Easy Chair Series

Debt

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 63-91

Genre:

Track:

Dictation Name: EC365

Year: 1986

This is R. J. Rushdoony, Easy Chair number 365, July the fifth, 1996.

This evening Douglas Murray, Andrew Sandlin, Mark Rushdoony and I will discuss the subject of debt, D E B T. Paul Biddle is not with us tonight, but is in the Midwest for the summer after which he will probably relocate in Nevada.

Now the subject of debt is one that we did consider a few years ago, very important subject. Briefly, to touch on the high point of our subject and our discussion then, it was that the Bible does forbid long term debt. Debts are limited to six years and no more. This means that combined with the fact of a hard money requirement , gold and silver, money by weight, just weights and just measures shall ye have is what the Bible requires. This meant that biblical society could not have an inflationary situation as long as they obeyed God’s law. You did not have long term debt and, therefore, everyone had to be thrifty in order to accumulate he wherewithal to buy what they wanted.

Now what makes debt again a very, very urgent subject of consideration is the fact that, beginning with the 80s we entered into a new phase with regard to debt. The liberals have been very prone to saying that the 80s were a time of greed and blaming the Republicans for what happened when actually the Democrats have maintained the same policy. And we have the policy because business and the American people want it. It is long term debt, more debt than ever before, debt as the solution to everything.

I do believe it is producing a kind of irrationality in American life. The July 1996 Reason magazine, Libertarian, very much given to classical economics, nonetheless has a long article by a Hudson Institute thinker deriding the concept of a balanced budget. Now I would agree that we are not going to get one, that Congress is not likely to enact one and that if they do it is meaningless, just as the balanced budget measure passed the beginning of the 80s in the Graham Rudman bill, because when a state calls itself sovereign as we have for some reasons especially since the New Deal, it means that it is the maker of the law, but beyond the law. You cannot legislate for a sovereign. No more than anyone in the Middle Ages could demand a law governing the king can anyone in the modern age pass a law that governs the sovereign.

The problem today is the Constitution means nothing. It is like silly putty. It can be molded to mean anything the court wants. And the court is busy doing that. And the reason is the Constitution can no longer bind the United States, because as a sovereign nation we cannot be bound by anything. That is, our Congress and our courts are free as sovereign powers to make whatever law they want. The Reason article never says how are you going to get along with no balanced budget, with endless deficit financing which the author somehow sees as good. But that illustrates the problem.

A book was published a few years ago, the author George Anders and the title is Merchants of Debt. The thesis of the book is that since the early 80s and increasingly with each passing year, we have a world of business that is dedicated to buy outs in order to increase its debt capacity, is head over heels in debt and regards debt as a good thing, unlimited debt, currently.

At the same time since World War II we have had a shift in Capitalism. R. E. McMasters has described what we have now as debt Capitalism. Well, it has meant that progressively every group in the economy is living off the state, off the taxpayer. The August, 1996 Reader’s Digest has an article “We Can’t Afford Corporate Welfare” by T. J. Rodgers, a devastating article. It goes on to describe how major corporations have gone to the federal government to get money to wipe out their smaller competitors as in the computer industry and as in many, many others. He describes how Congress is subsidizing any company maintaining a U. S. office and shipping commodities. And many of these are by... owned by foreign groups. They are foreign born corporations. The article says a French multinational {?} for example, has collected nearly one billion dollars from American tax payers. Eleven Japanese firms get a total of 393 million.

It cites some of the things last year that went to McDonald to boost chicken mcnuggets, Dole fresh fruits, Sunkist, Blue Diamond, Gallo wines, Tyson, Pillsbury which is owned by the British and so on and on, vast amounts.

Well, is it any wonder that others have gotten into this act? Almost every major league team in baseball is now putting the tax payer into debt because increasingly the sports arenas, the... for baseball, football are built with taxpayer’s funds. So debt has become the means to instant paradise. And anyone who doesn't get into debt is regarded as antiquated in their perspective.

So we live in a time of sky rocketing debt. When people are actually going about, they have corporations that go about in search of companies to buy out to increase their indebtedness and to make into a totally different entity than it was before.

So debt has become a way of life. And it is a way of life for the federal government, for the corporations, for sports, for the average person. I hear from time to time of young couples who awe as much as 15,000 to 20,000 on their credit cards. And the companies are content to let them go as long as they keep paying the interest, the huge sum.

