The Prosperity of Fools

“… and the prosperity of fools shall destroy them.” Proverbs 1:32

Last year, Cullen Murphy wrote a very popular book entitled Are We Rome? Murphy examined the fall of the Roman Empire and showed the striking similarities with twenty-first century America. These similarities included excessive corruption in government, issues with border controls, arrogance towards the outside world, over-reliance on our military power, etc.

However, maybe the more relevant question today is – Are We Egypt?

Thousands of years ago there was a time of abundant prosperity in Egypt. The economic boom continued for seven consecutive years. Riches were made and the nation lived as though the prosperity would continue forever.

Then came the Great Depression of Egypt. Investors who had speculated on real estate were left with worthless soil as the land would no longer produce grain anymore. Many others had used the wealth created in the years of prosperity to over-leverage themselves in expectations of an even greater era of prosperity.

After all, a new age of prosperity had arrived in Egypt. While there may have been economic cycles in the past, this time it was different. Sadly, it seems that no one was prudent enough to foresee a day when the prosperity would end.

“Yea, they are greedy dogs which can never have enough, and they are shepherds that cannot understand: they all look to their own way, every one for his gain, from his quarter. Come ye, say they, I will fetch wine, and we will fill ourselves with strong drink; and to morrow shall be as this day, and much more abundant. “  Isaiah 56:11-12

The first year of the famine in Egypt was undoubtedly a period of denial. After all, most recessions are short-lived and so the experts would have naturally predicted that the economy would soon resume its growth pattern again.

In our current economic crisis, we have already moved beyond the denial phase. A recent survey of 51 leading economists showed that they unanimously agreed that we are indeed in a recession (of course the average person could have told you that months ago).

We are now into the blaming stage – blaming everyone except ourselves for the conditions we find ourselves in. This is typically accompanied by outcries to the government to bail us out of our problems (just like in Egypt).

The government has stepped up with hundreds of billions of dollars in bailout packages, interest rate cuts and stimulus plans, but the underlying problems that have crippled our economy cannot be resolved by simply waving a magic wand.

So what has happened to the tremendous amounts of wealth created in recent years? Sadly, it probably never was real wealth in the first place. The prosperity of fools is never real prosperity. It is a credit-driven, artificially created wealth that soon evaporates leaving behind disastrous consequences.

The housing market was the first victim of the wealth bubble to pop. Coming out of the 2001 recession, real estate became a booming market. New wisdom said that real estate was a safe investment because there is only a limited supply of land and real estate prices “always” go up.

Individuals ended up buying homes they couldn’t afford while financial institutions contributed to the expanding bubble by offering exotic financing options to people who couldn’t qualify for traditional loans. 40 year mortgages, interest-only mortgages, teaser-rate mortgages and even negative-amortization mortgages (where your principle balances goes up) were popularized over these years as individuals grasped for a lifestyle that they really couldn’t afford.

But the credit-driven prosperity extended beyond just housing. Over the past decade we have experienced one of the most extravagant spending sprees in history. American consumers purchased everything from flat-screen tv’s to furniture, from designer clothing to vacations – all with the magical plastic credit card. In the last 10 years, Americans learned we couldn’t live without our daily $4 Starbucks, Netflix, and the very latest cell phones and electronic gadgets that Silicon Valley could produce.

Of course an economic boom driven by credit can’t last forever. Financial institutions are now feeling the effects of their lax lending practices. In recent months, the massive amount of debt that banks now have on their balance sheets coupled with escalating delinquency rates has basically frozen the credit markets. There are multitudes of businesses and individual consumers that would like to borrow money, but there is none to lend. Commercial banks have become much more careful about who they lend money to, while other institutions which a couple of years ago represented 70% of the debt market have now pulled out completely.

To date, the financial industry still doesn’t know the extent of the damage done from the foolishness of the last few years. Losses stemming from the subprime mortgage crisis are approaching $1 trillion, while speculation continues over how big the impact of credit card losses will be. Bank of America CEO Kenneth Lewis recently said, “We, as an industry, may end up with possibly the highest credit card losses the industry has ever experienced.”

This generation seems to have forgotten the basic financial principles that our parents and grandparents adhered to. In short, don’t spend more than you earn. In the decade of the 1960’s, the personal savings rate averaged 8.3%. In the 1990’s, that savings rate fell to 5.2%. Since the turn of the century, the savings rate is averaging only 1.6%. Over the next few years, people will need to get reacquainted with the concept of savings and less familiar with buying on credit.

Not everyone needs to follow the path of the fool in chasing after artificial prosperity. Instead if you will just follow the wisdom of God’s Word, you will find He can give you real prosperity.

Lending to the Lord

“He that hath pity upon the poor lendeth unto the LORD; and that which he hath given will he pay him again.”Proverbs 19:17.

When you consider the fact that we are living in a very affluent society, it’s amazing that we can always come up with excuses for not giving to the poor. Moses said that we would always have the poor with us and even with great economic breakthroughs and government programs those words have held true.

