This post will not be so much about prophecy, so you are forewarned.
Economics is a very dry science — well, its a social science, so technically, it can still be called a science. This site has casually touched on the principles of economics as we have argued that the opening of the Third Seal (Revelation 6:5-6) will be manifested by not only a massive spike in food prices, but also the overall costs of living. The opening of the 3rd Seal, like many prophecies found in Revelation, can be compared to labor pains. At first, the pain of contractions are spread far apart, but as birth approaches, the pain is more frequent and intense. I believe that we are now approaching the latter stages of the manifestation of the 3rd Seal, where the costs of living is beginning its crescendo.
Inflation is defined as the rate of increase in the costs of living, which is not to be confused with the overall cost of living. The pundits may claim that “inflation is peaking”, and even should that be true, after a massive about of excessive inflation, the overall cost of living remains high, regardless of whether it is only going up by 9% instead of 10% per year.
Another to remember is that government statistics on inflation, even if its calculation has not been manipulated to underestimate the true overall inflation rate, is only a picture of the average inflation of the nation. However, inflation does not effect everyone the same — the wealthy may actually benefit from inflation, no matter how high, but for the majority of people, they experience a vastly higher rate of inflation than the government measurement.
For somebody who rents, who works a job, who must drive a car to work, who does not have solar panels or a Tesla electric car — this person’s experienced inflation is mostly likely more than double the official inflation rate published by the federal government.
The job of the central bank has traditionally been to keep the inflation rate from increasing beyond a certain point. That mandate was warped and the central banks decided it was their job to increase the rate of inflation — their rational is not worth discussing. The central banks then began to pump massive amount of cash, debt, and leverage into the financial system that then spilled into the real economy. It drove up the prices of stocks, bonds, real estate and even created a massive bubble in nonsense things like Bitcoin and digital art (I can’t be bothered to look up the correct name).
The central banks are now faced with the end game of their policies — inflation is raging across the Western economies of Europe and America. It is the worse inflation since the 1970s and it has the potential to morph into Argentina-style inflation, where the latest annual inflation was measured at 70%.
The Federal Reserve (the central bank of the US) has belatedly begun to raise its short term interest rates. Europe has only just moved away from negative interest rates, and Japan has still firmly kept its interest rates at zero. Though America and Europe has stopped increasing its holding of government bonds — quantitative easing — neither has yet begun to sell off the massive amount of government bonds they purchased, and the ensuing massive liquidity injections that those bond holding represent (Japan continues it ongoing government bond buying activities) remain sloshing around in the economy. This means that on a global basis, despite the high inflation being suffered across the globe, there has been only a minor tightening by the central banks on a whole, especially when compared to the amount of liquidity these same central banks injected into the world’s economy.
What economics tells us is that inflation, once released, takes a lot of time to dampen down. This is especially true when there is no political will to do so. Argentina is the perfect example of this. The country has been vexed by ongoing rampant inflation for decades, and yet, due to the lack of political will to crush it, the inflation continues to rage, reaching 70% just recently. When we look at how Europe is reacting to its horrifying inflation, it resembles that of Argentina. Interest rates remain low, the ECB continues to buy Italian government bonds, and governments are subsidizing the increase in costs and are taking on massive debt to do so.
In America, though the Federal Reserve has begun to raise short term interest rates aggressively, they have made no move as of yet to take away to massive amount of liquidity they injected into the economy via its unprecedent buying of government debt. Though the marginal effect of higher short term interest rates is a marginal reduction of demand, there are other factors at work that will continue to drive demand higher.
Government demand for goods and services is only increasing. The federal and state/local debt continues to climb higher, partly due to the fact that US long term rates are still artificially low due to the Federal Reserve’s massive holding of government debt — should they remove their previous liquidity injections, long terms interest rates would spike higher to their ‘natural’ levels. Aside from the costs of government borrowing, the illegitimate Biden administration is pumping hundreds of billions of dollars into the inflated US economy through debt forgiveness (student debt forgiveness) and through its military equipment giveaway to Ukraine.
An unspoken and ignored driver of increasing demand for goods and services in America is the millions of illegal immigrants flooding through the open southern border. The New York City mayor is calling for a major city crisis after Texas just bussed a few thousand illegal immigrants to his sanctuary city. Similarly, the Washington DC mayor has asked for help from the National Guard over a similar amount of bussed in illegal immigrants. The overall effect of this ongoing flood of millions of illegal immigrants is that the demand for housing will continue to cause rents to move ever higher — New York City’s average rents has just spike to historic highs, and I can only assume it will keep going as Texas busses in move illegal immigrants to that sanctuary city. In California, demand for electricity is at a all time high, and there is the real possibility of rolling blackouts — though California is experiencing a major heatwave, the extent of demand is only exacerbated by the massive flow of illegal immigrants into that sanctuary state. The federal government is busy dispersing the flow of illegal immigrants across the nation, pushing the costs of supporting them onto state and local government budgets. The demand for food, housing, and energy (gas and electricity) will only continue to climb, insuring that the related costs and price pressure for these goods will continue to increase, despite the interest rate rises by the Federal Reserve.