Eight Arguments Against Debt 5 – Debt vs. Saving

There are Biblical grounds for staying out of debt. Any one of these is sufficient reason for people to avoid debt, as much as it is within their power. When put together, they become a formidable array of reasons why debt should be avoided.

5. Debt vs. Saving

In the first three chapters I described the wealth creation process. Mankind was created with the mandate to be fruitful, to be innovative, to be productive, to look after God's garden, preserve it, husband it, and in so doing create wealth for all to enjoy.

More importantly, however, it was seen that the process of putting aside for future use (savings) was the necessary step for economic advancement. Without savings there can be no process of ongoing economic development.

Debt is the opposite to the idea of saving. Instead of saving, people become borrowers. Instead of storing up wealth for the future, they consume other people's accumulations of wealth paying for the privilege with the wealth of tomorrow. The God-ordained process of wealth creation, however, is the foregoing of current consumption in order to put aside wealth for use in the future. That is, we must save for the future. We need to take assets we have now and turn them into more assets, better assets, in the future.

We saw in chapter four that the scripture in Proverbs 13:22 says a good man leaves an inheritance to his children's children. This thought is repeated in the New Testament where parents are instructed to "lay up" wealth for their children (2 Cor. 12:14). This leaves each of us with an obligation to leave our children some kind of inheritance. Our children's advancement will be directly linked to the inheritance we leave them; and it does not require a degree in economics to understand that the greater the inheritance we leave them, the better off they'll be (assuming they don't squander that legacy).

Debt, however, is the very antithesis of this Biblical idea. Rather than putting aside wealth to consume in the future, debt is an attempt to use future productivity in the present. People do not like to wait in order to get things. When borrowed funds are so readily available, as they are under the present financial system, it is easy to forget that the Biblical pattern is to work and save for the future. To buy now, with borrowed funds, is to say that our future earnings are to be spent in the present.

This contrasts with the New Testament passage mentioned above, where we are instructed to "lay up" wealth for future generations. While there are some people who will argue that debt is a means of laying up wealth for the future, they do not take into consideration the interest that is paid when they borrow. Unfortunately, our calculating ability on this matter is seriously hampered by inflation. We see, for example, house prices going up. We also see our pay packets going up each year. So we borrow to buy something, hoping that the item we buy also increases in price to cover the cost of interest that we must pay. If prices were relatively stable, then we would see the real effect of borrowing: an item that might cost us two or three times its price by the time we paid the interest bill, and if we were to sell it, we'd never recover the amount paid in interest.

Only in an age of inflation can any attempt be made to defend the use of debt. But this is precisely why debt must be avoided. Debt fuels inflation and we can soon get caught on a never ending merry-go-round of price increases that distort our ability to make sound economic judgments.

It is true to say that there can be no borrowing unless there is a saver who has made the funds available. But just because other people save, this is not a reason we might use to excuse ourselves from the same obligation. When everyone saves, the future productive capacity of society is enhanced. This is how we create an inheritance for our children and grandchildren.

Not surprisingly, we are seeing what the low savings rate is doing to countries such as America and Australia in the current economic climate. Many of our Asian neighbors have much higher savings rates, and their productive capacity is outstripping that of Australia. The opinion of business analysts is divided as to whether productivity in countries in the Pacific Basin is surpassing that in the United States. Increased wealth, though, is flowing to these nations, showing the truthfulness of God's plan for wealth creation. The United States, once the leading industrial nation in the world, is now staggering under a massive debt load of four trillion dollars. [That was 1995. In 2008, it is nine trillion, and rising by a million dollars, every ten seconds. Ed.] Some suggest that it is no longer the leading economic player in the world. But it is debt and the failure of Americans to follow the Bible's teaching on this matter, that has brought about its economic decline. In other words, ethics is the cause of declining productivity, and only a return to Biblical ethical standards will improve the economic situation.

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