By R. J. Rushdoony
May 01, 2006

(Reprinted from Larceny in the Heart: The Economics of Satan and the Inflationary State
[Vallecito, CA: Ross House Books, 2002], 75-78).

Debt and inflation are almost synonymous. All inflation is a form of dishonest debt. Basically, inflation is an expansion of the money supply by the state. This expansion is essentially through the following means: First, the coinage is debased, and/or the paper money is increased and is without backing by gold or silver, or has fractional backing. Second, deficit financing uses funds exceeding the income of the state to increase the spending power of the state. Third, bond issues, or debts, likewise increase the money supply.

However, before a state or civil government can embark on an inflationary policy, i.e., on a way of life to which debt is basic, a population addicted to debt is necessary. If there is no excessive nor long-term debt, there is no inflation.

The Bible forbids long-term debt and limits debts to six years, and for serious reasons only. The seventh year must be a Sabbath unto the Lord, from debt, among other things (Dt. 15:1-6). As a general rule, we are to “Owe no man anything, but to love one another” (Rom. 13:8). God declares that debt is a form of slavery, and “the borrower is servant (literally, slave) to the lender” (Pr. 22:7).

In the modern world, however, debt is a way of life, for not only unbelievers but churchmen, and for churches and Christian organizations. Debt as a way of life has deep roots in sin, in pride, envy, “and covetousness, which is idolatry” (Col. 3:5; c.f. Eph 5:5; 1 Tim. 6:17). It is not only absurd but immoral for a debt-ridden people to complain about inflation and the federal debt. It is like hearing one devil complain about another devil’s love of sin.

Because debt is so deeply rooted in sin and idolatry, debt and its consequence, inflation, are especially morally and religiously destructive. An inflationary society is an immoral and degenerate society, and it will see, as its natural concomitant, every other kind of depravity flourish. No more than we can restrict a raging forest fire to bad trees, or to certain areas, can we restrict the scope of inflation and limit its influence to economics. Inflation affects more than economics, because debt has its roots in far more than economics.

Inflation and debt also affect the nature of power in a society. First, in an inflationary economy, it is not the thrifty, hardworking man who flourishes, but the debtor (at least, for the time). The moral foundations of society have been shifted to favor the worst element. In every area, as inflation is stepped up, the scum tends to rise to the top. The sympathies of society favor this degenerate element. Second, production gives way to consumption as the primary concern of the people. Third, there is thus a power shift in society, from godly men to ungodly men, from the thrifty to the thriftless. Spending becomes a personal and a political virtue. Fourth, the power to make or break the social order passes into the hands of debtors. General Lewis W. Walt (USMC, Ret.) has called attention to this most tellingly. When the
U. S. Establishment (banks, civil government, etc.) has extended massive loans to states, firms, and organizations at home and abroad whose ability to repay is limited, then in time these borrowers control the Establishment and the United States. They can threaten to default on their loans and create economic disaster for the U.S. The response, then, is to give them even more! Thus, in the 1940s, Aramco sold oil to the Japanese at a lower rate than to the U.S. Navy, and American bankers supported the Panama Canal giveaway, hoping that its revenues might help Panama to repay them.

The conclusion of all this is the destruction of the social order. Even those who see the immorality of long-term debt finally join the crowd, to exploit the opportunity, and destruction becomes their common lot.

It becomes apparent why Scripture takes so strong a position on debt: it is a moral and a religious issue. First, we have seen, debt is basic to inflation, and it is responsible, in all the moral compromise debt involves, for the immorality which marks an inflationary era. Second, we are forbidden as Christians to become slaves, and debt is slavery. “Ye are bought with a price: be not ye the servants (or, slaves) of men” (1 Cor. 7:23). Third, not only are we God’s possession and property, and hence cannot become slaves of men, but our time belongs to Him: we cannot mortgage our future to men by means of debt.

To live debt-free, except for emergency conditions, or a short-term (six-year) debt to pay for our house, farm, or business, means to live providently. It means weighing the moral considerations in every expenditure. It means also to live content with what we have; living in contentment is impossible if the goal of our living is consumption, things we want to possess, rather than in terms of glorifying God and enjoying Him forever.

Those of us who can recall the era prior to World War II can remember that debt was then very limited among most people, although business debts had begun much earlier to expand. Pietism had limited morality to the personal spheres and hence moral men were readily immoral in the political and economic spheres. In the 1920s and 1930s young married couples did not go into debt readily, and their homes were largely unfurnished as a matter of course. The idea of having everything at once was clearly not in favor.

However, the roots of our present crisis were present then. The churches had no concern with preaching or teaching the laws of Scripture relative to politics, economics, education, and much else. As a result, the churches helped rear a generation which is now actively destroying all the foundations of Christian civilization.

The word of Isaiah 8:20 still stands: “To the law and to the testimony: if they speak not according to this word, it is because there is no light in them.”

Topics: Economics, Socialism, Statism

R. J. Rushdoony

Rev. R.J. Rushdoony (1916–2001), was a leading theologian, church/state expert, and author of numerous works on the application of Biblical law to society. He started the Chalcedon Foundation in 1965.  His Institutes of Biblical Law (1973) began the contemporary theonomy movement which posits the validity of Biblical law as God’s standard of obedience for all. He therefore saw God’s law as the basis of the modern Christian response to the cultural decline, one he attributed to the church’s false view of God’s law being opposed to His grace. This broad Christian response he described as “Christian Reconstruction.”  He is credited with igniting the modern Christian school and homeschooling movements in the mid to late 20th century. He also traveled extensively lecturing and serving as an expert witness in numerous court cases regarding religious liberty. Many ministry and educational efforts that continue today, took their philosophical and Biblical roots from his lectures and books.

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