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Economics & the Current Financial Crisis

dennis peacockeby Dennis Peacocke

February 2009

The economy continues to spiral downward, as both our citizens and the nations of the world await economic remedies that have a strong chance of success. As the government unfolds its “solutions,” the crisis described as the “perfect economic storm” will neither simply go away, nor will it transcend the long shadow of partisan politics. While both the “left” and the “right” have elements of economic wisdom within their agendas, neither has the ability to see the ultimate reality: debt-based, consumption-driven, rights-entitling Keynesian economics is on the verge of either collapse or massive adjustments.

In either case, it is a time of historic opportunity. A door is now open for the injection of biblically-based economic principles to engage the drama and the global dialog which is straining to discover sustainable economic growth, stability, and social justice. Can free market-economics deliver such a system? How do we begin to unravel the current economic “freeze” of both capital and confidence? What follows is an attempt to summarily answer these two questions from the perspective of a political-economist committed to the scripture’s view of these issues. Those answers must come to some degree from “outside” the current political system for the current crisis once again reaffirms Einstein’s observation that, “the level of thinking that created the problem is insufficient to resolve it.”

What is clear is the pressing need for an alternative economic system “for the common good.” From a “fifty thousand foot-level,” I will attempt to explain how a biblical view of economic principles and dynamics allows us to see from another perspective the current financial crisis. For many years I have passionately pursued political-economics and its relationship to the scripture. The subject itself is complex and requires a studied background in the secular disciplines surrounding both economic theory and political philosophy. It also requires an ability to contrast them with the biblical principles which speak to the same sets of ideas. However, simply stated, both the successes and failures experienced by Western culture politically and economically are easily traceable to their historical application, or disregard, of the biblical concepts undergirding both economic and political social structures.

What follows is a measured attempt to overview the current financial crisis without dropping down deeply into the “gears” of what will be required to both legislatively and politically fix the current crisis. Make no mistake; this crisis is systemic, possibly catastrophic. It harkens back to the 1930’s and the social-spiritual tragedy of the absence of biblically-trained and effective economists present then to refute the economic theories of John Maynard Keynes. His creation of the current debt-based economic system has finally reached its inevitable “crash,” which was widely predicted years ago. Ideas surely have consequences and that is….  the bottom line.