Dr. Mills,

You've said more in one article than fifty of the latest financial books put together! My prayer is that the LORD "...will bring forth your righteousness as the light and your judgment as the noonday." Psalm 37:6

Doug Walton
Boston, Virginia USA

Doug Walton   28 March 2011

Great article, giving clear Biblical principles for staying out of debt. As Christians we can "easily" live out these principles in our personal and church lives, as you outline. You've given some broader outlines of how these principles might "guide" economic/financial policy at a more national/governmental level towards a more Biblical idea. We're clearly a long way from the ideal; again as you clearly indicate. But I'm interested in how as a campaigning Christian, what's the most effective way that I on my own (but also possibly in concert with other Christians) might best influence public policy towards a more Biblical model. In other words, which pillars of the current financial set-up, e.g.:
1) Central banks and their control of fiat money (lack of gold standard?);
2) Public spending (i.e. extent of the welfare state & military spending, i.e. possibly living beyond our means and hence indebting future generations etc.?);
3) Globalisation (too easy flow of money, chasing short-term gain at expense of longer-term stability?)

should I/we be agitating for change or reform? Also, some of these aspects start getting political very quickly (i.e. you can quickly start sounding like a right-wing bigot/protectionist.) Can we as Christians offer an authentic Christian voice on these matters without being coloured with a political brush - is it possible to discuss this in an apolitical way, without being labelled Communist, Left/Right winger, Capitalist, Socialist, Green Environmentalist, social and/or economic Liberal/Conservative; but rather be distinctively labelled as Christian (I suppose this includes Judeo-Christian as well)?

Michael Parker   28 March 2011

From a U.S. housing perspective, 7-year term limits on mortgages would do much toward promoting widespread affordable housing for families. 5 to 7-year mortgages were apparently common in the early 1900's, but from my understanding these were primarily balloon loans, repetitively refinanced at the end of the term. Outstanding debt was not canceled, as would have been according to God's Law.

Also, current lending rules effectually mandating dual-income lending in the name of equality would need to be abandoned, so as to eliminate the consequential economic oppression of single-income households. This is beside the fact that dual-income lending is highly risky, compared to single-income lending.

Doug Walton
Boston, VA USA

Doug Walton   29 March 2011

Some interesting points, particularly about banks. In theory, a bank can still fail (though we've seen in practice that this isn't usually allowed to happen). If a bank can fail, then surely the investment can be lost and hence some return is justified by the criteria used here to justify returns on property and equity. We do need to allow banks to fail ... and be clear that backup from the tax system is limited.

What I think this article doesn't emphasise enough, at least from a UK perspective, is the role of successive governments in running up debts for the whole country, always assuming that another generation will pay them back. The Labour government of 1997-2010 in the UK was particularly guilty in this regard, and if the government behaved in this way, it is surely hardly surprising that individuals also did?

Some of the solutions suggested don't quite make sense - surely a graduate tax is a much more severe form of enslavement than a debt which will be paid off on favourable terms.

Overall an interesting paper - which does raise some good questions about the 'addiction' of many to debt - but perhaps itself acknowledges that there aren't clear alternatives to the current system of financing. In particular, a lot of the suggestions of things like lease to buy, and 'current account only' banks with no interest, still ultimately require someone to put money upfront, and run a risk, which it seems they are being asked to do with no prospect for reward, which is surely unjust.

Laurence, UK   30 March 2011

Congratulations on a well thought out paper! It raises many points and opens a can of worms as our Americans friends say. I found no cause for disagreement, but you omitted the case for interest in the parable of Jesus on the lazy servant who did nothing with his gift and was chided for leaving it buried and not put to interest for his master!
Secondly you avoided probably correctly political processes and parties, in particular the entity of the "welfare state" which drains resources and sadly encourages a passive acceptance that the state is responsible for one's weal, and not for the individual to work for his daily bread - biblical teaching. Of course there are those who need help (of which there can be several causes) in a civilized society, but thrift has hardly been encouraged in our western societies and living within our means. In fact some politicians encourage the opposite to spend our way out of recession. When we lose the work ethic we pay for it. Societies which flourish are those who work. It has nothing to do with the endowment of so-called "natural resources".
Your point of investing in equities and the negative effects of loans is interesting, the latter which is currently draining our well-being.
I think the whole lot of issues you have raised should be the basis of a workshop or whatever.

