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"INFLATION OR DEFLATION?"--MO December 9, 1974 NO 327--GP
--What's Ahead?--And What to Do About It!

Copyrighted December, 1974 by The Children of God
P.O.Box 31, London WC2E 7LX, England or GPO Box 3141, San Juan, Puerto Rico 00936

(I was asking the Lord if I got the right information about the present situation: --Are we right about the assured continuation of inflation until the crash of the explosion even in spite of the economic crash of Depression?--When the following answer came to me:)

       1. IN THE GREAT ECONOMIC DEPRESSION OF THE LATE 20'S AND 30'S THE POST WORLD WAR I DEPRESSION, THEY HAD NO ECONOMIC GUARANTEES on wages, no price supports, nothing to keep wages and prices up. So when the economic crash came, the war boom burst immediately, because of the production slowdown caused by the end of the war. (See also "War, Boom, Bust!" No. H.) They weren't making any more guns and munitions, etc. The boom had been caused by the war and when they stopped making munitions for the war, this threw a lot of people out of work and so the war boom burst!

       2. A LOT OF PEOPLE WERE OUT OF JOBS and there was no social security, no guarantees of wages, nothing for the poor man except starvation. They either cut his wages way down or threw him out of work entirely. When people didn't have jobs and had very little money, the prices also fell, because the people didn't have enough money to buy anything.

       3. THEY COULDN'T EVEN BUY NECESSITIES, MUCH LESS LUXURIES. Many other industries virtually went out of business, not only the war businesses, but the appliance businesses, etc., went broke too! The auto business was one of the first places where people cut their spending, because it's a luxury to buy a new car, and if everybody does that, then the auto business can go broke the first year because nobody buys a new car. They keep the old car, the old refrigerators, and the old houses as well!

       4. THEY JUST KEPT THE OLD ONES AND PATCHED THEM UP because they didn't have any money to buy new ones, which is what they should have been doing in the first place. If it happens now with so many people tied up with time and mortgage payments, they'll all go bankrupt. So the car industry nearly went broke, and some of them did, or at least went way down. I can tell you half a dozen to a dozen car manes that exist no longer because they went broke in the Great Depression. Only the big money boys survived, like General Motors, Ford, etc., and they bought up many other makes of cars.

       5. THE MORE INDUSTRIES THAT WENT BROKE, THE MORE PEOPLE THERE WERE OUT OF WORK, and therefore, the more people there were that didn't have money to spend! It was a vicious cycle, a downward spiral that just couldn't stop, and industry kept cutting prices to where people could afford to still buy. This meant that both wages and prices spiraled downward, prices following wages so the people could buy something.--This was the deflation. Now when both wages and prices are lowered, then your money actually buys more, so its value is actually higher. Believe it or not, this is called deflation. In a deflation (or depression) the money's value grows because it buys more to pay more wages and pay more prices, etc. So the monetary system actually increases in value, not numerically but in buying power.

       6. THE END OF THAT DOWNWARD SPIRAL WAS THAT ALL THE POOR WOUND UP WITH ALMOST NOTHING AND NEAR STARVATION, except for the public works programs that FDR put on where they were working for one dollar a day on a "make-work" project. He just declared or decreed that certain dams be built and certain places be reforested and bridges and roads built, all kinds of big "works project" where they sent thousands of people out to do these jobs. The government just took a lot of money and spent it! A lot of it was from borrowed securities and bonds. This was when one dollar a day could keep you alive, and it was called the WPA: Works Projects Administration.

       7. THIS RESULTED IN THE POORMAN AND LITTLE BUSINESSMAN LOSING EVERYTHING. They were gobbled up by big business, the big corporations and big banks who had enough money to buy them up. Whatever cash they had was worth more now because they could buy them up at these low prices and pay low wages.

       8. THE ONLY PEOPLE WHO BENEFITTED FROM THE DEPRESSION WERE THE ONES WHO HAD LOTS OF MONEY, cash. The depression really favoured big business--The guys who had lots of money to survive because their money was worth even more. This was not inflation, this was deflation which benefitted big business.

       9. SO THE BIG POWERFUL LABOUR UNIONS, THE POLITICIANS, THE MIDDLE CLASS AND THE LITTLE BUSINESSMEN WHO HAD BEEN WIPED OUT DETERMINED THEY'D NEVER LET IT HAPPEN TO THE COMMON MAN AGAIN! He was never again going to be totally thrown out of work with no money and where his buying power would fall so low that the prices crashed along with the wage collapse. From that time on there were going to be guaranteed wages and guaranteed unemployment insurance with the government footing the bill, along with big business having to pay part of the bill. Big business then, of course, insisted that they also have guaranteed prices. So they put so many safeguards on the wages and prices that they'd never collapse again like they did in the Depression.

