The West has shifted from a worldview which believed in divinely inspired moral absolutes to a worldview which believes final reality is based upon matter or energy shaped by impersonal chance. Naturalists, such as Emanuel Kant and Charles Darwin, believed God's existence is not provable and man's knowledge is limited to observation by human senses. Naturalism is the basis of nihilism, Marxism, and Keynesianism. Keynesian economics provided the intellectual rational for the transformation of the State from primarily an administrator of law and order (as the Bible teaches) into an economic manager with broad powers directed by philosopher kings.
When the United States removed the gold backing from the dollar in in 1968, the nature of money changed and transformed the size and role of the government. In 1971 when the Bretton Woods international monetary system broke down, and Nixon stopped redeeming the dollar with gold, central banks began creating fiat money and used it to buy currencies with their trading partners. Total public and private debt in the U.S. surpassed $1 trillion for the first time in 1964. Total U.S debt in 2010 reached $50 trillion. Credit growth has been the driver of economic growth for decades. Total world debt recently reach $300 trillion. In the recession of 2008 global debt stopped increasing fast enough to drive global growth when the housing bubble burst.
When the U.S. went into crisis in 2008, China stepped on the credit accelerator, and became the driver of global growth. However, China has created excess manufacturing capacity, which has caused a bubble in non-performing bank loans. This is turning a credit boom in China into a banking bust. The 50 year fiat money experiment is reaching it natural conclusion. Fiat credit booms cannot be sustained indefinitely without leading to ever-increasing rates of inflation or a natural liquidation depression. The current 50 year soft money experiment will end in financial failure, world war and devastation to civilization.
Dr. Steve Johnston
