QE3, the Bible, and Economics, Part 2 – Economics 101, But Not As Taught In School

The present article is a part of a series teaching the “ethical link between economic policy and God’s blessings and curses.” Particularly, the focus of the essay is to provide the basic biblical foundation for economic transaction. Common with other Christian economists, the writer upholds the Ultimate Ownership of God over all things, the creation of man in His image, and the task given to man to manage all things under God. The writer’s concept of scarcity is instructive. It is due to man’s sin and God’s curse that scarcity of resources exists. However, scarcity can be an opportunity for blessing through cooperative work, that is, the division of labor. Furthermore, honesty is required in economic transaction. Without it, the economy is distorted. After mentioning the importance of honesty, the writer distinguishes between simple and complex economies. The emergence of “common commodity” or money is occasioned by the need for efficient transaction in a complex economy. Among common commodities, history shows that since the beginning of time, gold occupies a prominent role as money for people of all ages are naturally attracted to it. The writer presents two major explanations to explain man’s innate attraction towards gold. Some explain such attraction in relation to gold’s inherent beauty due to its bright yellow color. Moreover, the writer claims that the real reason for man’s innate attraction to goal is due to the fact that man is made in God’s image. It is God Himself who ascribes value and considers gold good. Man as God’s image instinctively reflects such attribution of God towards gold. Throughout history, trust in gold characterized man’s economic activity due to its qualities of measurability, reliability, and scarcity.

Rebuild Your Biblical Worldview

Gold and money - sometimes they are the same

This essay is Part 2 in a series that deals with the ethical link between economic policy and God’s blessings and curses. The previous essay laid the foundation of the moral corruption that’s responsible for our present economic and social policies. This essay provides some Bible-based economic background to build you a framework for understanding economic cause-and-effect.

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Your Decisions Have Big Consequences–That’s Why God Gave You the Gift of Being an Economist

Britton Brown provides us with the basic foundation of biblical economics. The existence of the sovereign God and his revelation serve as basic premises. God’s revelation teaches that He is the Ultimate Owner of all things and He appointed man as His steward. Being God’s steward does not remove personal ownership and faithful responsibility. God expects man to be responsible in all his economic decisions. Such economic decisions is a way of taking dominion to advance the kingdom of God.

Dream of a New Economic Era

The existing crisis cause economic issues to be a critical part in public discourse. Politicians are aware of this and offer economic solutions to present crisis. However, in “Redeeming Economics,” John D. Mueller shows the failure of conventional answers offered by both Democrats and Republicans “for their deficit spending, promotion of unsound currency (theft through inflation), payoffs to select constituencies, and lack of fiscal discipline.” Mueller offers an alternative economic perspective among competing economic theories that is grounded on Christian theology. He attempts to apply the moral philosophy from Augustine to Aquinas to economic policy. The doctrines of providence and the image of God serve as the links that connect theology to economics. He criticized Adam Smith’s pantheistic idea of “invisible hand”. Mueller argues that such theological disconnection accounts for the reigning amorality and denial of natural norms among economists since Smith’s day. The ideas of Marx and Lenin simply followed such disconnection. Mueller is envisioning for “a new economic era grounded on neo-scholasticism.”

The Calvinist International

Redeeming Economics: Rediscovering the Missing Element
By John D. Mueller
ISI Books, 2010 (hardback, 480 pages)

Reviewed by Chuck Huckaby

As the 2012 Presidential elections draw near, the presidential candidates are offering a variety of economic proposals to stimulate our struggling economy. How are we to seriously evaluate which, if any, are likely to succeed based on sound economic theory? Does Christian theology (or even “natural theology”?) play a part in guiding our evaluation of both sound economic theory and these individual proposals?

John Mueller in Redeeming Economics: Rediscovering the Missing Element says “Yes”. As the speechwriter and economist for Congressman Jack Kemp from 1979–88, he was responsible for analyzing and developing policy options from his classically Christian perspective. Often disdained by those who rejected his application of moral philosophy from Augustine and Aquinas to economic policy, Mueller’s sport and revenge has been to build a business around predicting the…

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At The Brink

I think even though 30 years have passed that the US Tea Party Congressman first delivered his speech, At the Brink, its message is relevant now than ever in the light of recent events in global economy and politics. I am referring to alarming news that happened last second week of September. They include China’s decision to trade oil in Yuan, QE3, coercing Iran, death of US ambassador in Libya, and Japan’s declaration of nationalization of a traditional Chinese territory.






Specifically, At the Brink pertains to the collapse of the US dollar and to the threat of impending war. We witnessed the fulfillment of the second part of this prediction in the Middle East, but the first part of it is still in the making as the US dollar continues to struggle.

Financial Cliff

Dr. Paul delivered this speech on September 22, 1982 at the US House of Congress. It is found on pages 133 to 139 of the book, Pillars of Prosperity. In this speech, the Congressman expounded his foreseen economic danger. I just want to touch the subjects on the certainty of default, the detrimental economic policies, and the necessary economic solution.

The Certainty of Default

Ron Paul opened his 1982 speech with the discrepancy between the original goal for the formation of the IMF and its present practice of becoming a “social welfare agency” lending funds for nations immersed in debts. He specifically identified Mexico, Argentina, Eastern bloc Communist nations, and Third World nations that with their huge debts, it is unrealistic to expect payment from them. Dr. Paul disliked such “welfare program” for its serious consequence on US economy due to huge funding coming from the US for its implementation.

He then proceeded to describe the attitude among financial authorities in downplaying the international banking crisis. Default is considered impossible. Dr. Paul predicted otherwise that default is inevitable. It is just a matter of time.

