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Understanding the Economy: Part 5: Become a Money Saving Expert

By: Steve Johnson

2/13/2009 - 24 Comments

This is a summary of part 5 of a six-part class that I’m teaching at my local church.

As mentioned in my 2009 goals, I’m going to begin public speaking and have decided to start by teaching a six-part class at my local church titled “Understanding the Economy”.

The class is on Monday nights. To share this class with my readers, I’m writing an article after each class to summarizing the class.  

Introduction 

This six-part class is not just about the economy from an economist’s point of view, but from a Christian worldview with a prophetic understanding that we are living in the last days before the return of Jesus.

The primary theme of this class is to help people understand that the global economic crisis is part of Gods plan and He is in complete control. He will sustain us. We shouldn’t panic, and instead should get ready to help many people - the Church will need a tremendous response.

The title of this class was; Part 5: “Become a Money Saving Expert (Response)”

The Class

A money saving expert is someone that is an expert at saving money.  The recession will force most of us into becoming money saving experts. 

In this class I talked about two topics,

  • Get out of debt
  • Prepare for inflation

Get Out Of Debt

If you don’t have a budget, it’s time to get one.  America is on the verge of a major financial collapse that is just getting started.  The big crash is still to come, as discussed in the previous class, the collapse of the dollar.  The economic problem is so big that there is no way the government will be able to stop a deep recession. 

My advice is to get over it as soon as you can and focus on solutions for your family.  Create a family budget, find things to cut back on and get out of debt as fast as you can.  Get a better financial education and find or create new jobs.

Psychologists say we deal with a tragedy in five steps. 1. Denial, 2. Anger, 3. Bargaining, 4. Depression, 5. Acceptance

Americas are just beginning to think about and discuss the economic downturn and how their family will be affected.   Pretend the economic problems do not exist, will not help. We need to get to #5 Acceptance, as fast as we can so that we can focus on tough decisions to cut back on spending and increase savings.

Here is a list of 25 Things to Consider Cutting Back On

Prepare to help unemployed family members and friends. If you own a house and remain employed, you may need to open your home to several others who were not as fortunate.

Be prepared to find new ways to live, by doing more for yourself rather than relying on other services, like washing your car or cutting your grass or growing your own food. 

Prepare to rely and trust God to provide for your family.  This doesn’t even sound right because we are so rich, yet most of the world does not have more than one week of provision. 

Prepare to teach others about financial matters. Most people in America don’t live on a budget and that is about to change.  Who will teach millions of American’s how to live on a budget and manage their money?  You will, because they will be asking you and me about financial matters more and more. 

Prepare to partner with several families to help each other out.  Perhaps buying one house together or gardening together or watching the kids together while other parents are at work.  The ideas of living closer together on their way back.

Prepare For Inflation

Inflation will change the entire economy, governments will change, businesses will change and people will change in response to the coming inflation.

How Governments Change

  • A governments’ reaction to inflation has historically repeating throughout history again and again.  Nixon did the same as early as 1971.  The government will try many things, including increasing regulations, along with bank and business bailouts, price controls, wage freezes, taxing the rich, blaming business CEO’s and capitalism, etc., until finally when nothing seems to work they will drastically increase interest rates as Paul Volker did in 1976-1981. 
  • Governments hate to raise interest rates, because it slows down the economy and reduces the GDP, causing congress to cut back on spending. Cutting back on spending is not good for elected officials, because it decreases their chance of getting re-elected – even if it’s the right thing to do.

How Businesses Change

  • Businesses will change by abandoning low margin products as wages increase faster than they can profit from the products.  This reduces the number of products on the shelves, which reduces the number of products consumers have to choose from.   Businesses also reduce investments in new product developments because it becomes more profitable to just put their money in the bank (or foreign currency) and gain interest.  Both of these reduce the need for labor and increase unemployment.
  • Construction is especially hit hard, as bankrupt businesses leave many open commercial properties, which pushes down rents and reduces the need to build.  At the same time high interest rates and high material prices drive up the cost of building.  We have already seen the housing construction slow down, and commercial construction is sure to follow.
  • In an inflationary economy, cash management becomes a much higher priority because of the drastic fluctuations in the daily value of the currency.
  • Business will change, as production and sales are reduced while accounting departments are increased, as cash management becomes vitally important to the survival of the business.  In an inflationary economy, marketing departments shrink and accounting departments grow, as the daily management of money becomes more important than producing or selling more products.

