Some thoughts on debt

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Screenshot of US Debt Clock

This might astonish many people but there are more words in the Bible dedicated to the topic of money than any other single topic, and I have a theory as to why this is.

Money, in case you never heard it defined this way, is a claim on labour. The principle use of money is to compensate someone for the work they’ve done, either directly or indirectly. Thus, money gives those who have it the power to acquire the labour and/or products of the labour of others. It follows that if one OWES money to someone or something else, you actually OWE that entity however many hours, days, or even years of your life that it would require you to work to earn enough money to pay that debt.

As Proverbs 22:7 succinctly tells us, “The rich rules over the poor, and the borrower becomes the lender’s slave”

This is true in the life of an individual but it’s also true in the life of a country.

Most people know that the US Federal government has a debt that is over $27 trillion. Here is a link to the famous US Debt Clock, which will give you a better idea of the situation. As you can see from looking at this clock, it’s not just the federal government. All 50 US States and many local governments also have large and growing debts.

What most people might not know is that this terrible situation is also extent in many other countries. Japan owes over $12 trillion, which is more than twice their annual GDP. The UK national debt is about $3.5 trillion. The list goes on, with Israel making a depressing contribution to the story.

Despite this, one rarely hears any elected official or candidate for office at any level in any government anywhere talking about how this problem is going to be addressed. Frankly, I don’t blame them. There’s really only two things that can be done. Governments must either raise taxes or cut spending. Politicians who have proposed taking such steps in the past, usually accompanied by earnest attempts to explain why they were so desperately needed, were nonetheless angrily rejected and denounced by their constituents. No one argues that debt isn’t a problem, but everyone seems to want someone else to suffer the hardship necessary for it to be solved.

So, the problem gets worse and worse, and every day (actually, every minute) brings us closer and closer to that inevitable day when something called a “default” will happen.

What will that look like?

The subject of what could happen when (it is now a matter of “when, not if”) the US defaults on its national debt is a frightening one to examine. I watched a discussion on the subject hosted by a think tank in London many years ago which featured a panel of financial experts in which the question came up. Although I don’t remember all the details about what the panellists said, the gist of it was that a default by the US would be the equivalent of a 9.9 Earthquake which would send massive shockwaves through the entire global financial system. It would trigger an automatic degradation of the US’ credit rating, which would cause interest rates on all manner of debts which are guaranteed by the US Federal Government (including Israel government bonds) to spike, making defaults by other banks, governments, and institutions unavoidable. This would lead to a cascading sequence of crises culminating in a sharp loss in the value of nearly every imaginable financial asset and widespread bankruptcies of corporations, governments and individuals. Millions of jobs would disappear and civil unrest on an unprecedented scale would break out in cities all over the world. No one anywhere would escape unscathed, and the aftermath would be completely devastating for human civilization.

Someone asked one of the panellists how long it would take for all that to happen. After taking a deep breath, one man replied that the computers which regulate and keep track of all the financial transactions and the value of assets in the world’s banks, trading houses and Treasury departments would make the calculations automatically and the entire process would take “about an hour.”

There was stunned silence following this pronouncement, and rightfully so. 

I don’t know if anyone else was thinking about it, but my own thoughts turned to Revelation 18:9-11, which says;  “And the kings of the earth, who committed acts of immorality and lived sensuously with her, will weep and lament over her when they see the smoke of her burning, standing at a distance because of the fear of her torment, saying, ‘Woe, woe, the great city, Babylon, the strong city! For in one hour your judgment has come.’ “And the merchants of the earth weep and mourn over her, because no one buys their cargoes any more”

I can’t be sure that this prophecy was referring to the scenario the financial experts on that panel were referring to, but I think it very well might have been.

In any case, a great many of the problems we have in all of our countries is a direct result of the crushing burden of public a private debts, even before a hypothetical earth-shattering default. I can only advise you to pray into this issue and attempt to do all you can to pay off whatever debts you yourself might have as quickly as possible. As Romans 13:8 says; “Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law”

Click here to see the US Debt Clock.