What Does the Bible Have to Say About Debt Solution? (Part 3)

The Credit Card Story

Boy Reading the holy bibleOur last post discussed Biblical parables and their relationship to debt issues. Check out our previous debt solution articles for more information.

Imagine that you walk into your local bank to apply for a credit card rather than completing an application in the mail or on the internet. For illustration sake, this particular small local branch has $1,000,000 of deposits (actual cash) and you are approved for a $9,000 line of credit.

Because of GAAP accounting (Generally Acceptable Accounting Practices) the minute you are approved for your $9,000 credit card line, the bank will claim this as an asset (this is monetizing your signature – creating new money based on your signature) thus claiming to now have $1,009,000 of assets on the books.

Suppose you max out this $9,000 credit card and, for whatever reason, don’t/can’t pay the balance on the account. Where does that leave the bank? Well, first of all, the bank is allowed to write-off the $9,000 as a bad loan after 180 days and receives their tax deduction/credit. Secondly, after writing it off, they are now back to their original $1,000,000 of deposits they had before you were approved for the account. Thirdly, they did not lose one penny during this entire ordeal. Result: (1) the bank received money from you while you paid the interest on the “debt” thus receiving interest on money they just created; (2) the bank also received a tax deduction when they wrote off the $9,000; (3) the bank did not lose any money because they never had any of their own money at risk.

Our next post will discuss several scripture passages that highlight debt-related issues.

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