Debt, Disparity, and Discipleship
by Ray V. Foss with Thomas H. Greco, Jr.
Creation of fiat money as interest-bearing debt causes growth imperatives destructive to both the social fabric and the environment. Continued dependence upon this system portends a continuing crisis for humanity.
On January 12, 2010, Brian T. Moynihan, C.E.O. and president of Bank of America, testified before the U.S. Financial Crisis Inquiry Commission, “Over the course of this crisis, we as an industry caused a lot of damage. Never has it been clearer how mistakes made by financial companies can affect Main Street, and we need to learn the lessons of the past few years.”
But this does not acknowledge any systemic limitations, instabilities, and inequities inherent in the way money and credit are created. Fiat money created from nothing but loaned debt is dysfunctional. It drives inequity. Disparity drives debt. Debt becomes unsustainable.
“In the late 1970s, the richest one percent of the [United States] took in less than nine percent of the nation’s total income,” said leading economist Robert Reich last year. “After that, income concentrated in fewer and fewer hands. By 2007, the richest one percent took in 23.5 percent of total national income. It is no mere coincidence that the last time income was this concentrated was in 1928” – the Great Depression era, the longest period of general economic decline in U.S. history.
Surprisingly, there is a striking relation of income concentration increasing when debt increases (as a percent of U.S. GDP). Both spiked in the 1920s, and are now accelerating wildly. Debts from creating money the “old way” inescapably grow and grow, while the value of that fiat money becomes worth less and less – inflated away, now with the specter of threatened potential world-scale sovereign defaults.
Debt-based fiat money necessitates the competition and domination that thrive on indifference. The sloth of apathy is a first step onto the slippery slope that ultimately denies a sustainable and spiritually whole future.
It is tempting but unrealistic to assume the status quo is fixable. The efforts to solve debt crises with yet more debt seem akin to medieval bloodletting where the patient is presumed to die because not enough of his blood was drained. Actually the intent here is revival, to motivate religiously-rooted intention and commitment – in Christian terms, from which we write, discipleship – toward discernment on monetary alternatives. We must ground and articulate these issues in a faith perspective that relates money system dysfunctions to sinful pathways toward structural violence, against the poor.
The moral argument based on “justice-for-the-common-good” can be grounded on inequities – it is simply unfair for a handful of citizens to take home such a large share of income when so many others are struggling to make ends meet; such results in oppressive debt. But faith-based discernment can be grounded in transforming attitudes of indifference into attitudes of compassion. Awakening.
The problems are global; the solutions are local. Bottom line: despite an increased conversation in Washington about our national debt, getting effective policy changes enacted by government is a foreseeably hopeless cause. The banking establishment has too strong of an influence on the U.S. government; that will not change until people reclaim the credit commons through organizing credit-clearing associations and private community financing mechanisms. We need to rebuild the economy and society from the bottom up. The foundation must be sharing, cooperation, and reorganization based on trusting relationships.
The challenge for faith-based affinity groups is discernment. Biblical ideals on money are its injunctions: first, against theft, say from the common good by principal creation – loans created out of nothing in favor of issuer (“debt monetization” and fiat seigniorage); and second, against usury (interest charged for enriching oneself at the expense of others, especially the poor – see related article, page 22).
Those of us following Abrahamic faith traditions are able to call on thousands of scriptural passages that promote economic and social justice. Ezekiel, Isaiah, Jeremiah, Micah, Amos, Jesus, and other prophets all tell us it is the whole nation, not the individual, that bears responsibility for the marginalized and abandoned. The final act that prompted Jesus’ death was his cleansing the temple of the dove-sellers and moneychangers who took advantage of the poor. As he upset the tables and scattered the coin, Jesus quoted Jeremiah: God would allow the Israelites, as a nation, to possess the land conditionally, only if their entire nation acted justly.
A positive, life-sustaining, civilization-lifting change in the economy is impossible unless spirituality intervenes. Religious discipleship is the call to “be transformed by the renewing of your minds, so that you may discern what is the will of God,” as is written in Paul’s letter to the Romans. An authentic spirituality of nonviolence wisely “sees” human desires converge with those of the God we follow. The required reformations for our communities, both religious and secular, depend on making the shift from outer desires to the straight and narrow path of the inner journey; we cannot conclude this process until there are no more victims because there are no more victimizers. Seek right future possibilities.
