Money—There’s Never Enough!
SAID King Solomon: “Your money can be gone in a flash, as if it had grown wings and flown away like an eagle.” (Proverbs 23:5, Today’s English Version) Many squander their money, like the highly paid army general who went bankrupt after purchasing “two Cadillacs and a second mink coat for his wife.”
Similarly, a government can live beyond its means. The United States, for example, has accumulated an internal debt of over one trillion dollars! Other countries have likewise piled up astronomical IOU’s, including large external debts to foreign sources, such as the Soviet Union’s (16 billion dollars) and the Philippines’ (10 billion dollars).
‘But why haven’t the nations been more prudent?’ you ask. For one thing, ours has been a time of unprecedented demand for material goods. Economist Irving S. Friedman thus explains: “After World War II, governments could not survive, nor could opposition parties come into power unless they promised rapid, general, and major improvements in material well-being.” Governments therefore needed money—lots of it—to build the roads, schools, hospitals and housing that people clamored for. The results? Huge borrowings, resulting in towering global debts. The situation dramatically worsened after 1973.
In that year OPEC (Organization of Petroleum Exporting Countries) drastically cut the flow of oil to the rest of the world. The world reeled from this devastating move. Prices of oil soared. Hardest hit, however, were the developing nations.
The March of the Petrodollars
OPEC’s tactic worked, and its members were suddenly fabulously rich (although more recently they find themselves in financial difficulty due to the oversupply of oil and falling prices). But back then much of their newfound wealth marched to the cash-starved developing nations. But this desire for profit proved to be at the ‘root of many injurious things.’—1 Timothy 6:10.
All this cash helped fuel inflation, which some countries have tried to control by letting interest rates soar. The heavily indebted nations, however, were trapped—they needed more money but could not pay even the interest on their old loans. As we will later see, these debts now threaten the solvency of the entire world economic system!
Financing the Third World
After World War II the World Bank and the International Monetary Fund (IMF) were established to lend money to needy countries. Wealthier member nations finance these organizations. Recently, the president of the World Bank, A. W. Clausen, declared that “a key and central aim of The World Bank is the alleviation of poverty.” And these institutions have indeed funneled much needed money to developing nations. We are reminded, nevertheless, of a bit of wisdom found at Proverbs 22:7: “The rich is the one that rules over those of little means, and the borrower is servant to the man doing the lending.” Some developing nations therefore resist accepting help from these organizations. Why so?
In order to protect its investments, the IMF typically requires that a borrowing nation drastically alter its economic policy by attempting to balance the budget, cut government spending and devalue its currency. These may be sound economic ideas, but they can also throw a poor country into chaos. One economist thus concluded that forcing these policies on a developing country is “like throwing an anchor to a drowning man.”
Simply printing more money is a futile ploy—it merely tightens the death grip of world inflation. So, heavily indebted nations may have no choice but to succumb to the policies of the international lending organizations.