How People Change

  • People switch to survival mode, by hoarding food and supplies, cutting back on consumer goods, pulling money out of the banks and purchasing stronger foreign currencies to preserve their wealth.  Most of these things are what the government is trying to stop people from doing, but they do it anyway as they try to preserve their wealth.
  • The new personal financial advice will be to move your money (what’s left of it) to non-dollar based assets or currencies that are not deflating like the dollar. Then, stay alert as to government actions and move your money around bases on their actions.
  • The actions of the government are likely to create the biggest advantages/disadvantages in the marketplace, which is why it will be critical to monitor their every move – as it has been for the last year already.  If they create new regulations for large businesses (like price freezes), than move your investments to smaller businesses. 
  • If they lower the interest rates, than move your investments to commodities or foreign currencies.  If they raise interest rates, than move your money to the banks that offer the highest interest rates.
  • These strategies will be valuable for the next decade as inflation becomes a major problem around the world, even if congress takes drastic action to stop inflation from becoming hyperinflation.

In Conclusion

Nevertheless … greater things are yet to come in our nation because, God is raising up his people to rule with him after Satan is allows to rule for a short time. (as discussed in Part 3 of this article series)

God is shaking the economy, just as he said he would in Hebrews 12:25-29. God will protect Israel when no one else can or will.  When Jesus returns to setup his kingdom on earth as noted in Part 3 of this article series, He is going to crush every nation that does not submit to his kingdom.

I believe there is going to be a strong increase in God’s people in preparation to take over the kingdoms of the world with the return of Jesus. Yet, at the same time chaos will increase and lead the world into a dark period where Satan is allowed to rule for a short period of time (called the Tribulation), starting with a peace treaty with Israel as detailed in the Bible.

Christian persecution will also increase, which may lead to the closure of several large denominations that are based on something other than the belief in Jesus alone. When you see this, it may look like Christianity is shrinking, while it is actually increasing. The hard truth is that, regardless of the names on these churches or who attended them, they were not built on Jesus alone and therefore they can and will be shaken. 

True believers in Christ continue to accelerate in numbers and influence around the world as detailed in the book “What's So Great About Christianity

Here is how one person explains the global growth of Christianity,

“Many people think Islam is the fastest-growing religion in the world. Not true. Islam is growing fast, but Christianity is growing faster. Indeed there are twice as many Christians as Muslims in the world today and the gap is becoming larger. Moreover, Christianity has become the world's only religion that is truly universal.

Islam too has a wide reach, but Islam has only a small presence in the United States, Canada, Central and South America, and Australia. Christianity, by contrast, is strong everywhere in the world except the Middle East. Islam is growing mainly through reproduction, which is to say by Muslims having large families. Christianity is growing both through reproduction and through conversion. “

The Bible also says that the Spirit of God, which dwells within His believers, will be removed so that Satan can take over.  That event is sometimes referred to as the Rapture.  No one knows when this will take place (and if they say they do, they are a false prophet), but from analyzing the current events with the end time prophesies of the Bible, it could happen at any time – which is the basis for the popular book series‘Left Behind’.

The global economic crisis is part of God’s design to bring His prophesies into existence, just as He has done throughout history.  The real reason that the global economy is crumbing is because God is shaking the earth with His voice so that what will remain will only be that which cannot be shaken – which is His people that have their trust and their hope secured in Him. The governments and the financial systems of the entire world are crumbing so that the true King can come and establish his kingdom.  Hebrews 12:25-29

This is an exciting time to be alive watching these world events unfold knowing that my security is in Him.  Nothing else will be left standing when this process is complete.  Jesus is going to be revealed to the world as the King of Kings and Lord of Lords.  If you are not a part of the kingdom of God, now would be a good time to consider your options.

Previous article: Part 4: The global financial crisis and collapse of the dollar (economist)

Next article: Part 6: The Tremendous Church Response (Response)

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