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Doug Wilson has an insightful post today about an implication of the story of the widow’s mite:
This last Lord’s Day, something occurred to me in the course of the sermon, something which I mentioned in passing. But then as I was reading the Scriptures this last week, the same point jumped off the page at me, and in a far more explicit way than what I had seen before.
I was making a standard point about generosity, and mentioned the widow who had put her “two mites” into the Temple treasury, and who had been praised by Jesus for the proportions in her generosity. I then went on to point out that she was actually donating to a thoroughly corrupt ministry, one that was going to be judged in a severe way by God in the course of just a few years. Jesus didn’t rush up to the widow, and tell her to save her money for a more worthy cause, or to keep it herself.
I then compared this to the well-intentioned widows today who live in poverty, but who send more money than they can afford off to television stations where the thrones are gold and the women have big hair. God receives the intention, and not just the money.
What do you think? Do you think this could also apply to a believer who gives money in good conscience to a con artist who claims to be in need?
I’m not an economist. The only experience I have dealing with inflation is what happens to my eyeballs when I hear people talking about things like “principle” and “subprime loans” and “fiscal propriety” and so on. However, I am thankful that economists exist, particularly ones that care to make things understandable to non-economists like me.
In the most recent issue of WORLD magazine, Timothy Lamer penned an article titled “Anatomy of a Crisis: How Washington and Wall Street Got into Trouble” (pp. 10-11). In it, he explains what brought our country into the economic sinkhole we are experiencing. He does it in six steps, which I will try to reproduce and boil down a little for digestibility.
- In an effort to stave off economic recession after 9/11 and the “bursting of the tech bubble,” Alan Greenspan (Federal Reserve Chairman at the time) took bold strides to ease monetary policy, reducing the federal interest rate from 6% to 1% over two years (2001-2003).
- Because of the low interest rates, mortgage lenders started offering loans to people with sketchy credit history (called “subprime” loans). This increased demand, housing prices rose, and people started entering the market to “flip” houses (buying houses with debt, fixing them up, and selling them for a higher price tag). According to Lamer, “a speculative bubble began to inflate.”
- Mortgage lenders sold their dubious loans to groups such as government-sponsored Fannie Mae and Freddie Mac. The two corporations then “packaged these loans into mortgage-backed securities and sold them to investors.”
- These investment banks used these securities to take on dump truck loads of debt. As a result, the state of Wall Street depended on the ability of suspect home buyers to make their monthly payments.
- Interest rates began to rise, housing demand fell, and the “speculative bubble” mentioned in step 2 began to deflate. Homeowners who had taken advantage of subprime mortgages saw their interest rates rising at the same time as the worth of their houses either stagnated or sagged. Many defaulted because they couldn’t make house payments, and the Wall Street investment banks of step 4 were left out in the rain, stuck with a bunch of debt that was “secured” by assets whose value was dwindling.
- In response, the Bush administration attempted to do what it could to avoid the collapse or recession that was feared. It “began engineering bailouts of some of these firms [see step 4] and, finally, proposed a $700 billion macro-bailout,” which we heard about recently.
Lamer sums it all up by saying:
The fundamental dynamic is this: Washington and Wall Street helped people buy houses they could not afford on such a massive scale that simply letting the lenders and debtors take their lumps would arguably do grave harm to the economy. They will take some lumps (Wall Street isn’t exactly a hot job market right now), but most of the losses will be “socialized,” or spread out among everyone who pays taxes. This includes those who exercised restraint during the bubble. That’s how it is. (pg. 11)
BBC News carries a story about a beggar from Calcutta who has recently opened a bank account with the coins (weighing 200 pounds) she has amassed over 40+ years. She began begging as a child on account of an attack of polio.
This raises the interesting issue of how to deal with people who ask for money.
How do you think we should respond? Do you have any advice for how to approach the situation?
Do you think begging in America — or any first-world country — is different than begging in Calcutta?
History is one of God’s kindnesses. Through reading it he allows us to rehearse our futures a thousand times over. Consider, for example, 1 Timothy 6:6-7: “Now there is great gain in godliness with contentment, for we brought nothing into the world, and we cannot take anything out of the world.” In one sense, I have not yet experienced the end of verse 7 (”we cannot take anything out of the world”). But in another very real sense, I have.
During the winter of 1776, British and colonial forces were at a standoff. The redcoats were cornered in Boston while the ragtag American army encircled them around the perimeter. Finally, in a surprise move in early March, George Washington ordered his troops to set up defenses under the cover of night at nearby Dorchester Heights. Seeing that the colonial army had the unexpected upper hand, the British packed up shop and sailed away, bringing a number of civilians with them who were loyal to their cause. The hasty exit forced many to leave valuable belongings behind.
A man named Reverend Henry Caner reported his losses. David McCullough tells his story in the book “1776“:
“As rector of King’s Chapel, the first Anglican church in Boston, the Reverend Caner was the leading Church of England clergyman in Massachusetts and a greatly respected figure among all denominations. He had been rector for nearly thirty years and lived alone in a small farm house close to King’s Chapel, at the corner of School and Tremont streets. In his account of ‘goods left in my house at Boston, March 10, 1776,’ he listed, among other items: ‘a handsome clock,’ two mahogany tables, teacups and saucers, ‘one rich carved mahogany desk and book case (with) glass doors,’ pictures of the King and Queen ‘under glass with rich frames,’ a pair of brass andirons [used to hold up logs in a fireplace], ‘a fine harpsichord,’ 1,000 books, a barn and ‘appurtenances,’ a cow and a calf” (pg. 100).
When I read an account like this, it puts skin on a text like 1 Timothy 6:7 and I am reminded once again to not store up for myself treasures on earth, where ships and military stealth force me to leave them behind.
The harpsichord stays, Johnathon. The harpsichord stays.
And the list is short, according to Seth Godin in a very helpful post. In fact, if it’s not a business, a house, an education, or stocks, he suggests you pay cash. The only thing I would add to Seth’s advice is to take the million dollars he projects you could accumulate over twenty years and give most of it away. After all, if you’re in Jesus, you already own everything (1 Cor. 3:21-23).
Here’s what Seth says:
“If I could only share one piece of personal finance advice to grads or to just about anyone, it would be this:
Only borrow money to pay for things that increase in value.
It’s a short list: your business, your house and your education, mostly. Stocks if you’re smarter than me. That’s pretty much it.
If you have credit card debt, you’re in big trouble. Your bank account has a huge leak in it, and it’s getting worse. Hence the urgency.
If you have credit card debt, that means that every time you spend money (even cash), you’re borrowing money to do so. And so, if you’re going out to dinner or buying a new pair of shoes, you’ve just broken the single most important rule of personal finance. You’re spending borrowed money on stuff that is decreasing in value.
This is an emergency. It’s an emergency because every single day you wait, the problem gets worse. A lot worse.
My suggestion: Go to defcon 1, and do it immediately. Shift gears to live well below your means. That means:
No restaurants
No clothes shopping
No cable TV bill
No Starbucks
It means:
Take in a tenant in your spare bedroom
Carpool to work
Skip vacation this year
Eat brown rice and beans every night for dinner. Act like you have virtually no income.
The result? You’ll save $5,000 to $20,000 a year. Send all of it to the credit card company. Do this until you’re debt free, the faster the better.
There. Now you’re rich. Now you get interest on your savings instead of paying the bank. Twenty years from now, this emergency action will translate into perhaps a million dollars in the bank, depending on how much you earn and how serious you are.
You can thank me then.”