So we live in an ungodly world radically dedicated to debt and, in effect, asking for judgment and defying God and man and ridiculing anyone who opposes debt.

Douglas, would you like to comment on the subject now?

[Murray] Well, the... you alluded earlier to the ... the divine status that the government has put itself in. We have a combined {?} federal reserve.

[Rushdoony] Yes.

[Murray] ... the federal reserve has set themselves up in {?} on a hill top and they have become a power unto themselves, although they do, during an election year tip their hat to whoever is in the White House, they general {?} rates just before the election, but you have the insane situation where the federal reserve tells you how much interest you are going to be paid on the debt that you are ... that the federal government incurs. And nobody in the United States or very few... very small proportion of the U. S. treasury bonds are purchased by U.S. firms. They buy junk bonds because they get a higher rate of return. And it is foreign governments that buy U. S. treasury bonds and it is mainly distributed among the industrialized, the seven industrialized countries and they... there is an interlocking purchase agreement between the industrialized countries to buy each other’s debt.

So it is... it is a shell game. You buy my debt and I will buy your debt. You buys his debt. And we just go around the ... the seven and it is... it is a pea shell game.

However, because the United States’ economy is so huge compared to the other G7 countries, if we hiccup thy get pneumonia and I have seen recently where financial analysts predict that any more insults to the world economy such as Italy is supposed to be on the brink of ... of going under, because Italy really is split into two separate countries, two... two countries now from an economic standpoint, the manufacturing north and the south which is virtually one huge welfare state. And if it goes down or another big bank goes down such as the Bering’s bank, that will pretty much be the end of the {?}.

The U. S. stock market is now something like a normal price earnings ration would be 15 to one. And right now it is 50 to one. Now the Japanese got up to he 50 to one area and their stock market caved in and they lost half the equity of the stock market.

{?} Japanese exchange. The people who had huge real estate debt were forced to liquidate properties that they purchased in the United States. That caused prices to drop over here. They liquidated property in Japan which forced prices down there. Their stock market dropped by 50 percent. The bubble broke. Well, we are due. And I think when that happens that the other industrialized countries will no longer want to purchase our debt. And then how do we finance the deficit?

Well, the insurance companies, the mutual funds, they don’t want to buy U. S. paper because it doesn't produce enough income to attract more people to the shell game to buy mutual fund stock. So the message, there is no domestic buyers and there is no foreign buyers, then that is the end of the game. At that point foreign governments will no longer accept U. S. dollars in payment for foreign exchange. So it is a complicated issue which few if a very small percentage of the people in this country are even aware of it or even care about it, but when we have a depression—and you can have one of two kinds. You can either have... you can either go over the cliff with your foot on the brake which is a deflation depression or you can go over the cliff with your foot on the accelerator which is an inflationary depression, but you still go over the cliff. And whatever you have, you either have no money, can’t get at it... the ... the banks will, as they did in the depression in the 30s, they banks close and as we have seen in the recent past when banks in the east became insolvent people couldn’t get at their money for six months. And nobody seems to react to this. They think it is an isolated circumstance that only happens to the other guy.

[Voice] Well, they think the federal government will always be able to guarantee their money. That is their...

[Murray] Well, the federal government {?} has gone from bailing out corporations in the United States, now they are bailing out whole countries.

[Voice] Oh, yes.

[Murray] Well, if there is another default the size of Mexico which all Mexico did was try to steal 15 percent of the equity of... that investors had invested with them in Mexico, but what they misjudged was that now with electronic transfers, you can get out very quickly. And most of these investment houses, they have sell stops already built into their ... into their trading programs and the computers make the decisions for them. The decisions are premade, executed with lightning fast speed. So it is pretty difficult for political entities to steal anymore, because it is tough to beat the computers.

So the debt bubble is, I feel is very, very close to breaking and it is going... it could happen any time. It could happen in a matter of days.

[Rushdoony] Yes.

[Murray] I remember in 1987 in October of 1987 I was watching the market very closely because I was invested in mutual funds and I was trading using a 39 week average and I saw the average about 10 days to two weeks before the crash, I saw the average head down, start to head down with a vengeance. And the... the... my system issued a ... an automatic sell signal or a... a built in sell signal about two days... about on Wednesday of the... of the week where the market went down. But that is how fast it can happen. And my brother, he didn’t get out. He rode it down and {?} had to try to get well on the other side.

