“Owe no one anything, but to love one another.” Romans 13:8a
At the time of this writing, the entire world is engulfed in a financial system that is based on debt and credit. This is the first time in history that the world has used a debt based system using fiat currency (i.e. government issued paper money), and more importantly, one that is not backed by a physical, tangible material that represents a real value such as gold and silver. Back in 2008, about 10 years ago, a crisis occurred that threatened to bring down the entire world financial system. As a result of this crisis, the validity of this global financial system based on debt has come into serious question by many people and there has been much written about it in the media, both the main stream media as well as the alternative media. I would like to look at this system from a Biblical perspective, attempting to understand how we as Christians should view debt. Thus the question: “Is debt evil?”
Let’s first take a closer look at what debt is or what it entails. The definition of debt at dictionary.com is “something that is owed or that one is bound to pay to or perform for another; a liability or obligation to pay or render something.” When we go into financial debt, we enter into an agreement to pay in the future for something that we receive in the present. In one sense, we are taking from future value. When corporations or governments go into debt, they are obligating future employees or citizens to generate value to satisfy the debt. For individuals, debt can be left for children after the person who borrowed the money dies.
Of course, there is an additional price for the borrower in this arrangement. The lender is looking to make a profit so there is interest added to the obligation, usually as a percentage of the total debt. This interest is complicated because we must consider that the value of paper currency is decreasing as time goes on due to inflation. For example, a dollar today can’t buy as much as a dollar could buy 20 years ago as a result of inflation.
Let’s look deeper at the underlying motivations for both the borrower and the lender to gain more insight into the situation.
It would seem that the borrower is motivated either by the desire to acquire something immediately, before they have saved up enough money to buy it outright, or they are motivated to use debt to increase their financial situation, for example, to expand a business or purchase a rental property.
The lender, in most cases, is motivated by the opportunity to make a profit using their money through the interest gained from the deal. Additionally, the lender typically has, as part of the agreement, a legal right to the borrower’s assets, either a separate item as collateral or the item being financed, should the borrower be unable to complete the payoff of the debt.
I must mention at this point that in our society it is almost impossible to function without the use of debt. We are forced to use debt to establish a credit rating that is needed to function. For example, in order to rent an apartment in many areas you must pass a credit check that requires you to have a good credit rating. Young people are pressured into going into debt with the fear of having a low credit rating that could hinder them later in life.
Let’s look at some of the issues with debt from a Biblical perspective.
1 – The Borrower is a Slave to the Lender
“The rich rule over the poor, and the borrower is the slave of the lender” Proverbs 22-7
As per the definition of the word “debt” noted above, we see that the borrower has an obligation to the lender and becomes liable or legally responsible to repay the debt amount plus interest. This obligation results in a form of enslavement.
When we hear the word slave we think about someone in chains being beaten and forced to work for their masters under harsh conditions, but this isn’t always the case. Not all masters were abusive to their slaves, and likewise, not all lenders are abusive to their borrowers. We must realize though, that the potential for abuse is always there, and depending on the circumstances, the lender has the power to treat the borrower abusively, demanding payment or possibly repossessing some collateral if payments aren’t met.
I can tell you from personal experience that situations can change suddenly and place you in a bad place with a debt obligation. Years ago I had refinanced my house and was given what I thought was a great deal where they gave me the full amount of the appraisal of the property. I of course believed the conventional wisdom at the time that “real estate never drops in value” so I couldn’t go wrong. Shortly after I refinanced, the financial crisis of 2008 hit, causing the value of real estate to drop considerably. I also lost my job and source of income and was therefore unable to keep up with payments for the mortgage. I also could not sell the house at a price to cover the loan. When faced with the inability to pay off the loan by selling the house, and without the means to make payments, I could feel the enslavement! The lender put the pressure on to keep up the payments and wouldn’t bend at all to help me work out a solution. I was forced to go into foreclosure, losing the house and any equity that I had accumulated, plus my credit rating was ruined.
It would be wise for us to consider this condition of servitude before entering into a debt, and in fact, I would suggest that avoiding when possible this potential for abuse would be the wisest path to take. Be aware that the lender has all the power and leverage and if circumstance change for you, they will do what is best for them in most cases.
“See, I am sending you out like sheep into the midst of wolves; so be wise as serpents and innocent as doves.” Matthew 10:16
2- Debt Feeds our Impatience and Discontentment
“There is great gain in godliness with contentment; for we brought nothing into the world, and we cannot take anything out of the world; but if we have food and clothing, with these we shall be content.” 1 Timothy 6: 6-8
For most of history, people would have to wait until they could afford it before they were able to buy something, but today we can use debt to buy things as soon as we want them, without any need for savings (no down payment needed). Unfortunately, it often times leads to us becoming over-committed financially and becoming deeply indebted and unable to comfortably service the debt. Salesmen and marketing people know how to appeal to our strong desire for material things or our desire for the comforts of life and can pressure us into over-committing.
As Christians, shouldn’t we be looking to God to supply for us what we need? I am certain that if God wants us to have something, that He will give us the resources to make the purchase without becoming enslaved to a lender, with the potential of being abused or placed in a bad situation where we are unable to pay them back.
“And my God will fully satisfy every need of yours according to his riches in glory in Christ Jesus.” Philippians 4:19
The ease of going into debt, without considering the future burden of payments or potential for defaulting, is not a motive that comes from our spiritual nature, but rather, I would suggest that it comes from our carnal nature. It appeals to our flesh.
It is obvious that sales and marketing campaigns are manipulating people by appealing to their fleshly desires for products and services, and making it easy to purchase these things by offering easy financing. Notice that advertisements appeal to our emotions, telling us that their product will make us happy or make us feel good, not that it meets some practical need we have. The motivation behind these sales initiatives is greed and have nothing to do with helping people or the good of society.
