totalitarian world empire and transform the nations into something much more beastly.

It does not at all seem unreasonable to anticipate that the American king will shortly be facing his battle of Carchemish against the financier-controlled forces of empire.