But I found it very difficult. I started on Wednesday afternoon to call the mutual fund. I won’t mention the name, but a very, very large firm. And they have a lot of funds. And it was three o'clock in the morning when I was using an automatic dialer that dialed every few seconds. And it was continuously dialing about ever 10 to 15 seconds, you know, it would disconnect, reconnect and dial automatically. It was two or three o'clock in the morning and I felt very fortunate to get through and be able to sell, to liquidate my position. But that is... and that was just ... that wasn’t really a crash. It was a correction in the market, what they call a correction in the market. People call it a crash. It is nowhere near the kind of loss of equity that the Japanese lost. We lost something like 10 percent of the equity in the U. S. market in October of 1987. The Japanese lost 50 percent and then in the depression they lost 30 or 40 percent and it happens very quickly and when it happens you can’t get your money out.

So that is what debt bubbles... that is how fast debt bubbles can break.

[Voice] Will you explain what that was? Joanna didn’t water.

[off mic voice]

[Voice] {?} that was. It was the clock.

[Rushdoony] Well, Andrew, we will hear from you now {?} stop coughing.

[Sandlin] They have already heard from me.

[Rushdoony] Yes.

[Sandlin] I apologize. This is Andrew Sandlin and I have been coughing the whole time.

[Rushdoony] Andrew and I had the misfortune of getting summer colds and a cold is bad news any time, but the summer, I think, is the worst.

[Sandlin] Yes. Well, Douglas has... oh, I am sorry, Rush.

[Rushdoony] Go ahead, Andrew.

[Sandlin] Douglas has dealt with the—how can we say it—macroeconomic matter. Let’s bring it down to the individual and families and let’s spark a discussion here and deal with a somewhat sacrosanct issue. What problems do 30 year mortgages pose? Rush, for years you have inveighed against, and justifiably so, these very long term mortgages. Let’s talk about the problems that they pose for individuals and for families. Would anybody like... anybody like to start that discussion?

[M. Rushdoony] Well, just from a financial standpoint they are great if you are at the beginning or the middle of a... an inflationary period. If you catch it at the end of an inflationary period...

[Rushdoony] Yeah.

[M. Rushdoony] You are in big trouble. In California, our economy is worse than... than most areas of the country. There are people in the Sacramento area who have lost 25 percent to 35 percent of the value of their homes. Some of these people bought in the mid 80s and are now selling their homes at a loss and they are coming away from selling their homes still in debt. And we know somebody whose factory closed just about an hour from here, sold their property and considered it a long term investment, but ended up owing money. {?} that... that is becoming more and more common. And when the debt bubble bursts you... you are left holding the bag.

[Murray] Well, the difference is that 200 years ago if you were in debt and couldn’t pay your debts you went to prison. Today you go see an attorney and you file for personal bankruptcy and within five years you can go back and... or if you want to take an assumed name, as a lot of people do, they create a new identity, go to one of the ... the identity mills and they start the debt spiral all over again. They can get credit cards. It is amazing. You... if you are...

[Sandlin] That is right.

[Murray] If you live in one place for 90 days and you have a job you can buy a new car, you can get credit cards. I mean, they are more than willing to start you on that... on the same road to destruction again. But there are no consequences. The problem is that our system has removed the consequences and people how play the game. It is a gamble. It is just... as far as they are concerned, it is like buying a lottery ticket.

[Sandlin] I heard somebody say, “Why be debt free when credit is so cheap?” I mean, let’s just go out and go into debt.

You know, I believe in most states lenders are now required by law to disclose to borrowers that when the loan is amortized, how much eventually they will be paying back. I think if people would sit down and recognize that often times for a mere 50,000 dollar home which you really could scarcely get in California—you can in some places back east—you will end up paying back 150,000 dollars, 300,000 home, a million dollars of... in interest, of God’s money if you are a Christian.

[M. Rushdoony] And let’s look at... at why people go into 30 year mortgages with low down payments. The obvious answer would be to ... to have a home. That is usually about at least the third reason. One, it has been considered an inflation hedge that it is kind of... it is... for many, many years in the 50s, 60s, 70s, it was a foolproof inflation hedge. You were guaranteed to be able to sell that house at a higher price. It was an inflation hedge and a tax deduction. Those two reasons alone made it very attractive, because, frankly, there are a lot of advantages to renting. It is somebody else... everything is somebody else’s problem. And somebody else has to fix the roof. Somebody else has to take ... paint the house. Somebody else has to do all of that if you rent. There are a lot of advantages to buying... or to renting.