       10. BUT WHAT THEY ACTUALLY DID WAS TO VIRTUALLY GUARANTEE PERPETUAL INFLATION, THAT WAGES AND PRICES WOULD CONTINUE TO RISE AND NEVER GO DOWN AGAIN! Every time big business hiked their prices, labour would hike its wages, and then business would say it had another excuse to hike its prices because wages went up. It became a vicious cycle, an inflationary spiral. It was impossible for prices and wages to decline because they were guaranteed by governments who never wanted to see another depression.

       11. SO WHAT RESULTED WAS A PERMANENT INFLATIONARY SPIRAL of prices and wages, and a permanent constant continual inflation of money so that the money continues to buy less and less and less, and its value goes down and down and down. The higher the wages and prices go up, the less your money can buy. The higher the prices go, the higher the wages go, but the rich make sure the wages are never able to catch up with the prices. So they just keep going up and up and up and the money buys less and less, until finally the money is worth almost nothing compared to what its value used to be.

       12. NOW THE PEOPLE WHO ARE HURTING ARE THE BIG MONEY BOYS, because now their money is inflating and exploding in an inflation explosion. Now it's the big investors, big business, big money and big governments whose money is dwindling down to nothing so it can't even buy much any more. In spite of the fact that industry is slowing down and therefore unemployment is increasing, there are so many safety guarantees to keep wages up and to give unemployment insurance and to keep prices up that there is still inflation in spite of a recession or depression right now this minute picking up speed!

       13. THE STRANGE THING THAT'S HAPPENING IS THAT THE INFLATION IS PICKING UP SPEED RIGHT ALONG WITH THE DEPRESSION, just the opposite of what happened in the Great Depression. This time they're not only going to have a big depression, or economic collapse, which in days past benefitted the big money boys, but it is also going to bring about the collapse of big investors, governments, everybody! It's going to take the money down with it!--And Capitalism!

       14. THAT'S WHAT THE LORD SHOWED US! We'll be paying three pounds or the old equivalent of seven dollars for a can of soup before long, and they won't even sell you a round trip ticket because the price of a ticket will increase faster than you can use it! (See also "The Crash", No.284.) The "Green Pig" of monetary inflation is going to get so big it's going to explode and cause the collapse of the banks. (See also "The Green Paper Pig", No.243 and "The Money Explodes!", No.294.)

       15. SO WHAT IS IT GOING TO DO TO THE SMALL LANDOWNER, small home owner, small business owner and the payments makers? Well, the actual value of the payments is declining so it'll actually make it easier for them to make their payments.--If they have anything to make them with! The people that own property are going to be better off than the people renting, because unless the governments control the rents, the rents are going to rise right along with the prices. Whereas, the people who are buying or leasing on a long term contract are actually going to be paying less and less for their property because of the decreasing value of the money.

       16. THE BUYING PRICES OF PROPERTY WILL SKYROCKET, but the people who've already bought or who are already on contracts are going to benefit if they have any money at all to keep up the payments. For example: During the Depression we bought a house for 25 dollars down and 25 dollars a month. Well, that 25 dollars would be the equivalent of 250 dollars down and 250 dollars a month now, for as wages and prices go up the actual value of those 25 dollars a month payments has gone up. If the people are getting any money at all guaranteed by governments, they'll be able to meet the payments even more easily because of the inflation. It was always our policy before, because of the experience of the previous Depression when prices crashed along with the Depression and the value of everything went down, that it didn't pay to buy but rather it paid to rent, because rents were down in deflation.

       17. BUT THIS TIME THE PRICES ARE NOT GOING TO CRASH BUT THEY'RE GOING TO EXPLODE AND CAUSE THE MONETARY SYSTEM TO CRASH INSTEAD. That's the difference between the inflation of today and the deflation of yesterday's Depression. The fellow who has bought or is buying on a contract is going to benefit because he'll already have it, and its value will skyrocket. If he has any income at all to keep up his payments, or especially if he's already got it paid for, then this is a totally different situation from the last Depression. This time they've guaranteed wages and prices are going to go up as the value of money goes down, just as the Lord has shown us.

       18. SO IF YOU'RE GOING TO BUY ANYTHING, THE TIME IS NOW and the sooner the better. That's one reason there is a boom of land and property buying right now. Smart investors know that's where they can put their money and it'll be fairly safe and they'll have something to show for it. Whereas, the value of everything else which has a monetary price on it, like stocks, bonds, cash, etc. will actually decline, just like they're going down now. Their real value is shrinking because of the inflationary explosion.