Tradition
Basic issues arise from calling something “money” which at best is definable as credit; we place our faith in symbols – symbolic “money,” not substantive. Our reigning paradigm of money needs questioning. Is that an idolatrous trap?
The Bank of England, founded in 1694, is a usurious model that still frames our financial systems. Mainstream economists do not dispute the idea that banks “create money” by extending loans. However, monetary reform critics who claim that a fractional-reserve based banking system – or its debt-based monetary system – is inherently destructive are considered marginal if not heretical, despite their statements that this structure inevitably generates debasement of the currency, extreme economic inequality, and periodic financial crises, abetting the systemic violence that threatens life in its fullness.
Experience
The ratio of public debt to income (gross domestic product, or GDP) gives at least a rough idea of current trends and the risk of default. “The underlying issue can be stated as follows: if a high debt/GDP ratio rises continuously rather than stabilizing or falling, there are two possible outcomes. One is the insolvency of the debtor (the government); the other is credit rationing (or complete denial of credit) by the creditor (i.e. the market). There have been real-life instances of both, although they have been associated with ‘revolutions’ or ‘breakdowns’ in the countries concerned.” (From The Foundations of Economic Policy: Values and Techniques by Nicola Acocella, translated by Brendan Jones, 1998.)
Consequences of sovereign default when debt service outstrips revenue are apocalyptically frightening.
Reason
It can be inferred that the world’s challenges of strife, violence, injustice, inequity, and despotism are aided and abetted by the present monetary system. Its ethic of competiveness fosters activities of domination denigrating attitudes into a morass of indifference.
A paradigm shift transforming attitudes to compassion establishes solidarity of activity institutionalizing cooperation … by practicing purposeful holism: knowing, doing, and seeing. Discipleship on money challenges envisions peace, harmony, justice, equity, and freedom. We must seek God’s purpose, not ours.
In summary, our global systems of money, banking, and credit have, at fundamental levels, generated social injustice, economic inequity, environmental despoliation, and violent conflict. Collusive arrangements between finance and politics are inherent in world central banking regimes, and these relationships have centralized power and concentrated wealth in ever fewer hands. The creation of money as interest-bearing debt causes a growth imperative that is destructive to both the environment and the social fabric, with serious consequences for humanity if we remain dependent upon this system.
Most importantly, however, collaborative restructuring is emerging as a new model to create a promising new metamorphosis toward a kind of “butterfly economy,” where economist Paul Ormerod observes human behavior is surprisingly random. Faith-based communities will play positive roles in addressing the complex cycle of boom and bust economies, as our communities are crucial to building an emergent economics of peace and sustainability. Through “discernment discipleship,” seeking the will of God, we must evaluate supporting freedoms to create debt-free money and movement toward practical Sabbath economics.
Unless spirituality intervenes, pervasive structural violence produces addictive behaviors that are expressed as a sequence of habits and mimicry, e.g. a particular re-ordering of the “seven deadly sins”: Apathy/Sloth => Envy => Gluttony => Lust/Power => Greed => Pride => Wrath/Violence. Discipleship on money and debt is a premised transformational trigger: a “game stopper.”
Can a faithful adherent strive for a disciple-driven life while also rationalizing greed as benign self-interest, without contradiction? No. Can those of us who are Christians attune ourselves to the power of the Spirit in facing injustice and threats to life wrought by our monetary system – debt-based fiat money, currency based on nothing more tangible than power of force? Yes! Is including systemic monetary problems within discipleship and spiritual formation agendas discernible, as the Spirit shall lead? Yes! Is critique of the world’s debt-based monetary system within discipleship agendas locally actionable, as the Spirit shall lead? Yes! Will discipleship seek the will of God with new boldness, accuracy, and discipline to transform the very measure of the world’s “wealth” itself – debt-based fiat money? Once and for all, yes!
Ray V. Foss is an elder of the Presbyterian Church, USA, and an associate of the United Methodist Church. A former corporate research engineer, he lives in Parkersburg, West Virginia. Thomas H. Greco, Jr. also provided input toward this article.
