Where Is Your Money Heading?
IN ALL parts of the world, the prices of nearly everything keep going up. This is called inflation. While it is not new, the scope and pace of it are.
How serious a problem is it considered to be? The publication Money & Credit said recently: “Inflation is the number one problem, the problem that makes all others pale into insignificance. If allowed to rage on at its present pace it could easily destroy the fragile fabric of this and every other democratic society.”
What makes the situation so serious is that never before in history has the entire world been caught up in such inflation at the same time. And, in recent years, the rate of price increases in many nations has gained speed.
This means that your money buys less and less. And, for persons on relatively fixed or low incomes, it is a growing tragedy. They find themselves unable to increase their incomes enough to make up for inflation. Hence, their living standard drops.
Regarding the rate of inflation, U.S. News and World Report said: “Not in a quarter of a century . . . have prices gone up so fast for so long.” And the New York Times added:
“If American consumers are irritated over an 8 per cent inflationary rate, consider the Japanese. . . . current wholesale prices in Japan are up 16 per cent and consumer prices 13 per cent from last year’s levels. . . .
“The rate in South America has far exceeded 100 per cent in some countries. In relatively stable Peru prices have been rising about 12 per cent a year over the last two years.”
In August of 1973, prices in the United States jumped the fastest in twenty-six years. Since the United States is the main foundation for the Western world’s economic system, authorities all over the world were very much concerned about the consequences of such inflation.
The havoc that world inflation has caused prompted the head of the Bank of Zambia, Africa, to call the future of the world’s money systems “bleak.” Also, the Nigerian Daily, noting the chaos in the world economy, urged African nations ‘to establish their own monetary exchange system in order to eliminate losses resulting from the world monetary crisis.’
Why is there such worldwide inflation now? There are several reasons for this very complicated situation. But, as economist Milton Friedman wrote in Newsweek recently, some of the reasons are: “Too much creation of money, too much government spending,” and too much government intervention. Many nations are now spending more money than they make. To pay for such things as the huge cost of armaments and for fighting wars, for public services and other things they want to do, they have constantly gone into debt. To pay their bills, they have to borrow money or create it on their printing presses. In addition, the general public has engaged in vast borrowing themselves. But the effect of all this excess money chasing goods and services is that prices are pushed up.
What cure is there for the situation? It is of interest to examine what more and more authorities are now saying.
“Heading for Crash”
Late in 1973, the New York Times carried this headline: “Boom Economy in Europe Feared Heading for Crash.” At about the same time U.S. News & World Report stated: “Fears are widespread among bankers, economists and politicians all over Europe that governments are losing control over the wage-price spiral, and that runaway inflation is leading toward economic disaster.”
Whereas just a few years ago the number of economists making such dire predictions would have been few, now there are more and more. Nicholas L. Deak, president of a large foreign money exchange in North America, said that ‘inflation will lead to a world-wide depression that will make the 1930s look like a summer holiday.’ He also said: “Inflation creates a boom that ends in disaster. The trend can’t be reversed without a major depression.”
London’s Financial Times called the prospects for the near future “spine-chilling,” commenting:
“When Dr. Schaefer, the highly respected chairman of Switzerland’s largest bank, recently warned of the danger of the [world’s] entire economic system ‘meeting with a tragic end,’ he was not exaggerating.
“He was merely ringing round a worry that even the most sober observers of the international scene no longer find it easy to dismiss—that . . . inflation has now reached the point at which nothing can stop it [from] completely destroying the world’s monetary base, with consequences too frightful to contemplate.
“Dr. Schultz, the international monetary chronicler, puts it bluntly when he says in his latest news letter that . . . ‘Money is dying.’”
A member of Britain’s parliament, Sir Henry d’Avigdor-Goldsmid, a banker whom the London Sunday Telegraph of July 22, 1973, described as “a very model of judicial caution,” warned:
“When [Mount] Vesuvius erupted the citizens of Pompeii were probably discussing plans for new public baths. No doubt that was a matter of great moment to them, but they were completely unconscious of the deluge of death and destruction that was about to descend upon them. . .
“We are facing what amounts to an eruption of Vesuvius. Price inflation all over the world in the last 18 months is something which will bring much of the Western world as we know it to an end.”
Can the Tide Be Turned?
If the unchecked tide of inflation will bring disaster, can it be halted? Is it realistic to hope that it will?
The record is not comforting for those who put too much trust in money. For instance, regarding the American inflation, the New York Times said:
“The present rapid rate of inflation in the American economy . . . is a mystery, at least in good part, to the experts . . .
“Hardly an economist, in or out of government, dreamed that the inflation rate of the last three or four months would be as great as it has proved to be.”
So the experts did not foresee what has taken place in recent times. And even more ominous is the fact that some of them do not think that much can be done about it at this late date. The Financial Times of London remarked:
“The fact that the so-called monetary managers are almost everywhere behaving as though they see the problem as having got far too big for them to tackle, either individually or collectively, inevitably adds weight to these spine-chilling [indications of coming disaster].”