Stephen de Garis   1 April 2011

A few responses from the author to comments so far:

To Michael: perhaps the most profoundly effective change to campaign for would be to remove the corporate tax subsidy to debt versus equity. This is not just consistent with how taxes should ideally be levied (remove tax breaks and lower the marginal rate) but would help address excessive corporate and commercial property borrowing during a boom, stop banks wanting to leverage themselves, and remove the tax subsidy to risky leveraged buyouts and mergers. It is starting to get some traction (e.g. in the US) and the IMF is now pushing it as a clear lesson from the crisis but many vested interests will lobby hard to keep the status quo.

On a radical but non-party political biblical model, read my Cambridge Paper from 2000 - The Divine Economy.

Doug - thank you for your kind words. I agree that some of the things you suggest would help to make the mortgage system less enslaving but I'd prefer a non-debt, lease-to-buy approach instead as debt financing of property exaggerates housing booms and busts.

Laurence - I agree that over-borrowing by government is a big issue and only had space for a couple of sentences within the 4000 word limit. It may be the topic of my next CP. The Center for Public Justice in the US has just issued a statement on the Christian case for intergenerational justice through tackling the deficit there. (I agree with the goal and some - but not all - of the proposals).

On the issue of a bank failing entailing loss to the creditor, I agree - but this is the case with all commercial debts. Credit risk and loss crystallize if default occurs. The point is that this uncertainty of outcome is not recognised upfront in the terms of the contract (as with equity or partnership). As a result we construct a fragile edifice of debt-financed balance sheets that regularly need to be saved from collapse by inflation, subsidy or bail-outs because we don't have financial buffers that cushion economic uncertainty.

A graduate tax is only 'slavery' to the extent that all income taxes are - the state taking a proportion of marginal income. Those who gain most would pay most while those who which to work for little and not burdened with a long-term debt.

Stephen - I did address the point about interest in the Parable of the Talents (bottom of page 2). Many Christians now assume that the Parable commends taking interest when, a careful reading of the text shows that Jesus is doing exactly the opposite - consistent with the Old Testament and Luke 6:34,35. Note that the Master judges the servant 'by his own words' not the Master's perfect ethical standard.

I gave one of the London Lectures in 2010 on this topic and the audio is available on the Jubilee Centre website if you wish to hear more.

Paul Mills, 7th April 2011

Paul Mills   8 April 2011

Dear Dr Mills,

Thank you for a well thought out paper, drawing on it does on both your Biblical knowledge and your financial expertise. I can see that were the whole financial edifice rebuilt, a Biblical model would be fairer, but now is now and we have to live in the world that is.

Take this as a personal example. My son has a small start-up company that needs financing. The first 10 months has been profitable, but in order to invest in stock he needs £x,000. He can get a bank loan but they will charge 20% interest, since they are aware that many small companies fail. He asks me for a loan. I offer him a gift, but he refuses it on the grounds that I have three other children and I could not afford to give the same to all of them. I offer to buy into his company, but he does not want to dilute his ownership. I offer him an interest-free loan, but he refuses that since inflation would decrease the value of my loan by 4.4% in a year. Eventually we agree an interest rate half way between what I am receiving from the bank (1.1%) and the inflation rate. This seems to be as fair as I can be recognising my wish not to be a usurer and my responsibility to my whole family and his wish not to become my 'bond-slave'

I have also a deep suspicion of principles built upon Old Testament Israel. Paul's letter to the Galatians makes it abundantly clear that we are not under the Mosaic Law but under the law of the Spirit. (And I wonder how the financial rules worked out in practice. It seems to me that it would be very difficult to get any sort of loan in the year before the Jubilee. Also we surely don't want to back to drilling holes in the ears of our bond-slaves.)

Living under the Law of the Spirit means adapting to our fallen world and often making difficult choices, being guided by Scripture and prayer, but recognising that there is sometimes no excellent choice available to us. We should certainly put self last, but not use that as a flimsy excuse for doing harm to others.

Currently, investors are being advised to buy property to let out to tenants rather than leave money in bank accounts. A return of 10% can often be realised. There is some social merit in renovating old buildings to house the poor, but since the rent is frequently paid by the taxpayer via housing benefit, this does not seem to me to be more ethical than receiving interest from a bank or bond.

