Thoughts on Economic Collapse
In this article, we’ll discuss whether another big market crash is coming, whether we can know when such a crash might happen, and whether there might be a divine purpose behind it.
In 2006 Robert Wiedemer published the highly controversial book America’s Bubble Economy in which he predicted a collapse of the stock market due to grossly inflated values of stocks that were unsustainable. Peter Schiff is a seasoned Wall Street prognosticator and CEO of Euro Pacific Capital. In his book Crash Proof which was published in 2007, Schiff likewise warned investors that a stock market crash was coming. Few people took Schiff and Weidmer seriously, but in September of 2008, their predictions came true. The biggest stock market crash in decades shook the financial world.
Both men have written follow-up books detailing their belief that an even bigger market crash is looming in the not too distant future. Schiff’s book is titled Crash Proof 2.0. Wiedmer’s book is titled Aftershock. Both books give advice on how to survive the coming crash. The reason why they believe another crash is coming is this:
The crash of 2008 was supposed to be a correction of stock prices that were greatly overvalued. When stock prices fell, banks that were heavily invested in Wall Street lost their assets and were on the brink of bankruptcy. In the middle of the downward market correction, the Federal Government stepped in and offered trillions of dollars to bail out a banking system that was collapsing before its eyes. When banks are given cash, they tend to invest it in Wall Street to make more money. The massive infusion of Federal money halted the market correction and stock prices leveled out. Since then the Fed has printed trillions of dollars (under its quantitative easing program) which it has loaned to banks at almost zero interest. The Fed’s hope was that the banks would lend the money to businesses which would allow them to buy goods and services and hire more employees which would create economic growth and reduce unemployment. Due to new tighter lending regulations, banks did not lend the money to businesses, but invested it in Wall Street. The infusion of Federal money failed to create economic growth and reduce unemployment, but it has served to drive the prices of stocks higher. Six years later, Wall Street is in the same precarious position it was before the correction of 2008. It is for this reason that market analysts like Schiff and Wiedemer believe another big market correction is inevitable.
If you follow the prophetic words that have been given by nationally recognized prophets during the last ten years you don’t have to dig too deep to find dire warnings about our financial future. Men like John Paul Jackson, Rick Joyner, Terry Bennett and others have seen an economic collapse coming. In November of 2009 I had my first of many dreams that had to do with our financial future. In that dream I watched as several news anchors reported on an event they were witnessing which they referred to as the “global economic collapse.” Here’s a second dream I had in July of 2013:
In the dream, I was in a room with a friend who happens to have degrees in finance and economics and works for a large bank. He was working on a forecast model of the economy. The model worked like this:
A stream of data on the economy came from the internet and was fed into a machine that produced solid foam panels. When the foam panels were assembled, he would analyze the shape to get an indication of how the economy would do in the future. I knew that he was expecting the panels to come out as flat, rectangular shapes that would form a rectangular box when they were assembled. But the panels came out as curved shapes, and when they were assembled, they formed a sphere. As he assembled the sphere, he had a look of concern on his face and said in a matter-of-fact tone, “No one is going to escape this.” I knew from the look on his face and the words that he spoke that the model indicated a worse than expected economic forecast.
This same friend and I have had many discussions about the global economy and the financial markets. He made the following observation about the severity of our situation, which I’ll paraphrase: “The US government’s policy of quantitative easing (printing money) is designed to increase the supply of money and decrease interest rates which in theory is supposed to provide the capital people need to start businesses, purchase goods and stimulate economic growth. Under quantitative easing, gross domestic product should go up and unemployment should go down. They’ve done everything you’re supposed to do according to the playbook and it hasn’t changed anything. With all the money that’s been printed over the last six years, we should be seeing massive economic growth and almost no unemployment. The fact that all that money has been printed, but the economy hasn’t responded, and unemployment is still fairly high means things are a lot worse than anyone expected. If all that money had not been put into circulation, there’s no telling how high unemployment would actually be.”
The stock market is an indicator of economic health and although it can be manipulated for a while to make things look better than they actually are, eventually, if stocks are over-valued, prices will fall. If they are undervalued, prices will rise. It’s only a matter of time before the price some will pay for an asset reflects its intrinsic value. I believe it’s only a matter of time before we’ll see a massive correction in the stock market. In a moment I’ll discuss whether we can know when that correction will happen, but first, I’d like to make one thing clear:
I have for years been teaching people about a God who is much more in love with us than we realize. God has revealed Himself to be far more gracious, kind, and patient with me than I ever thought possible. I think it’s impossible to overestimate the goodness of God. I don’t imagine I’ll ever change my views on that. I don’t agree with the commonly held belief that things like earthquakes and hurricanes are the judgment of God on our sin. Having said that, I do believe that God is interested in having His people walk the best path possible. I believe He will at times suggest course corrections when we stray from the course He has set for us. But His corrections always come in the form of suggestions, which we’re free to ignore if we want. Ignoring the correction of God has consequences, of course, one of which is suffering the inevitable outcomes of our own misguided thinking and poor planning.