In this same line of thought, U.S. News & World Report stated: “A feeling of helplessness and anxiety about the world monetary outlook seems to have gripped top bankers from the United States and Europe.” The Bank for International Settlements warned that no end was in sight for world inflation. And the Economic Education Bulletin, published in the United States, declared:
“No matter how strong and wealthy the nation where inflating occurs, this at first insidious process ultimately can wreck the nation’s economic system and deform the moral character of its people.
“Such has been the invariable experience of mankind in all the centuries of recorded history without a single exception to date.” (Italics ours)
Do you think our time, which is experiencing the first worldwide inflation of such magnitude, will be the exception to that rule?
Consider this too: In an editorial in the London Sunday Telegraph, P. Worsthorne said that inflation “represents instincts of human greed and selfishness so primitive and fundamental as to challenge the confines of common sense.” This observer went on to say:
“Could it be that inflation is also a form of mass madness, rooted in evil, no more curable and controllable by economic rationality and political common sense than Nazism was curable and controllable by the normal therapy of international diplomacy? . . .
“When one talks in private to people who know about such things, their description of the challenge of inflation is so dark and ominous, almost so apocalyptic, as to suggest that the cure of it must require truly painful remedies.”
Do you think that world leaders can change the selfish, greedy human nature that is so apparent today? Do you think they could do that on the worldwide scale needed? There is no evidence whatsoever that this is being done—or will be done by today’s human leaders.
A large firm representing manufacturers wrote to its clients in late 1973 and reminded them that the present inflation “is unfortunately reminiscent of 1929. It is accompanied also by another condition that appeared in 1929, namely, the lack of faith in governments.”
Also of interest is the reminder that, for example, in the United States paper money has been pumped into the economy much faster than it was before the Great Depression. Other nations have done the same. As The Wall Street Journal noted: “The money supplies in dozens of nations are swelling by double digit annual rates these days, the International Monetary Fund’s figures show. Such speeds stand out as especially excessive.”
You need to understand that such concern over the collapse of money standards is not just an idle thought or opinion. It has happened over and over again, to many nations. At various times this has led to anarchy, radical changes in society, dictatorship, even war.
For example, in August of 1922, the money supply in Germany was 252 billion (252,000,000,000) marks. Just 15 months later it had soared to 497 quintillion marks (497 followed by 18 zeros)! That was about two thousand million times as much as 15 months earlier! This inflation destroyed the German money. The savings of people were annihilated, the economy wrecked. Anarchy resulted, paving the way for Hitler and Nazism.
Similar inflation in the late 1940’s helped to pave the way for the Communist takeover of mainland China.
Another Important Factor
As noted earlier, a basic reason why many countries have had rising inflation is that their governments have been spending more money than they have been making. But now there is another new element that makes the situation worse.
What is that? It is the arrival of worldwide shortages in some basic commodities, such as food, fibers, energy sources, minerals and other things. These shortages on a global scale mean that the increasing money supply will be purchasing relatively fewer of such goods. That will give already rising prices another boost upward. Of this, the New York Times commented:
“This runaway inflation of commodity prices is not wholly due to Administration policies; there has been an upsurge in world demand for food and other resources at a time of crop failures and feed shortages around the world. . . .
“In the case of food and other commodities, the big plungers are national governments—the Soviet Union, China, Japan, Brazil, and many other countries. Fearful of shortages and outright hunger, nations are stockpiling food as fast as they can, trying desperately to outbid one another.”
Harvard economist Otto Eckstein called the resulting spectacular rise in world commodity prices, especially for food, “an economic disaster of historic proportions.”
True, in some periods, the production of basic commodities rises enough to ease shortages temporarily. For instance, in the autumn of 1973 good harvests helped the food situation in some lands.
However, world population is growing at the rate of 75,000,000 persons a year! That is the net increase of births over deaths. This “exploding” world population is why experts are so certain that, whatever relief may come at times in the production of basic commodities, it will be very temporary. Population pressures will eventually result in ever-increasing demands on all commodities.
Also, available good land that can be devoted to crops and production of other commodities is now decreasing. This is due to erosion, mismanagement of land, the growth of cities, the building of highways, houses, factories and other things that eat up land.
Too, the desire of developing nations to have a better standard of living, to enjoy a better diet, better clothing, and have more material things creates a huge increase in demand for basic commodities. So, even without a population increase, this ‘rising expectation’ in developing lands would strain supplies. But when added on top of a staggering population increase each year, it puts tremendous pressures on earth’s resources.
Of this growing problem, U.S. News & World Report says: “Current shortages of food, fuel, other items are only a hint of what’s coming. . . . Authorities warn that the whole world—not just this nation—is starting to press against the outer limits of earth’s resources.”
