The late French President Charles de Gaulle once dismissed the United States and Britain as "the Anglo-Saxon debtor nations." Four decades later, their enormous debt is forcing the two countries into a period of dramatic change.
It's now official.
When I was at school in England in the 1950s and early 60s, we were taught that the two primary functions of government were "defense of the realm" and maintaining a strong and stable currency.
That's now changed.
Faced with increasing financial problems due to years of overspending, Western governments are having to cut their big budgets. This includes the United Kingdom, which is having to cut billions of pounds in government spending to bring down the nation's debts. Austerity—strictness in curtailing spending—is the constant refrain.
All government departments were told to submit plans for massive reductions in spending, with the exception of two departments considered sacrosanct—health and overseas aid.
Defense is to be slashed amid fears that the country will no longer be able to defend itself. There is even to be some sharing of major military hardware with France—including an aircraft carrier!—so that both countries can save money. This is rather ironic when we consider that the British have fought France more times than any other country!
Clearly, "defense of the realm" is no longer the government's foremost priority.
There are also to be cuts in welfare and other forms of government assistance. When it was announced that government support for rent was to be capped at £400 per week (about $630), the Conservative mayor of London, Boris Johnson, charged his colleagues at Westminster of "ethnic cleansing" (he later softened his stance somewhat).
This was a reference to the fact that many of those in London receiving assistance are nonwhite immigrants and their adult children. Housing in London is extremely expensive, and news reports have frequently highlighted families that receive thousands of pounds every week to help them remain in their homes. (One British pound equals approximately $1.60.)
What's happened to the United Kingdom?
A century ago, the United Kingdom was the greatest military power in the world. The country was also the greatest investing nation, accounting for almost 50 percent of all international investment on the eve of World War I in 1914.
Yet by 1916, halfway through the "war to end all wars," the United Kingdom was borrowing heavily from the United States. The country still remained a global superpower right through World War II. Even in 1953, at the time of Queen Elizabeth's coronation, it was a major military and political power.
But by the 1950s it was in rapid economic decline. Contributory factors were a lack of competitiveness and government control of much of the nation's production. Added to these were rising welfare and health costs, a consequence of the postwar welfare state introduced by the government elected after the war ended in 1945.
For more than six decades Britain has been gradually reducing its military spending, effectively to finance its ever-increasing welfare and health costs.
Bible prophecy helps us understand
Regular readers of this magazine know that modern-day Britons are largely the descendants of the biblical half-tribe of Ephraim. God promised Ephraim and his brother Manasseh, the two sons of Joseph, incredible blessings for their descendants.
Manasseh was prophesied to become a great nation, whereas Ephraim was to be a "multitude of nations" (Genesis 48:19), a prophecy fulfilled in the former British Empire and Commonwealth, as explained in our free booklet The United States and Britain in Bible Prophecy.
The empire was still fairly intact when Queen Elizabeth assumed the throne on her father's death in February 1952. Today, it has almost all gone, a reflection of the great decline the country has undergone during the reign of just one monarch.
The Old Testament prophet Hosea addressed his prophecies to modern-day Ephraim. Many reject that the prophecy is about our time, but a passage in chapter 5 of the book of Hosea shows that it was not a message intended for ancient Ephraim. In Hosea 5:5 we read that Israel and Judah will both fall and stumble within a period of 30 days, the "New Moon" referred to in verse 7.
This did not happen in ancient times. The 10 tribes comprising the kingdom of Israel, of which Ephraim was a part, fell to Assyrian invaders more than a century before the kingdom of Judah was overthrown and crushed by the Babylonians.
The decline of present-day Ephraim has a lot to do with the country turning away from God. Leviticus 26 and Deuteronomy 28 show the connection between a nation's obedience and blessings or disobedience and negative consequences.
One of the consequences of disobedience is economic decline, which the country is feeling now as it struggles with a heavy burden of debt. This is not new. The late French President Charles de Gaulle once referred to "the Anglo-Saxon debtor nations" when rejecting Britain's bid to join the European Community (now the European Union).
He was talking about the United Kingdom and the United States, whose modern economies have been built on massive borrowing. (It's ironic, but more than 40 years later France also wrestles with its own serious debt problems!)
One of the reasons for Ephraim's economic decline is Britain's 50-year obsession with Europe. The 1957 Treaty of Rome pledges member countries to form "an ever closer union." Gradually, since joining in 1973, Britain has been losing more and more of its sovereignty and has traded places with others in Europe.
The country that once led Europe economically is now behind both Germany and France and is on a par with Italy as an economic power. Britain is a net contributor to the EU, which means it subsidizes other countries in the Union to the tune of billions of pounds each year.
