Debt Crisis

by André Piet
June 28th, 2012


If there is one short expression that in recent years has dominated the economic news, it is “debt crisis”. It is a problem that increasingly imposes itself on us, internationally, and the end of it is, not as yet perceived, by far. However, one could know that the bomb will have to burst, sooner or later. It began in 2007 with the collapsing housing market in the United States, after which the banks also encountered huge problems. The payment problem spread throughout the financial world. Lending money is an extremely complex phenomenon. Borrowed money is loaned out again, which, in turn, also is loaned out again, and so on. The original lender has no idea of who the ultimate borrower is. But everything does depend on it! Remains this one in default, then it will have a domino effect on all previous lenders and borrowers, as they may then not be able to fulfill their obligations.

Sham solution

What began as an unbearable burden in the housing-mortgage sector has, via collapsing banks, become a worldwide problem for national and international governments. Debts were “solved” by making more debt. But whoever cannot pay a debt and tries to solve this by assuming a new loan, does not do a service to himself nor to anybody else. The problem is in fact increased, rather than made smaller. We see that at the micro-level when individuals do not meet their obligations. The stress increases and relationships come under pressure. And in countries that are suffering financial overload, we see the same. The societal, social and political unrest is increasing, with the result that it becomes even more difficult to meet obligations.

Debt versus freedom

Debt is also a negative concept in the Bible. A basic standard has been violated. That also applies to economic debt: one spends more than is available. Instead of living within one’s means, one spends as if there will not be a tomorrow spells disaster. Consider, for example, the many households, who book a holiday or buy a car, based on a loan. They do not control their lifestyle in harmony with their income, which, obviously, will lead to disturbed relationships with all its consequences. How true are Solomon’s words:

…the borrower is servant to the man from whom he borrows.
Proverbs 22:7

Debt makes sure that one is no longer free. There is only one way out: get rid of the debt. Paul’s wise directive, therefore, we can take very literally:

To no one owe anything, except to be loving one another…
Romans 13:8


Translation: Peter Feddema

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