       19. THE "GREEN PAPER PIG" IS EXPANDING just like when you blow up a balloon. There's actually no more balloon there than when you started. It's just getting thinner and thinner and filled with more and more hot air and stretching further and further till it bursts. This is what the Lord showed us about the "Paper Pig", until finally it can't stretch any further and it explodes! That's why the Lord showed us even as far back as several years ago to buy gold then. The same is true of real estate or houses, buildings and lands.

       20. IF YOU'RE ACTUALLY GOING TO USE THE LAND FOR SOMETHING TO LIVE IN OR ON, ITS VALUE IS GOING TO INCREASE along with its price. So it is better to buy now because both prices and rents are going to go up. The only safe thing to do is have it already bought. At the end of our present contracts what are they going to be worth? If you're a farmer and know how to grow food, then a farm is the best place to buy so you have food along with your place to live. That's even better than gold because you can't eat gold!

       21. THAT'S WHY THE BIG INVESTORS ARE NOW BUYING FOOD COMMODITIES ALONG WITH GOLD. They're now not only buying this year's crops, which haven't even been harvested yet, but they're also buying next year's crops and crops as far as four years ahead because they want to make sure they're going to get them at this year's prices. But that's probably going to cause a collapse too because by that time, or maybe even before, the growers won't even be able to afford to grow them. The price that was paid one, two, three, four years ago won't even pay for the cost of the crop, so they'll collapse--if it even lasts that long! But, of course, along with the collapse of big business, big money and big banks will come the collapse of big governments.

       22. HOWEVER, BEFORE THE GOVERNMENTS WILL COLLAPSE OR ALLOW THEIR BIG BANKS OR BIG BUSINESS OR BIG MONEY BOYS WHO RUN THE GOVERNMENTS TO COLLAPSE, THEY'LL START A WAR. They're going to blame it all on the oil, like they're doing right now, that the inflation is all because of the oil prices.--Which isn't true! But at least it's a good excuse to take the people's minds off their domestic problems, like Hitler and every other dictator has always done.--They start a war with somebody else and then they promise the people that if they can get that oil they can control the economy, and that a war will boost industry, create jobs and circulate money.--And so they promise, "We'll have another boom!" But it's not going to work this time!

       23. THE WHOLE WORLD'S PRESENT ECONOMIC AND GOVERNMENTAL SYSTEMS ALONG WITH ITS MILITARY MACHINES AND SUPER POWERS, IS GOING TO EXPLODE AND COLLAPSE. The rich industrialised West is going to be wiped out, and possibly Russia along with it! Probably the Anti-christ will then arise and pick up the pieces and become the "saviour" of the world with a new system of government, economy and religion!--The Imitation Messiah!

       24. BUYING WILL SAVE, AT LEAST FOR THE TIME BEING. But, of course, under the New World Order which will arise there'll probably be no private ownership and there'll be a whole new system. So this is just a temporary stopgap for the next year or two, I doubt if any longer. The point is that if you can buy something now on low and long enough terms so that your payments will be about what rents are now, then you are protected against the rise in rents because your payments will continue to be the same amount.

       25. BUY PROPERTIES ON LONG TERMS with low payments, and I believe they'll be protected for the next year or two because I think rents will skyrocket along with all other costs and prices and wages. Of course, many things are going to become scarce and almost impossible to buy soon, so the same is true of any other major purchases. If you can afford to buy it outright right now, or better yet on very long term payments so you don't have to put out all that cash right now, then I'd advise you to buy it now.

       26. BECAUSE THE PRICES AREN'T GOING TO BE ANY LOWER TOMORROW--at least not until the whole world monetary, economic and governmental system collapses, and after that it won't matter anyhow, as there'll be an entirely new and different values, and your money and property probably won't be worth anything anyway, as it'll all be owned by the new world government dictatorship!

       27. IT'LL PROBABLY BE LIKE IT WAS WHEN CASTRO TOOK OVER CUBA: The government took over the property of land and house and apartment owners, and any worker-tenant who'd lived and paid rent there ten years or more got his place rent-free from then on, and the others paid the government a very low rent--and the owner got nothing! They figured he'd already had his in past rents, which he probably had, and some had received rents many times over the property value! So things will sort of be evened out again and the poor labourer will get a breather!--Until next time, when he'll probably get plenty of nothing till Jesus comes!

       28. SO THE IDEA OF BUYING NOW ON LONG RENT-LIKE TERMS OR TODAY'S LOW PRICES IS SIMPLY TO GUARANTEE PROTECTION AGAINST A CONTINUED RISE IN RENTS and assure low payments for your property, for those who are able to do so. However I wouldn't necessarily recommend this for all Children of God, for we move around too much and wear out our welcome too fast in place after place!--We have to stay as mobile as we can. But for others, friends, relatives and the little man and labourer, I'd say buy now on long terms and pay later if you can, until the New World Government comes along and relieves you of everything!--Only Jesus saves!

Copyright (c) 1998 by The Family