Hosea 7:9 says that "aliens have devoured his strength, but he does not know it." Whereas this certainly applies to the drain from the EU, it is also applicable in other ways. While on the surface a commitment to maintain overseas aid at its former level during a period of austerity may seem generous, it is difficult to understand how this should take precedence over the "defense of the realm." After all, if the country suffers defeat in war, there will be no aid to give to anybody!
Even more curious is the fact that India is the foremost recipient of aid from Britain—the same India that is fast becoming an economic superpower! Other recipients include nations ruled by dictators who notoriously pocket a great deal of the money for themselves!
"Aliens have devoured his strength" at home too, as Boris Johnson's comment on housing and subsidizing immigrants testifies. It's well known in the United Kingdom that the country's generous welfare system and free health care attract many to the nation's shores. While many contribute to the country, huge numbers of other immigrants require financial help with housing, health care and financial support for their children.
Is the United States any different?
While Britain's priorities have changed since World War II, the country has always known it could, in the end, rely on the United States to defend it in the event of a major conflict. Britain itself has contributed to America's wars, and the expectation is that the United States will always provide a military umbrella if the United Kingdom were attacked. But can the United States fulfill its military obligations at a time when U.S. debt is at record levels?
The United Kingdom and some other countries are in a time of austerity. America's debts are just as bad. The only reason why the United States has gotten away with it longer is because the U.S. dollar is the world's reserve currency.
This means that many countries willingly take American dollars as payment for goods because they can use those dollars to buy oil and other commodities from many different countries. The United States has even been able to print more dollars seemingly without too much concern, an option the United Kingdom and other nations can't normally exercise without serious negative consequences.
But now some countries are clearly turning away from the dollar. At the November 2010 G20 meetings in Seoul, South Korea, Germany, China and Japan all called for an end to the dollar's role as the world's reserve currency, due to anxiety over reckless U.S. government policy in printing more money to stimulate the economy. On Nov. 24, 2010, the China Daily website carried the headline "China, Russia Quit Dollar."
The article, written from St. Petersburg, Russia, began with the following: "China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday."
Major changes looming for the United States?
A U.S. congressional committee looking into ways to reduce the nation's debt is advocating cuts similar to those in Britain—including a call for reduced military spending. Just as Britain's policing of the world, a job it had done for two centuries, was overtaken by other priorities for the British after World War II, so America will follow suit.
U.S. News and World Report publisher Mortimer Zuckerman, in the December 2010, issue, summed up what has become the new economic reality for many Americans. Titled "Tax Hikes, Fewer Benefits Key to Federal Deficit Crisis Fix," the article was more ominously subtitled, "Americans feel anxiety without pause as millions fall out of the middle class."
Zuckerman states: "The dominant mood in America today is one of anxiety without pause. Millions of decent, self-reliant, regular Americans who had begun to fear that the prolonged recession means the American dream is over for them now brood that their children and even their grandchildren are also to be denied the prospects of the good life they took for granted just a decade ago.
"Once, the vast majority thought they were in the middle class, not rich and not poor. Today, more and more Americans are starting to identify themselves with lower economic groupings and see no prospects of moving higher, whether in terms of job opportunities or earnings. The fear has grown that years of hard work will no longer translate into a better life for themselves and their families.
"The new normal is that millions of them are facing the risk, or the reality, of falling out of the middle class, losing all that this once meant in America—financial independence, sending your kids to college, having equity in your home, choosing where you live.
"Today, people in their 20s are hard-pressed to get jobs, and those who do are taking them at incomes lower than they ever imagined. For those who are surviving as middle-class families, they are facing years of financial insecurity."
In an earlier Aug. 26, 2010, article by Zuckerman titled "The Most Fiscally Irresponsible Government in U.S. History"—subtitled "Current federal budget trends are capable of destroying this country"—he wrote: "There is another instinctive conclusion among the American people. It is that the national deficit, and the debts we have accumulated, are of critical political importance.
"On the national debt, the money the government has spent without the tax revenues to pay for it has produced mind-numbing numbers so large as to be disconnected from reality. Zeros from here to infinity. The sums are hard to describe; it is hard to describe an elephant, but you know one when you see one. The public knows that, shuffle the numbers as you may, the level of debt is unsustainable.
"Who could be surprised since millions of voters have discovered that for themselves? As one realizes the morning after the night before, there is an unavoidable penalty for excess."
Heading down the road to ruin
The United States is clearly going down the same path as the United Kingdom, its predecessor as global superpower. Only a few decades ago the United States was the world's greatest lending nation. Today it is the largest debtor nation. By some estimates, when all of America's debt is added to its future obligations to fund Social Security, Medicare and Medicaid, the nation's true debt is more than $50 trillion—a staggering half million dollars for each American household!
With both Britain and the United States clearly in a period of financial decline, three questions loom with global implications: Where are these nations headed now? Who will be the new global leaders? And how will these developments transform the world in the next few years?
As for you personally, will you be ready? GN