Today marks the 50th anniversary of one of the most significant events in world history. On August 15, 1971, Richard Nixon announced he was “closing the gold window,” thus ending the U.S. dollar’s convertibility to gold. This ended the post-World War II Bretton Woods monetary system where the world operated on a gold-backed U.S. dollar with other world currencies pegged to the dollar. It also began the new era of fiat currency and sowed the seeds of the next great financial crisis. Fiat currency is not backed by commodities such as gold or silver. Its only value comes from the public’s willingness to accept it as a means of payment. Since Nixon’s announcement, all the major governments of the world have used nothing but fiat currencies. Prior to 1971, this had never occurred in human history.

The Danger of Fiat Currency

Why was Nixon’s announcement such a significant event? Fiat currencies are dangerous. They eliminate government financial discipline and accountability. When nothing backs a currency, the government can print unlimited currency units. The more currency units that exist, the less valuable they all become. If you earn and save in fiat currency, you lose purchasing power over time. The government is essentially stealing from you via inflation. This means government spending is no longer restrained by collected tax revenue or fiscal responsibility.

For example, during World War II, the United States launched a massive war bond campaign to raise the money necessary for funding the war. They did so because U.S. currency was backed by gold and silver. They couldn’t simply “print” the dollars needed to fund the war. But that’s no longer true. Since 1971, the U.S. has funded the world’s largest standing military, fought two wars in Iraq, a war in Afghanistan, and countless other conflicts. In doing so, they never once launched a war bond campaign. They simply printed the dollars they needed.

Since 1971, the U.S. government has been on a spending binge. In 1971, the U.S. national debt was $398 billion. Today, it’s $27.8 trillion. That’s an almost 70-fold increase in debt in the past 50 years. To fund this massive rise in debt, they’ve run the printing press. This means the value of a dollar has decreased significantly in the past 50 years. In 1971, an ounce of gold was $35. Today, an ounce of gold is $1,781. That’s a 98% decline in the dollar’s purchasing power.

And before you attribute the rise in national debt to the declining purchasing power of the dollar, take a look at the debt relative to national income. In 1971, the U.S. debt to GDP ratio was 34%. Today, it’s 127%. That’s an almost four-fold increase in real terms, and it’s a debt level many economists believe is unsustainable. As bad as this is, the United States isn’t alone. In a world awash in fiat currency, debt to GDP ratios are terrible all over the globe. Japan’s debt to GDP ratio is 256%. Canada’s is 116%, and the United Kingdom’s is 107%.

The Eurozone alone is home to a number of troubled nations – Greece (181%), Portugal (132%), Italy (155%), France (115%), etc. Compounding the problem for these nations is they owe their debt in a fiat currency they can’t print. The European Central Bank controls the euro, and that puts all these nations at potential risk of default if they can’t make their debt payments. A default by any of those nations will ripple throughout the European banking system, which holds billions of euros worth of government bonds. If European banks become insolvent, financial contagion will spread throughout the world and plunge the world into a financial crisis far worse than the Great Recession, one with the potential to be worse than the Great Depression itself.

The Central Bank Conundrum

The U.S. Federal Reserve, the European Central Bank, and central bankers throughout the world are well aware of this potential scenario. It’s their worst nightmare. More than anything else, they fear an out-of-control deflationary spiral akin to the Great Depression. This is why central banks engaged in unprecedented measures in 2020 to prop up financial markets as the COVID-19 crisis unfolded. But now they face a conundrum. If they keep these policies in place, we’ll have runaway inflation. But if they reverse their “easy money” policies, they risk triggering the very financial crisis they’re so eager to prevent.

For example, in the United States, interest on the national debt is $378 billion. This is the fourth largest expense in the annual budget. A good portion of the national debt is financed using treasury notes with a maturity of less than ten years. If the Federal Reserve raises interest rates, the interest on the national debt will grow and eat up a larger and ever-growing portion of the annual budget. The same is true for other countries.