But home ownership has been part of the ... of the debt game where people assumed that they were going to be able to beat inflation. If they couldn’t beat it in a personal finances, in their bank accounts, in their savings accounts, in their investment strategy, at least they felt they could beat it by owning a house. So it was considered urgent and unfortunately I see a lot of young people today who still feel that urgency.

[Sandlin] Yes, that is right.

[M. Rushdoony] ... to buy a house. And they haven’t been listening to the news reports in California the last couple of years that real estate prices are going down and people are...

[Sandlin] That is right.

[M. Rushdoony] ...selling at losses. And that is very scary that people think that they ... the game... they don’t realize the game has... has changed a little bit. That is right.

[Murray] Well, they are trying to play the same game that their parents played, you know, their parents bought a home right after World War II. You know, the... the... the baby boom... boom generation. The home interest rates were like three percent and G. I. loans and Cal Vet loans were six percent and so forth. And they rode it up and they sold a 15,000 dollar home for 60,000 dollars. And they... they think they made money, but what they didn’t look at was that the purchasing value of the dollar has dropped by this time, too.

[Sandlin] That is right.

[M. Rushdoony] So that was a wash. But they are... they are... you know, the politicians talk about the loss of the American dream, the American dream of buying a home and it becomes your principle asset. Well, that... that is no longer a given.

[Sandlin] That is right.

[M. Rushdoony] That is the... the American dream is the dream of being able to run up a big debt, you know, to... to... to acquire a large debt and come out winners. And that is... that is no... there is no guarantee to that any longer.

[M. Rushdoony] I think one of the tragedies of debt is that we are... we consider ourselves a capitalistic country, ok? But Capitalism is the ... the private ownership of wealth which means... requires the accumulation of wealth.

[Sandlin] That is right.

[M. Rushdoony] ... the accumulation of savings.

[Sandlin] That is right.

[M. Rushdoony] Inflation makes that impossible.

[Sandlin] That is right.

[M. Rushdoony] So we have distorted the whole basis of our economy, destroyed the character building elements of savings and thrift. Thrift doesn't make any sense. If... if saving something...

[Sandlin] Absolutely.

[M. Rushdoony] ... [?] absolutely worthless tomorrow.

[Sandlin] That is right.

[M. Rushdoony] So we have had... have had several generations who have grown up with the idea of don’t save it. Enjoy it.

[Sandlin] Because it is going to be worthless in the future if you do save it, so...

[M. Rushdoony] And... and they are right. You have got to do something with your money.

[Sandlin] Well...

[M. Rushdoony] And in business it is make a buck. Make a buck.

[Sandlin] Make a buck and get out. That is right.

[M. Rushdoony] Make a buck, make a buck, make a buck.

[Sandlin] That is right. That is right.

[M. Rushdoony] It is not long term investment in capital, in equipment, planning for the long term, planning for five, 10 years. It is make a buck now.

[multiple voices]

[M. Rushdoony] And if you can’t make a buck sell off.

[Murray] CEOs live or day on the quarterly reports now where as they used to have five year plans of investment and... and...

[Sandlin] Yeah.

[Murray] ...research and development. That is a thing of the past.

[M. Rushdoony] And that... that is why you have so many professional business managers....

[Sandlin] Right.

[M. Rushdoony] ...because they are... they are... they get in, make a buck and they move on.

[Murray] But we have to be clear on the reason. The reason is the government has imposed its will on the marketplace and it can... it is controlling the game. The discretionary decision making part of CEOs of corporations, they are simply sheep herders. They really don't make decisions except when to merge. You know, when it is good for the ... the shareholders, including themselves to ... to either be bought out by another firm or merge with another firm to the advantage of the stockholders. But that is about all they do anymore. You know, they come and go. It is a revolving door. They are in and out. You read the financial pages and, you know, they are in and out and it is three months here, six months there, a year there. And they get paid huge salaries because they are like sports figures. They have a very short performance life. So they have got to make a lot of money in a short period of time just like sports figures have useful shelf life of maybe 10 years.

[Sandlin] That is right.

[Murray] And then they are over the hill, because the... with the CEOs their knowledge becomes obsolete, just like engineers today. The technology in many areas is moving so fast that they don’t have any new ideas by the time they pass 35 years old. They have nothing... little or nothing more to contribute in the way of new products and new ideas. So they are shoved aside.

So it is a... it is a... they... they... our industry devours itself. We devour people. We devour capital and the debt is just killing us.