The time the US Congressman wrote this speech, he described the insolvency of SSS, $11 trillion US liabilities, and $1.1 trillion national debt. Compared that data to the present, one will still wonder why Ron Paul’s prediction about the certainty of default is not yet taking place. I am not an expert in reading financial data, but checking usdebtclock.org, I notice that US national debt now is more than $16 trillion and the total unfunded liabilities is more than $120 trillion.


Such attitude of denial persists even until now. The best recent example is John T. Harvey’s Forbes’ article written last September 10. John T. Harvey, with the backing of the messages of financial experts, was confident about the impossibility for US to default. He is bold in his claim that “there is 0% chance that the US will be forced to default on the debt.” Even though without sufficient grounding both in monetary and economic matters, my personal impression in reading the article is that the writer is either deliberately lying and misleading the public or sincerely mistaken in his analysis due to his economic perspective.


The Congressman mentioned two methods of default. In the fashion of 1929 deflation, the first method is by declaring bankruptcy and liquidating debt. However, Dr. Paul is also certain that politicians and bankers will not allow this method of default.

The other method is the 1923 German style deflation and that is paying “the debt with the rapidly depreciating newly created dollars” (p. 135). This method is actually “the policy of currency destruction through the inflationary process” (ibid.). Dr. Paul further describes this second method: “When the dollar is worthless, or approaching worthlessness, real debt disappears … As new money appears out of thin air, real assets of the savers and the debt denominated dollars evaporate into thin air” (ibid.).

I think the US government preferred the latter method. For Dr. Paul, choosing the second method is an indication that the US government is failing to learn the lessons of history and is bound to repeat the mistake that caused untold sufferings for many nations in the past.

Detrimental Economic Policies

Detrimental economic policies need to be stopped. That’s the message emphasized by the Congressman 30 years ago. His message never changed, but still the government failed to listen. Inflation, excessive taxation, central planning, protectionism, and economic isolationism must be stopped if we want to see genuine and lasting economic reforms. These are bad economic policies that reduce people’s standard of living. However, the loss of personal liberty is the greater threat resulting from such kind of economic policies. Dr. Paul raised such threat to personal liberty by asking a series of questions:

“How is it that the people cry out for less taxes and they get more? How is it that the people cry out for balanced budgets and they get greater deficits? How is it that the people cry out for sound money and they get more inflation and higher interest rates? They cry out for peace and they get war” (p. 138).

The Solution

One concrete solution offered by Dr. Paul is for the US to stop subsidizing both its political allies and enemies. He was referring both to the “free gifts” offered to strengthen the defense of Germany and Japan and the subsidy given to China to build a steel plant at the expense of American taxpayers. These actions have been justified for the sake of national interest. Dr. Paul could not see the wisdom of such actions. He saw it as absurd and continuing to do so is an act of “economic suicide.”

Financial Cliff

Dr. Paul has been calling for the active participation of an informed public to provide a base for legislators to stop inflation and the destruction of the US dollar. He warned the American public about the danger of failure to respond. He has been calling:

“A bold step is required…The opportunity for positive change is available to us in this decade, and if we fail to respond in a positive way, it could be years or decades before the damage can be undone and a free society restored. It is literally up to us” (p. 139).

Proposing Reform to an Unidentified Economic System (Rewritten)

Walter Brueggemann, a professor emeritus at Columbia Theological seminary wrote From Anxiety and Greed to Milk and Honey in February 2009 as a response to 2008 crisis. To him, the debate between “socialism” and “capitalism” is futile from a biblical perspective. He believes that something is wrong with the existing economic system. He actually describes it as “greedy system of economics” and that the crisis serves as a call to transfer from the present economic system into an alternative one. He describes the present system as a product of human autonomy resulting to anxiety and characterized by “acquisitive greed.” He then portrays his proposed economic system as covenantal distinguished for its qualities of abundance and generosity. Such is the “simple sketch” provided by professor Brueggemann. He acknowledged that “the reality on the ground is of course more complex and more difficult…but no less urgent.”

As a whole, I consider the professor’s biblical categorization of both the crisis and the solution commendable. The challenge is how to present these biblical categorizations in contemporary economic terms and convert them into concrete action. I wonder how mainstream professional economists would respond to his biblical proposal.

I have two questions in mind. My first question is related to the distinction between “autonomous economics” and “covenantal economics”. The professor states that “autonomous economics begins with a premise of scarcity.” Even Gary North, a professional Austrian economist and van Tilian theologian affirms this (Introduction to Christian Economics, 1973, p. vii). Scarcity as an economic reality results from man’s fall under the power of sin. My question is about the abundant premise of covenantal economics. To what extent this abundant premise would affect real world economics?

My second question is connected to the statement of the professor that “It is futile, from a biblical perspective, to engage in disputes about modern theoretical labels such as ‘socialism’ or ‘capitalism’.” With this assertion, the covenantal economics therefore of professor Brueggemann cannot be identified with either of the two dominant theoretical labels. However, he claims in his article that the existing economic system, which he describes as “autonomous economics” is a “greedy system” and “self-destructive”. Since in real world economics, generally, socialism and capitalism are the two dominant systems, to what economic system does the professor refer to as autonomous, greedy, and self-destructive? Is he referring to both as autonomous? If he is, then his covenantal economics is actually a proposal to reform both socialism and capitalism. This one is vague to me. Such vagueness would make alternative economic educational campaign without direction and economic reform beating the air. How can you introduce change to an unidentified autonomous, greedy, and self-destructive economic system?