The High Cost of Economic Ignorance-Part 1

By Andrew McColl, 24th August, 2010.

One of the things which consistently disturbs me, is the economic ignorance within the community, and specifically the Christian community. Perhaps people think that economics is a subject they would rather avoid, as they view it as being boring, or too technical, or it doesn’t really affect them. Perhaps there are other reasons. I don’t know. But what is clear is that economic ignorance is going to exact a high price from us all.

It has been claimed that there are about 50 million people in the United States who claim to believe the Bible. That is a significant proportion of that nation. You would think that a group that size would have considerable political leverage. But what we can observe, is that the U. S. government can behave with utter economic irresponsibility, and the Christian community there seem to be utterly disinterested. Sometimes, they actively support this irresponsibility.

The Bible says a lot about economics, though it doesn’t use that term. It refers to buying and selling, stealing, borrowing and lending, gold and silver, heirs and the inheritance. That last one is a very important word in the Bible; the Bible says it is reserved for Jesus Christ (Ps.2:7-8), and His people (Ps.37:18; 61:5; Rev.21:7). But before we get to the interesting and really glorious stuff concerning the inheritance, we have to master the basics: the nuts and bolts of economics.

Let’s begin with these:
The rich rules over the poor, and the borrower becomes the lender’s slave (Prov.22:7).
Owe nothing to anyone except to love one another; for he who loves his neighbour has fulfilled the law (Ro.13:8).
A good man leaves an inheritance to his children’s children, and the wealth of the sinner is stored up for the righteous (Prov.13:22).

The Bible teaches us that work, productivity and thrift are good. “Man goes forth to his work and to his labour until evening” (Ps.104:23). The woman of Proverbs 31 “considers a field and buys it; from her earnings she plants a vineyard” (Prov.31:16). Jesus praised the men in the parable, who used their talents productively gaining a 100% return, not wasting their time and money (Mat.25:14-30).

These scriptures (and others) remind us that God is a covenant keeping God. His covenant always has five parts:
1) An announcement that God is transcendent- the supreme Creator and deliverer of mankind. God is completely superior to and different from men and the world He created, yet He is also present with it: immanent.
2) The establishment of a hierarchy to enforce God’s authority on earth.
3) A set of rules or laws man must follow in exercising his dominion over the earth. God will judge man by how he follows these rules.
4) A list if judgments that will be imposed by God, who blesses man for obedience and curses man for disobedience.
5) A program of inheritance- a lawful transition that mortal men need in order to extend their dominion over creation.

Economic ignorance within the community has many ugly outcomes. Just a few of these are: 
a) Government creation of central banks which manipulate interest rates: Earlier this year, when the U.S. Congress sought to audit the Federal Reserve, the FED resisted and avoided it. Furthermore, the only audit that has ever been done of the gold inside Fort Knox was done in 1953!

The Federal Reserve system virtually controls the nation’s monetary system, yet it is accountable to no one. It has no budget, it is subject to no audit, and no Congressional committee knows of, or can truly supervise its operations (Murray Rothbard).

b) Central Bank institutionalising of inflation by manipulating the money supply:   Inflation occurs when the money supply is increased. From the Napoleonic era till the First World War, inflation world-wide was negligible. That was about 100 years of prices being the same. But with the First World War, governments needed money, fast! It’s easy to procure when you have a printing press. So, we suddenly got inflation, and it hasn’t gone away. Since the creation of the U.S. Federal Reserve in 1913, the U.S. dollar has lost 95% of its value. 

c) Massive, unsustainable private debt.     Now, there will be some who would say to me, “but Andrew, what’s wrong with a mortgage? Most families have one.” But if we take Romans 13:8 seriously, we will have a problem with a mortgage. The Bible specifically prohibits it. Today, the U.S. housing market has fallen dramatically (perhaps 20-40%) over three years, and there are millions of buyers who borrowed and bought when the market was up, who now are out of a job (unemployment being about 10%), and can’t pay their mortgage.

The Australian housing market may be ready to follow suit. Already it appears to be tightening up. A lovely house up the road from us was put up for auction a few weeks ago, but there were no bidders. One analyst (Morgan Stanley's Gerard Minack) claims the Australian housing market is over-valued by 40%.

d) Massive government debt.   U. S. government debt is now officially 14 trillion, and it increases by three million dollars a minute. You could say it’s out of control. But this is just the “on-budget debt;” there is a whole lot more.

Boston University economics professor Laurence Kotlikoff, in an article published on Bloomberg.com, writes, “Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.” Kotlikoff took a hard look at the Congressional Budget Office’s Long Term Budget Outlook, released in June. “Based on the CBO’s data,” he writes, “I calculate a fiscal gap of $202 trillion.” 

This has made another Great Depression almost inevitable. U.S. economic vulnerability is compounded by many European governments, which are carrying unsustainable debt levels. The international debt situation is now preparing to burst its banks.

e) Unnecessary wars.    The U. S. Defence budget is now around 1 trillion dollars, while their soldiers fight in Iraq and Afghanistan, countries which curiously have never attacked America. Any reason for those wars? Only evil ones.

It is no coincidence that the [twentieth] century of total war coincided with the century of central banking. When governments had to fund their own wars without a paper money machine to rely upon, they economized on resources. They found diplomatic solutions to prevent war, and after they started a war they ended it as soon as possible. Ron Paul, “End the Fed,” (p.63).

Conclusion:
There will be a high cost to our economic ignorance.  The big bills internationally are coming due now. They will keep coming for a long time yet.

Our son has a collapsible stool which when erected, reaches to about a metre. It is helpful for painting inside houses, and has a safety label on it, which is particularly applicable to the Bible and economics, and our present circumstances:

Failure to read and follow instructions on this platform may result in injury or death.

Have you been reading and following the instructions, or are you going to get hurt?

Next Week? The solutions.

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