[Sandlin] That is right.

[Rushdoony] I would like to call attention, briefly, to the moral effect of debt. This is not considered as much as it should, but if you are in debt, your orientation is to the past...

[Sandlin] That is right.

[Rushdoony] ...and to the present.

[Sandlin] Absolutely.

[Rushdoony] You are governed by what you have done in the past, because then you decided that for the present you needed these things. It takes away the future orientation from a society. And future orientation is remarkably lacking in our culture. Most people cannot think ahead very are...

[Sandlin] That is right.

[Rushdoony] ... in their daily life. They don’t plan ahead. They think short term because they live short term.

[Sandlin] Absolutely.

[Rushdoony] And this has a devastating effect on moral character. Historically what has made for the advancement of a culture is the fact that people have the character to work and to save because they are future oriented.

[Sandlin] Delayed gratification.

[Rushdoony] Yes. Delayed gratification. And that is true of a decreasing element in the society. So we have a serious problem.

Now we can say that in part, a large part, it is due to the federal government and its inflationary policies. But these policies are dictated by the demands of the people for more and more goods and services. As a result, they push the federal government and the state governments into spending an ever increasing among even at the same as they complain about federal and state extravagance.

[Murray] One of the interesting things is among voters that they expect to vote for Clinton will be people on social security, because they have this child like self delusion that Clinton is somehow going to be able to maintain the ... the present payout rate on social security and when everybody agrees that it is going to go broke. They apparently are not future oriented, because they don’t care what is going to happen to their children. Their children are going to be saddled with enormous taxes.

[Sandlin] That is right.

[Murray] They predict 80 percent tax rate on this next generation. And it is going to go broke anyway.

[Sandlin] That is right.

[Murray] Even if you took 100 percent. They cannot meet the... the servicing the national debt and continue the... continue the payouts on Medicare and social security. So the people who should be acting responsibly are acting irresponsibly by condemning their children to an even greater debt and financial ruin. In other words, they don’t care what is going to happen to their kids, as long as they get theirs. And it is ... it is a... it is a brutal way to look at things.

[Sandlin] That is right.

[Murray] It is a brutal perspective.

[Sandlin] They really don't care about their children.

[Murray] But we... you touched on earlier on savings rate. And I am always ... get a chuckle out of these sanctimonious politicians that get on the television and radio and decry the fact that we have the lowest savings rate in the world. What is the incentive to save?

[Sandlin] That is right.

[Murray] You know, you go to countries, other countries. Japan has one of the highest savings rates in the world and that is probably what is saving them. There is enough money in the banks to keep them from... otherwise they would have crashed. I am sure that Japan would have had a terrible, terrible crash when their stock market went down, had it not been for their high savings rate.

[M. Rushdoony] Yeah. There is no incentive to save in this country.

[Murray] We... we don’t have that cushion. Our banks are resting on a foundation of totally of debt and when our system goes under, it is going to crash into the dust. There is going to be no savings pillow to hold them up.

[M. Rushdoony] Well, let’s talk about Pietism and debt. I have heard the most super pious excuses for debt on the part of churches. A number of them in the 70s actually went into receivership and bankruptcy because they borrowed on speculated income . The church is growing at a remarkable rate. And we are expecting to have thousands, you know, five years down the road. So they were willing to go into heavy debt. And they often do it under the guise of... and this is especially repugnant, to living by faith. Of course, they are totally wrong. It takes just as much faith to save the money before hand for God to provide than it does to trust him to make the payments later. But they obviously don’t think that way.

But a large part of the evangelical church and not just the evangelical church is saddled with debt because of this sort of super pious mentality by which it is ok to go into debt and into very questionable speculation, precisely because we re doing it for the work of the Lord.

[Murray] They want to be able to blame God when the plan goes sour.

[M. Rushdoony] Well, some of them say, “Well, let’s just run up our credit card debt, because the ... the rapture is going to come soon and the antichrist, this great figure will get our... “I have actually heard some of them say that. The antichrist will be getting our debt so let’s all run up our credit card bills and give the money to foreign missions which is a total affront to God.

[Rushdoony] Yes.

[M. Rushdoony] In spite of the fact that they are doing it for super pious reasons. But this whole mentality really pervades modern ... modern Christianity.

[Sandlin] Deuteronomy 28 promises debtor status to the disobedient. So I guess we could conclude that the modern church, for the most part, has been very disobedient, because the modern church and modern American society is in debt. Alternatively it promises the blessings of creditor status to those who are obedient. And we will know things have changed when Bible believing Christians are lending to sinners and covenant breakers rather than borrowing from them.