At the end of the day a collapse of the stock market is nothing more than a correction of prices that have been allowed to increase to an unrealistic and unsustainable point. A failure of the banking system is the natural result of living with a system that allows a few greedy people to prey upon the financial resources of the masses until they’re so impoverished that there’s nothing left to take from them. The coming corrections could be seen as the judgment of an angry God if you prefer that view, but they could also be seen as the inevitable consequences of poor decision-making by people motivated by greed. The collapse of the banking system, because it would effectively wipe out most consumer debt could also be seen as a kind of jubilee. Although it would create unimaginable financial turmoil for a while, over the long haul it would set people free of their financial indebtedness, which is not a bad thing.
I’m not opposed to the concept of stock markets. Stock markets are a good invention that allow small companies to raise capital for growing their businesses and they allow people to invest money in companies with a chance to earn a little money in the process. Stock markets themselves are not inherently evil. It’s only when people are motivated by greed and become irrational with their investing that stock markets create problems. The same is true for banks. A bank is an institution that allows us to purchase things we would not be able to buy if we had to pay cash. Banks also allow us to save money and earn interest on it. There’s nothing inherently evil with this arrangement. It’s only when bankers that are motivated by greed charge excessive fees or when people become obsessed with having things they can’t afford that the lending arrangements made through a bank become problematic.
So the question now is this: Is there any way to know in advance when the market correction will happen?
I’ve never been a big fan of people who put dates on their prophetic declarations. Ninety-nine percent of those dates come and go and the prophesied event never materializes. You can almost be assured that the one day something won’t happen is the day someone predicted as the appointed time for it to occur. Having said that, there’s an interesting prediction about the stock market collapse that’s worth taking a look at:
The Messianic Rabbi Jonathan Cahn, author of The Harbinger, in his own follow-up book titled, The Mystery of the Shemitah notes that the two largest dips in the stock market (in terms of points lost by the DJIA) happened on the 29th day of the Hebrew month Elul. Cahn points out that for Israel the 29th day of Elul was the last day of a seven-year period known as the Shemitah. On this day the financial burdens that people had accumulated over the previous seven years were wiped clean. Cahn points out that this day has special relevance to the financial and economic affairs of nations, which he believes is the reason why the two largest market corrections happened on the 29th of Elul. Cahn says there is a prophetic pattern regarding the Shemitah that is beyond our control and that it has already set the date for the next market correction. He gives the following dates and their corresponding events:
9/11/2001: Attack on New York City by terrorists. This happened in the Hebrew month of Elul
9/17/2001: Wall street opens for trading for the first time after the terrorist attack. The DJIA dropped 684.8 points in one day. In terms of point loss, the drop was the largest in history. In terms of percentage, it ranks 17th all-time. (Source:Wikipedia) The day on the Hebrew calendar is 29 Elul.
9/29/2008: On this day, congress failed to approve a bail-out of Wall Street. The DJIA dropped 777.7 points. In terms of points, it was the largest drop in history. In terms of percentage, it ranks 20th all-time. The day on the Hebrew calendar is 29 Elul.
Based on the fact that the two biggest losses (in terms of points lost by the DJIA) happened on 29 Elul, and the fact that they happened exactly 7 years apart on the Hebrew calendar, Cahn believes that the next drop in the Dow is due to happen exactly seven years from the last one. He says the date of the next 29th day of Elul, which is 7 years after the last market correction is September 13, 2015. According to the Rabi, we should see another big market correction on this date.
Will the market take another major hit on the day he predicts?
Only time will tell.
It may end up that Cahn, like others who’ve attempted to predict the dates of future events, will end up with egg on his face. On the other hand, his prediction may come true. Whether Cahn is right or wrong about the date isn’t the issue I’m concerned with. Many analysts now believe that the bull market we’ve seen in recent years is not due to robust economic growth, but the Fed’s policy of printing money and the Fed can’t keep printing money forever. In fact, it has gradually tapered down its QE program by 10 billion dollars every month for seven straight months. The Fed plans one more bond purchase this month of 15 billion and plans to end its QE program after that. When the Fed stops printing money, and banks are forced to cut back on their investments in Wall Street, it may only be a matter of time before the next market correction comes.
Because we’re living in times when the systems of man are being shaken, it would be wise to invest in things that cannot be shaken. Wall Street is not the only place where you can invest your financial resources. We’ve been given a kingdom that cannot be shaken. If opportunities open up for you to invest in the kingdom, you probably won’t regret making such a decision. If you need help deciding how to safely invest your money, it’s always a good idea to ask God.
More information on this subject is available in my book, A Kingdom View of Economic Collapse.