In addition, hundreds of U.S. companies are now “zombie” companies. These are heavily indebted, poorly managed companies that depend on low interest rates to meet their loan interest payments. If interest rates rise, those companies will go bankrupt. The same is true for many individuals. A large number of consumers carry variable interest debt. If interest rates rise, they’ll no longer be able to meet their debt obligations. In short, raising interest rates will plunge the U.S. economy into a depression. And the same is true for all the other major world economies.

According to Bloomberg, world debt now stands at $281 trillion. This is the total amount owed by governments, companies, and households. It represents 355% of global output. That’s nearly four times what the world produces in a year. This level of debt can never be paid back. Either it will end in default, or it will be paid back with devalued currency.

The first option will lead to immediate pain and suffering, with bankruptcies, defaults, massive unemployment, and widespread social unrest. The second option offers an alluring promise of a way to avoid such pain. Which option do you think politicians and central bankers will choose?

The Next Economic Downturn

When the next economic downturn arrives, it will be in the form of a severe global depression. Unable to service their massive debts, many individuals and companies will default. Those defaults will leave the banking system on the verge of bankruptcy and politicians scrambling to put together another series of bailout packages. The government and central bank response to this crisis will be bigger than their response to the COVID-19 crisis.

What will they do? They’ll run the printing press. They’ll bail out companies on the verge of bankruptcy. They’ll buy stocks and corporate bonds. They’ll backstop people’s mortgage and student loan payments. They’ll do anything and everything they can in an effort to avoid the inevitable economic pain. And then they’ll institute something they’ve wanted for a long time – universal basic income. Every man, woman, and child will receive a monthly stipend equivalent to an average worker’s salary. A desperate population will welcome it. But it won’t be enough.

When the prices for rent, food, and energy double as a result of all this printed currency, the government solution will be to double the amount of the monthly payments to combat the rising prices of the “greedy” corporations. But the problem won’t be rising prices. The problem will be a failing currency. This process will play itself out over and over until all the world’s currencies are driven into hyperinflation and the entire system comes crashing down.

A Dangerous Time

Hyperinflation has ravaged individual nations in the past – Weimar Germany, the post-war Austro-Hungarian Empire, Zimbabwe, Venezuela, and others. But hyperinflation has never hit all the world’s nations simultaneously. Maybe it won’t this time either. But keep this in mind: never before have all the world’s major economies simultaneously been run on fiat currencies. This experiment is only 50 years old, and it’s quickly coming to an end.

What happens when it inevitably falls apart? What happens when lives are ruined, life savings are lost, and the streets are filled with hungry people? We don’t know. But history provides us with clues. In times of chaos and economic instability, dangerous political leaders and demagogues often rise to power. They capture the public imagination with promises to end the chaos and restore stability. Past economic crises led to events such as the rise of Napoleon, the launch of the Bolshevik Revolution, and the consolidation of German state power in the hands of Adolph Hitler. All these events had grave consequences for the entire world, not just the individual nations involved. Why should this time be any different?

What the Bible Says

The Bible describes just such a scenario in the end times. Revelation 6 says an entire day’s wages will barely buy enough food to survive (Revelation 6:5-6). This describes a world ravaged by hyperinflation, and it’s the backdrop against which the Antichrist makes his drive for global conquest (Revelation 6:3-4).

Ultimately, the Antichrist will implement a global economic system which requires the people of the world to worship him. The Bible says he will require everyone on earth to receive a mark, and no one will be able to buy or sell without the mark (Revelation 13:17). We see the beginnings of this system today as paper currencies give way to digital currencies. Once this transition is complete, government will be able to control all buy/sell transactions, just as the Bible foretold.

This is one of the many Tribulation events casting its shadow on our day and time. Along with the restoration of Israel (Jeremiah 23:7-8) and the many signs Jesus and prophets said to look for, all these events are converging for the first time in history. Jesus said when you see this happen, you can know His return is soon (Luke 21:28). So rather than hang your head at the trials and sorrows set to come upon the world, lift your eyes to heaven. He’s coming soon!

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Britt Gillette is author of the free ebook Coming to Jesus as well as the books Signs of the Second Coming, Racing Toward Armageddon, and The End Times. Receive his book 7 Signs of the End Times for free when you sign up for his monthly newsletter.