[Rushdoony] Yes. Well, the whole subject of debt gets to the heart of the modern world, because, as I mentioned earlier, R. E. McMaster has called what we have today not historic Capitalism, but debt Capitalism.

[Sandlin] That is right.

[Rushdoony] That means you live off the future to create something for the present.

[Sandlin] That is right.

[Rushdoony] Historically Capitalism has built for the future. Now it is the reverse.

[Murray] Well, they are stealing from the future.

[Rushdoony] Yes.

[Murray] It is theft.

[Sandlin] Well, we need t point out that secular Capitalism is no better than secular Socialism.

[Rushdoony] Yes, very good.

[Sandlin] There are a lot of Libertarian people and a lot of times the Libertarian critiques are quite sound, but ultimately Libertarianism, as you have pointed out a number of times, Rush, ultimately Libertarianism, secular Libertarianism fails because personal economics, micro and macro economics have to be governed by the Word of God. And a free market economy that is not governed by the Christian faith is no better than... that Socialism. And people like Solzyneitzen and others have pointed that out. They have rendered a stinging indictment against the United States because he... they pointed out that the Socialists were Materialists, secular Materialists, envious Materialists and, well, so are the secular Capitalists.

[Rushdoony] Well, we are facing economic catastrophe with the major part of the Christian community head over heals in debt. And because they think it is a matter of faith, a few years ago evidence seemed to indicate that Christians were more in debt than their non Christian neighbors because, as evangelicals, many of them felt that it was a matter of faith, of trusting in God in to plunge into debt.

[Sandlin] Are they denying the commandment of Deuteronomy about presumption?

[Rushdoony] Yes.

[Sandlin] Of course, Satan himself came to Christ with that temptation.

[Rushdoony] Yes.

[Sandlin] And God despises that. We don’t need to be, quote, spiritual, as you have pointed out, Rush. We need to be obedient to the law Word of God rather than appearing to be spiritual. Even if we don’t have new church buildings and new homes and new automobiles all the time.

[Rushdoony] Well, we are seeing this in a number of ways. I hesitate to go into this, but I have seen conferences put on for worthy Christian causes without any funds. And then the audience held in the auditorium at the conclusion until they came through with the 9000 or the 11,000 or whatever it is that was needed to conclude the conference. Or else holding a conference and then telling the speakers that we cannot pay you because we have to pay the hotel, but we know you are ready to donate your services for the Lord, which is very presumptuous and yet this is very common when you are dealing with evangelicals.

[Sandlin] That is corrupt and it is sinful.

[Rushdoony] Yes.

[Sandlin] And it is... you are right, Rush. It is not faith. It is presumption. They are governed by their own feelings and their own desire for instant gratification rather than by the law of God. They get away with it because it is done under a guise of spirituality. But it is not.

[Rushdoony] Well, one of the things that offends me is to go somewhere to speak and you go to the home of one of the leaders of the group, magnificent home, beautiful and you are very happy to see that God’s people are prospering. And two new cars out in front and everything superb. Only you later find out from another source that they are head over heals in debt. They are skating on thin ice, that they may... a few years ago they were doing this. Sell it off to make a profit in order to move on because they have reached a dead end there and start the whole game all over again.

And I am ashamed to say it, but Bible believing Christians tend to lead in this kind of absurdity. I, for a time, in the early 80s attended a national group made up of a variety of peoples and Dorothy noticed that the clergymen came very much as lords of creation and their wives had the most expensive gowns and hairdos that were sensational.

[Sandlin] I have seen this before, Rush. Yes. I know what you are talking about.

[Rushdoony] So the evangelical community has really much to answer for, because it has abandoned God’s Word. They claim to believe the Bible from cover to cover, but they pay not attention to what both the Old and the New Testaments have to say about debt.

“Owe no man anything, save to love one another,” Paul said.

And this is sin. There is no other word for it.

[Sandlin] That is right.

[Rushdoony] It is no reason that the Christian community has less and less influence in this country. It has no character. It is immoral. There is no other word for it, because it treats God’s Word as something it can go to and pick and choose what it wants.

[Sandlin] That is right.

[Rushdoony] So they like to pick texts that tell them they are going to heaven, but not texts that tell them this do and live.

[Sandlin] Yes. Too, Rush, debt precludes biblical giving.