Debt can satisfy the desire to live beyond our means or feed our fleshly yearnings for material riches like driving a fancy car or living in a large home, but we can easily get in over our heads, living beyond our means, or having to compromise our integrity to pay off the debt needed to continue in our wealthy lifestyle.
Patience and contentment are highly valued characteristics for the Christian and therefore we should not expose ourselves to the pitfalls of indebtedness that will only erode these characteristics if we chose to go down the pathway of debt enslavement. We need to patiently wait on the Lord to meet our need rather than going into debt enslavement. We need to recognize that our current situation is where God wants us and therefore we should be content with what we have.
3- Debt Feeds the Love of Money
“But those who desire to be rich fall into temptation, into a snare, into many senseless and hurtful desires that plunge men into ruin and destruction. For the love of money is the root of all evils; it is through this craving that some have wandered away from the faith and pierced their hearts with many pangs.” 1 Timothy 6:9-10
Borrowers need to examine their motives to determine if it is the love of money that is driving their indebtedness, allowing their conscience to steer them. We don’t want to allow riches to corrupt our faith and cause us to be included in the judgment of the godless rich.
“Come now, you rich, weep and howl for the miseries that are coming upon you. Your riches have rotted and your garments are moth-eaten. Your gold and silver have rusted, and their rust will be evidence against you and will eat your flesh like fire. You have laid up treasure for the last days. Behold the wages of the laborers who mowed your fields, which you kept back by fraud, cry out, and the cries of the harvesters have reached the ears of the Lord of hosts. You have lived on the earth in luxury and in pleasure; you have fattened your hearts in a day of slaughter. You have condemned, you have killed the righteous man; he does not resist you.” James 5:1-6
Even more of an issue though, especially in our current financial system is the role of the lender and what I see as a dishonest scheme that uses debt as a means to steal value from people, and that is fueled by the desire to gain wealth. At issue is the fractional reserve banking system that is in use in our financial system. Although the system has been made legal by governments, I would suggest that it is not a moral system and should not be legal. Unfortunately, most common people don’t understand how it works or realize what is being done. In short, the banks are required to only keep a fraction of the money that they are lending out to people in reserve (only 10% is needed in reserve) and the rest they create from nothing and give to the borrower to be repaid. In essence, they are creating value out of nothing, and this is morally questionable at the least, and in my view, should be illegal. This system has developed for centuries and has become legally accepted over the years mostly because of the hidden and deceptive methods of the lenders that people don’t clearly understand, and by the power of the wealthy people who benefit from this system that have influence in the governments.
If you would like to understand more about the fractional reserve banking system, there is much available online, but I would recommend a book by a Christian man named Norm Franz entitled, “Money and Wealth in the new Millennium” to get the full picture of the current financial system. The advice of brother Franz is to do all that you can to stay out of the financial system, to get out of debt and to stay away from the financial markets. I agree with his advice.
Most debt we encounter today is through the banks or financial institutions for mortgages, auto loans, or home equity loans, so it involves this fractional reserve banking scheme. Most of us are not borrowing from a friend or relative who want to help us, and don’t create the money out of nothing like the banks do. Although it may be difficult and challenging, I would start to get out of debt now before difficult times come in the future (and I believe they are inevitably coming) so that you are not deeply impacted when this system of debt collapses. Lenders will use their powers to take what they can from the borrowers, not caring about the pain they may inflict on them.
There is also something unfair about gaining an increase in money without doing any real work or adding any real value to the world. Financial systems are set up so the rich get richer and the value is shifted from the poor to the rich. Lenders many times make their money on the deal immediately through various fees and closing costs, then create the money out of nothing that will come back to them in the end, and they charge interest on top of it. This also is unfair and immoral.
The Scriptures encourage us to work with our hands, to be diligent and carry our own weight:
“Now we command you, beloved, in the name of our Lord Jesus Christ, to keep away from believers who are living in idleness and not according to the tradition that they received from us. For you yourselves know how you ought to imitate us; we were not idle when we were with you, and we did not eat anyone’s bread without paying for it; but with toil and labor we worked night and day, so that we might not burden any of you. This was not because we do not have that right, but in order to give you an example to imitate. For even when we were with you, we gave you this command: Anyone unwilling to work should not eat. For we hear that some of you are living in idleness, mere busybodies, not doing any work. Now such persons we command and exhort in the Lord Jesus Christ to do their work quietly and to earn their own living. Brothers and sisters, do not be weary in doing what is right.” 2 Thessalonians 3: 6-13
In summary, we need to trust God to supply to us what we really need and not give in to our carnal desires for material things. We need to be content with food and clothing, and not looking for all of the other things that our society pressures us into getting (to “keep up with the Jones”). Be aware that the financial system is evil and unfair, with the potential to cause damage to your life. Wisdom would lead us away from getting into debt.
The Bible warns us that the final global financial system, run by the global government (“The Beast”) will require that all people have the mark of the government system in order to buy or sell. This is the final enslavement of the financial system of the anti-christ. All indications are that we are moving towards this type of system even now. As Christians we need to be aware of these occurrences.
I leave you with this Scripture quote from Peter:
“Be sober. Be watchful. Your adversary the devil prows around like a roaring lion, seeking someone to devour. Resist him, firm in your faith, knowing that the same experience of suffering is required of your brotherhood throughout the world. And after you have suffered a little while, the God of all grace who has called you to His eternal glory in Christ, will Himself restore, establish, and strengthen you. To Him be the dominion for ever and ever. Amen.” 1 Peter 5:8-11