Gary discusses the next phase of the Democrats’ disastrous economic policy in an attempt to buy votes in future elections.
There are two owners: the lender and the borrower. The lender owns money. This is a capital asset. It could be used for consumption purposes, but the owner is a capitalist. He prefers to put his money to use in order to gain even more money later on. He looks for borrowers with good credit ratings to lend to. Because the lender owns money, what he owns is easy to see and understand. What is not easy to see or understand is what the borrower owns: credit worthiness (at some rate of interest). This is the thing not seen. Henry Hazlitt put it this way:
There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it. He brings it into the bank with him. That is why the banker makes him the loan. The banker is not giving something for nothing. He feels assured of repayment. He is merely exchanging a more liquid form of asset or credit for a less liquid form. Sometimes he makes a mistake, and then it is not only the banker who suffers, but the whole community; for values which were supposed to be produced by the lender are not produced and resources are wasted.
In any economic transaction, there is an exchange. The exchange is an exchange of ownership, either permanently or temporarily. In this case, it is a temporary exchange of ownership. The owner of money lends money, meaning the use of money, to a borrower. What does he receive in exchange? He receives a promise of repayment of the original loan, plus an additional payment later on. The rate of interest—the price of the loan—is in the contract. So is the length of the loan: the deadline for repayment.
The lender knows better than to seek something for nothing. So, what does he seek? He seeks a written promise of repayment. He seeks it from someone who possesses good credit. The borrower’s credit rating is the asset that undergirds the written promise to repay. Therefore, the borrower is someone with capital. This capital is his reputation as a reliable participant in the economy.
President Biden recently announced that he was going to “spend” $500 billion to help the student debt crisis. This is nothing more than the next phase of the Democrats’ disastrous economic policy in an attempt to buy votes in future elections. It’s all a sham, and only further devalues the dollars currently in our wallets as well as every future dollar.
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Christian Economics in One Lesson
Christian economics must begin with the issue of ultimate ownership. This sets it apart from modern economic analysis, which begins with the issue of scarcity. Second, this leads to the issue of theft, which in turn raises the issue of ethics.
Author: Gary DeMar
Gary—who served as President of American Vision for thirty-five years—is a graduate of Western Michigan University (1973) and earned his M.Div. at Reformed Theological Seminary in 1979. Author of countless essays, news articles, and more than 27 book titles, he has been featured by nearly every major news media outlet. Gary also has hosted The Gary DeMar Show, History Unwrapped, and the Gary DeMar’s Vantage Point Webshow and is a regular contributor to AmericanVision.org. Gary has lived in the Atlanta area since 1979 with his wife, Carol. They have two married sons and are enjoying being grandparents. Gary and Carol are members of Midway Presbyterian Church (PCA).