Terry Hamblin
Bournemouth

Prof Terry Hamblin   8 April 2011

Dear brother in the Lord Mills, Thank you for reading my comments and for your response. I would not wish to argue with your interpretation of Scripture, but having re-read your section on interest, I am not certain that you have correctly interpreted the teaching of Jesus in the quotes from Matthew and Luke, even if you understand it differently with your "careful reading of the text". You might allow it is open to different interpretation. The condemnation of the servant is for doing nothing with what had been entrusted to him, in addition to his words which condemned him. You refer to Proverbs 28,8 which in my bible translation (NLT)gives: "Income from charging high interest rates will end up in the pocket of someone who is kind to the poor". I find no problem with this. As I understand Scripture, loaning at interest was forbidden within the Hebrew community, but not to foreigners. There must be a reason for this, even if it is conjecture as to why this was proscribed. The issue of interest seems complex and there must be a reason for this in Scripture. The servants in the parables were commended for the capital gain, though the text does not indicate how it was achieved. It I suppose could have been from interest, but unlikely to double the value of what was entrusted to the other servants. I do not think that is the issue of either parable. I wait to be convinced. I regret if my understanding is perverse.
Stephen

Stephen de Garis   10 April 2011

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Accounting Software Training   11 April 2011

I'd like to respond to Stephen de Garis' comment in regards to interest, and here especially in regards to the Luke 19 parable of the 10 minas as I fully agree with Dr. Mills. Perhaps the following explanations makes it more clear?
The third servant justified not using the entrusted money like the first two did by accusing the newly crowned king (Jesus) of being a hard man (V 21a), which he then clearly defines as someone who takes out what he never put in and reaps what he never sowed (V 21b).
Jesus, however, exposed him to be a wicked liar not acting on what he said, as that would have logically resulted in banking the money for interest. So Jesus effectively did the very opposite of what people make it out to be. He did not give His approval to His servants (us) to put money on bank accounts to gain interest, so that He can withdraw it when He returns. Jesus actually disapproved gaining interest. Why is that so?
For once He commended the first two servants (V 17+19) who had acted completely opposite to the third, yet they did not bring the money to the banks.
Second, the banking for interest only came into the picture because Jesus exposed a disobedient and unfaithful servant to be a liar. Again, if the servant truly believed that the king was a harsh man the logical consequence would have been the banking for interest option. Because thats what harsh people do according to the provided definition: they take out what they never put in (interest) and reap what they didn’t sow.
Third, and perhaps most important, Jesus unquestionably is the very opposite of a king who enriches Himself at the cost of others. So by asking us to follow Him and reflecting more and more of His own nature, it would be a contradiction for us to act in the opposite spirit than He did.
The problem I see is that we tend to defend what we have become accustomed to because we don’t know any better and can’t fathom anything else to be true and workable than what we grew up with.
Gottfried Hetzer
Ellerau/Germany

Gottfried Hetzer   13 April 2011

I really enjoyed reading your article, thank you. My church has recently adopted the Charities Aid Foundation Bank (CAF) to manage its finances. CAF is committed to increasing generosity in the UK, which does seem to align with the OT economy of grace you outline. However, CAF Bank provides interest on current accounts by investing in “highly rated institutions on the London Money Markets”. Half of the assets are invested in (a) AAA rated gilts/bonds (b) Floating Rate Notes (c) Major International Banks and their subsidiaries. It occurs to me that CAF bank is different in its mission and governance structure, but identical to mainstream banks in other respects.

I agree with your statement: ‘Any essential longer-term savings held by the church should be held principally in property or equity with a close knowledge of the economic ends to which such resources are put. If their church or congregation cannot follow these principles, Christians should seek governance reforms until they can’. I would be interested to hear about your opinion of CAF bank, as a bank widely used by churches in the UK. In my opinion CAF would require significant reform if it was to align with the ‘Relational Critique of Debt Based Finance’ that you outline. Given the wide spread of its investment globally and lack of ethical filters, it occurs to me that there is no way that investors can know how their money is being used for good or ill. Would anyone agree? I haven’t seen any published critiques of CAF to date. Please note that I am cautious about pointing the 'gun' at institutions in the third sector, but I have these questions...

Adrian Bailey   9 May 2011

Good paper. Had to learn some not-nice lessons before learning the principles of your paper. Now I know the Lord was "obviously!" right all along! Think your proposals will be implemented by Jesus when He returns for His 1000 year reighn! Looking forward to that day! In the meanwhile, the majority of people are to self centered even to listen. There are some that do understand and implement some of your proposals and prosper. Me and my family surely are on our way and aim to remain dept free. Thanks for putting the paper together in such profound simplicity and clarity!!!

Gradus Teseling   23 May 2011

Hi,

This article is pretty much what we have been thinking in recent months and it is good to see we are not the only ones. However we are unsure how we can practice these things given the current situation especially considering that having a job and many of the necessary payments we have to make require a bank account.

We have a desire (that we believe is God given) to build/establish/be part of a community that lives out *all* of these principles. You wouldn't happen to know of any already existing, would you? It is a shame that it seems unlikely that our government will attempt such actions unless they are driven to it. A living example of a fully alternative way of living can be a powerful thing.

Much love and blessings in Christ,

Kiran and Amy Lotay

Kiran and Amy Lotay   14 January 2012