[Rushdoony] Yes.

[Sandlin] One reason that organizations, good Christian organizations like Chalcedon, good churches and so forth have great difficulties is because God’s people or those that profess to be God’s people have already committed pre committed income to debt. And they would like to send money, but we can’t, because we have gone into debt.

I think if Christians got out of debt and would tithe as they are supposed to...

[Rushdoony] Yes.

[Sandlin] I know of many Christians that... that cannot, which is to say will not, tithe precisely because they are in debt. They need to realize they are in debt first to God.

[M. Rushdoony] Something I think... I wonder about sometimes that I really don’t know where to begin is when this bubble of debt collapses, whether it is inflationary, deflationary, however it occurs, when... when this economic crisis catches up to us, what is going to happen? I mean, financially, politically there is going to be upheaval. Socially.

Back in the Depression people tended to move to the cities because that was where they could look for work. The cities already aren’t safe. There is a large element in the cities that are predators. And it can get very ugly in the cities this time around.

[Murray] Well, there are some lessons to be learned from the 1930s.

[Rushdoony] Yes.

[Murray] I just finished a book that was written by a retired local newspaper man, George Hooper. And he told a story that was told to him by a man and his wife who survived during the 1930s by going out and panning for gold in the streams. Now it all sounds very glamorous, but it was very hard work. They lived in a tent.

[Rushdoony] A very interesting book, by the way.

[Murray] And it is called Bacon and Beans from a Gold Camp.

[Rushdoony] Yes.

[Murray] And ... but there you saw classic economics at work. In other words, labor was expended to get the gold. There wasn’t very much. They made somewhere between a dollar and three dollars a day and that was... that was good wages. But they were able to buy their basic food stuffs and basic requirements and stay ... and stay independent. They were ... of course they didn’t... you know, their living expenses were rather low. But it was classic economics at work. People today think that the laws of economics are somehow different or apart from the laws of God. the laws of economics are the laws of God.

[Sandlin] That is right. Absolutely.

[Murray] They are not mutually exclusive.

[Rushdoony] Are they still living? They were in nearby San Andreas a few years ago still.

[Murray] Yeah, no, the... the Coffees, the ... the couple involved are gone, but George Hooper is still alive. He is still living in San Andreas.

[Rushdoony] I liked, if I might digress a big, the story was warned by somebody if he were panning not to go to this particular point on this particular stream because there was quite a nest of rattle snakes there.

So do you remember that? He immediately headed for that spot, told his wife to be ready with her .22 to kill the snakes whenever they appeared. And found a great deal of gold there because nobody had wanted to go there.

[Murray] Sure.

[M. Rushdoony] Yes.

[Rushdoony] That was good entrepreneurial thinking.

[Murray] Right.

[M. Rushdoony] You know, it may not be enough to be out of debt, because a chain reaction, especially if people owe you money and you are depending upon that in hard times they may not be able to come up with the money. And so a businessman who is out of debt may go out of business if people owe him money. The people who made off like bandits in the Depression, as I understand it, are people who had capital, who had savings in hard assets that they could hang on to. They actually accumulated what other people had to divest themselves of.

[Murray] Well, it is the... the ... the great fable was in 1929 Joe Kennedy, Sr. and Barnard Baruch foresaw the crash of the market . They... they knew a speculative bubble when they saw one and they got out and they cashed out while the rest of these guys were jumping out of the sixth floor window. And within a few months they were able to pick up enormously valuable assets for 10 cents on the dollar. And that is how they got rich. But not everybody was that knowledgeable about how the market worked.

[Rushdoony] Well, I know a few people who when young lived though the depression and when they went into business after the war, they did it on a strictly cash basis. Their competitors were offering credit and doing a land office business. But when the Carter years hit with all their economic storm and stress and the ups and downs of the economy since then in many instances their competitors went out of business and they thrived because of their cash only basis.

[Murray] Well, you know, the reason was is that the rate of inflation was 14 percent. And, you know, like the... rather the ... the ... the rate of increase of the interest rates were going up very rapidly and if you owed money, if you took a while to pay it, then the guy that you owed it to was losing money because he had to subtract that time value of the money from the ... from the net amount that he was supposed to be paid. So everybody slowed down paying their bills. I was in business down in the Bay area during the 60s and 70s. And when I bought the business the ... the fellow who.... proprietor of the business that I bought it from, he had ... had open accounts to people and when the rate of inflation started to pick up, my banker warned me. He says, “Get on a strict cash basis.”