All these pressures, of course, mean that in the long run, prices are likely to continue in one direction—up.
Where It Leads
Already, in the relatively wealthy United States, high prices and shortages have led to a marked increase in stealing. More elderly shoppers also are being caught stealing from food stores. As one woman of sixty-eight years said when caught pilfering a few tomatoes: “I just couldn’t afford it.”
When such behavior becomes more widespread at a time that is considered ‘peak prosperity,’ what may be expected when conditions become even more severe? In the London Sunday Telegraph article, P. Worsthorne said: “To be absolutely blunt, my fear is that this country [Britain], like the rest of the industrial world, is moving into a period of cruel political turbulence and strain, as the masses . . . begin to suffer, or think they suffer, a decline in their standard of living.”
Some indication of the way things may go can be seen in what has been happening in India. There, the conservative Times of India said of that country: “Everywhere there are signs of strife and unrest, among youth, among workers in factory and field, and most ominous of all among those who run the Government.” The Indian government admitted that the country faces its worst economic crisis since independence.
In the United States, the New York Times Magazine spoke of “a growing sense of frustration” among people because of inflation. It added: “All the ills, all the flash points, all the threats to social order and stability spring from the same source—chronic inflation, which breeds social injustice with the speed of a fever virus. . . . the poor and the aged are the fever’s first victims, but not the last. Bitter social tension is the one certain result of inflation.”
Hence, throughout the world the economies of most nations are in deep trouble due to inflation. The fact that this is happening all over the world at the same time, with such persistence and severity, is indeed unique in history—and also highly significant.
What is taking place today throughout the world economy is a clear, advance warning signal that we are nearing the end of the present economic systems on earth. While temporary measures by some governments may halt, or even reverse, the trend for a short while, these will do no good in the long run. Why not? Because present world conditions, including the economic uncertainties, provide unmistakable evidence that the entire world system, not just the financial part of it, has entered its time of the end. The perilous economic situation is only one of the many problems that is filling people with dread. Truly, what Jesus Christ prophesied about the “last days” of the system of things is undergoing fulfillment: “On the earth anguish of nations, not knowing the way out . . . while men become faint out of fear and expectation of the things coming upon the inhabited earth.”—Luke 21:25, 26.
The “last days” were foretold to culminate in a “great tribulation such as has not occurred since the world’s beginning until now, no, nor will occur again.” (Matt. 24:21) That tribulation will clear the earth of the economic factors that have brought and continue to bring hardships upon millions. In fact, all human governments and their monetary systems will be replaced by one government—a righteous administration in the hands of the self-sacrificing Son of God, Jesus Christ.—Isa. 9:6, 7; Dan. 2:44.
When the “great tribulation” strikes, even the most stable of the world’s monetary systems will be unable to buy protection. The situation will then parallel that of the inhabitants of Judah and Jerusalem in the seventh century B.C.E. Regarding them, the prophet Ezekiel foretold:
“Into the streets they will throw their very silver, and an abhorrent thing their own gold will become. Neither their silver nor their gold will be able to deliver them in the day of Jehovah’s fury.”—Ezek. 7:19.
So the danger in which we find ourselves today is far graver than the collapse of all national currencies. Bible prophecy clearly establishes that the generation now living faces an unequaled “great tribulation,” at which time only an approved standing with God will be of any real value. (Matt. 24:34) People everywhere should therefore think seriously about what they can do to survive that destruction. Are you endeavoring to build up a record of fine works with the Creator so that you may be among those hidden in the day of his fury?
Because of what is sure to come, those who put their trust in money now, who build their lives around it at the expense of doing God’s will, are only deluding themselves. God’s sure promise is: “The one trusting in his riches—he himself will fall; but just like foliage the righteous ones will flourish.”—Prov. 11:28.
[Blurb on page 5]
‘Nothing Can Stop Inflation’
Inflation has now reached the point at which nothing can stop it [from] completely destroying the world’s monetary base, with consequences too frightful to contemplate.—London “Financial Times.”
[Graph on page 6]
(For fully formatted text, see publication)
U.S.A. Stockpile of Strategic minerals (Tons)
1965 1972 Decrease
Aluminum 1,893,000 1,275,000 32 percent
Copper 1,002,000 259,000 74 percent
Nickel 211,000 39,000 81 percent
Tin 292,000 251,000 14 percent
Zinc 1,416,000 1,040,000 26 percent
Growing shortages of minerals contribute to pushing prices upward. In the United States, the world’s largest user, the strategic stockpile has been dropping
[Picture on page 4]
INFLATION LIKE VESUVIUS?
A member of Britain’s parliament warned about the danger of unconcern regarding inflation, likening it to the unconcern some people in Pompeii showed when Mount Vesuvius erupted
[Picture on page 7]
Many authorities say that whatever temporary relief the nations get from shortages and high prices would soon be nullified by a world population “exploding” at the rate of 75 million a year