[Sandlin] Absolutely.

[Murray] And so I cut out all of that, you know, 30, 60 90 day stuff, because it will kill you. And a lot of business went under because they couldn’t... they simply couldn’t collect their accounts receivable. In fact, it became a roaring business for a while of selling your accounts receivable to professional collection companies.

[Sandlin] Time is up.

[Murray] And you took a... you took a loss when you did. You had to discount it.

[Sandlin] In times of inflation debtors make out like bandits, of course, and creditors lose.

[Rushdoony] Yes.

[Sandlin] And that is one reason that inflation is so evil.

I want to put in a plug here for Rush’s book The Roots of Inflation. That book had a remarkable impact on my life. I hope that you will obtain it from Ross House Books. It is outstanding.

[Rushdoony] Thank you, Andrew. That was not a very successful book.

[Murray] It is...

[multiple voices]

[Murray] ...because it is... it is news people don’t want to hear.

[Rushdoony] Yes.

[M. Rushdoony] Incidentally, I ... apparently I have heard a couple of things on the television that apparently the talk shows or had been beaten to death and ... and they are on their way out and they are being replaced by another round of game shows. And one of the game shows that is coming this fall is called Debt. And the idea is you can win ... win money and with which they will pay off your debts.

[Sandlin] Oh. I think I have heard that, Mark, come to think of it. Yeah.

[Rushdoony] And the IRS will be there before any of your debtors or creditors.

[M. Rushdoony] The IRS knows not to be too generous with debtors, because if you owe the IRS money, boy, they attach those fees and penalties and it is ... I... I suppose when you are in trouble with the IRS it is some people never recover from it. A lot of people never recover.

[Rushdoony] Yeah.

[Murray] They... they.... they have to file personal bankruptcy.

[Sandlin] But, you know, the IRS has gone through such difficulties I getting money that they have, in many cases been willing to settle for cents on the dollar, not with everybody, but with a number of people because they have had trouble recovering money, of course.

[Rushdoony] Well, I think in a not too distant time the subject of debt is going to be more than academic. It is going to be so urgently important that those who are in debt are going to be in great fear, because the chickens will come home to roost.

[Murray] There is going to be a hurricane.

[Rushdoony] There will be a hurricane. Yes.

[Murray] Only people are going to be in the eye of the hurricane and the people that don’t owe.

[Rushdoony] Well, if people simply obey God’s Word, no long term debt, no more than six years indebtedness on anything and as a general premise, owe no man anything save to love one another. Then we will have a difference society. If only 10 percent of those who claim to believe the Bible would adopt this premise and apply it, it could have a revolutionary impact on the country. And yet they are not willing to do it, which means they are not ready to believe in God. They only want to believe in what God offers them not what God requires of them.

[Sandlin] Absolutely.

[Rushdoony] And the result is that we have a crisis today not only economically and culturally, but religiously. God’s people, so-called, are not taking the Word of God seriously.

[Sandlin] That is right.

[Rushdoony] Is there anything any of you would like to add as a final note before we conclude?

[Sandlin] Well, Rush, you said a number of times that if we are Christians, everything that we have belongs to God. Our money is God’s. Therefore we cannot do with our money as we would. It belongs to the Lord and therefore, we cannot use it for long term debt. It is his.

[Rushdoony] Very good. Anyone have el... anything else?

[M. Rushdoony] Just that no... I tell my students at school when they are begging you to go into debt and commercials are begging you to go into debt, you have to realize they have something to gain or they wouldn’t be urging you to do it.

[Sandlin] That is right.

[M. Rushdoony] And nobody does it ... you a favor by helping you go into debt.

[Sandlin] That is right.

[Rushdoony] Well interestingly, lately the television has been full of inducements, no down payment, no interest, nothing for 18 months.

[Sandlin] Yes. But what a corrupt idea.

[Rushdoony] Yes.

[M. Rushdoony] What is even... what is very scary is I see there is a heavy promotion on in the last few years about taking the equity from your house and getting an equity line of credit.

[Rushdoony] Oh, yes.

[Sandlin] Absolutely.

[M. Rushdoony] So you have some equity even inflationary equity in your house you can use that very easily.

[Murray] Well, that game is the savings and loan... the banks wouldn’t approve the ... value of their portfolios. You know, get out of commercial property which was going down. So that is why they started that program.

[Rushdoony] Well, thank you all for listening and God bless you.