“For the poor shall never cease out of the land: therefore I command thee, saying, Thou shalt open thine hand wide unto thy brother, to thy poor, and to thy needy, in thy land.” Deuteronomy 15:11.

Throughout the Scriptures we find admonitions to remember the poor in the land and yet there are many today who choose to ignore these passages. People tend to come up with a multitude of excuses to justify their inaction, but let’s take a look at how the Bible would answer some of those common excuses:

I don’t know where to give
“The righteous considereth the cause of the poor: but the wicked regardeth not to know it.” Proverbs 29:7.

This is not only a poor excuse, but is also a reflection of how unconcerned you have been with the welfare of others. Job said that he went and “searched out” the cause of the poor (Job 29:16). If you don’t know where to give, the best place to start might be by giving a special offering to your church directing the money to be given to those in need.

Charitable organizations do very little anyway
“Whoso stoppeth his ears at the cry of the poor, he also shall cry himself, but shall not be heard.” Proverbs 21:13.

This excuse is often a catch-22, because charitable organizations are almost always limited by the amount of resources they have available. Since these resources are derived primarily from contributions – poor levels of contribution tend to limit their effectiveness.

I don’t have enough money to give
“He that giveth unto the poor shall not lack: but he that hideth his eyes shall have many a curse.” Proverbs 28:27.

People use this excuse for not giving offerings or paying their tithes as well. They never have enough money to give to the church or to those less fortunate, but manage to indulge themselves with flat-screen TV’s and other non-essential items. The fact of the matter is (just like with tithes and offerings); you can’t afford not to give. God has already promised that He will provide for those who care for others. Shouldn’t you at least try Him and see if what He’s said is true?

My contributions won’t be enough to help
“She stretcheth out her hand to the poor; yea, she reacheth forth her hands to the needy.” Proverbs 31:20.

While it’s true that no one individual can solve all the needs in this world, that doesn’t mean you can’t make a difference to someone. If I see 100 children drowning in a lake, I might not be able to save all of them (that doesn’t mean I won’t try), but if I’m able to save even a single life then I’ve made a difference. Instead of worrying that we can’t move mountains, let’s start by focusing on the obstacles we can move.

If the Lord would ever bless me, then I could give
“Blessed is he that considereth the poor: the LORD will deliver him in time of trouble.” Psalms 41:1.

It’s amazing to think of how many of God’s blessings we miss out on, because we attach our pre-qualifying conditions on whether or not we will obey His Word. As if we expect our Creator to negotiate with us on the terms by which we will serve Him. The fact of the matter is that if we would just believe His Word and do what it says, He has already promised to bless us.

I already tithe on 10% of my income
“At the end of three years thou shalt bring forth all the tithe of thine increase the same year, and shall lay it up within thy gates: and the Levite, (because he hath no part nor inheritance with thee,) and the stranger, and the fatherless, and the widow, which are within thy gates, shall come, and shall eat and be satisfied: that the Lord thy God may bless thee in all the work of thine hand which thou doest.” Deuteronomy 14:28-29.

Moses’ law identified three tithes, one of which was a poor tithe. The children of Israel were required to bring up 10% of their income every three years to provide for the poor in the land. Many people forget this tithe and only focus on the Levitical tithe, but the oft-quoted prophet Malachi did say to, “bring ye all the tithes into the storehouse.” Malachi 3:10.

I pray for the poor
“If a brother or sister be naked, and destitute of daily food, And one of you say unto them, Depart in peace, be ye warmed and filled; notwithstanding ye give them not those things which are needful to the body; what doth it profit?” James 2:15-16.

As Jesus said, “these ought ye to have done, and not to leave the other undone.” Luke 11:42. Our responsibility as Christians doesn’t stop at praying for those in need. There are some situations in life where all you can do is pray, but there are others that require you to be actively involved.

Isn’t the government supposed to take care of the poor
“He hath dispersed, he hath given to the poor; his righteousness endureth for ever; his horn shall be exalted with honour.” Psalms 112:9.

Every one of the Scriptures referenced in this article (along with many others) all point to the fact that giving to the poor is an individual responsibility. The upside is that you stand in line to receive individual blessings for following God’s Word.

Am I really sinning by not giving to the poor
“He that despiseth his neighbour sinneth: but he that hath mercy on the poor, happy is he.” Proverbs 14:21.

While many of the “sins” of the Bible are the result of doing things that you shouldn’t, there are also sins of omission. Much of Amos’ prophecy was rebuking Israel for neglecting the poor in the land. In God’s eyes, failing to help those that are less fortunate than you can be just as sinful as committing murder or adultery.

In conclusion, I hope that many of you have already established a pattern of giving in your life and hopefully this article will spark you to do even more. For those that haven’t “considered the cause of the poor,”  make the commitment to do so today.  As Christians we should be striving to live every aspect of God’s Word. And I’m confident that the returns on lending to the Lord will yield more than we could possibly hope for.

The Biblical Principles of Investing

The Word of God is THE authority on every subject of life. It should guide your natural life as well as your spiritual. In fact, even in investing the Bible lays out principles which can help you make better decisions. Too many people lose money by trying to catch a rising stock or chasing some get-rich-quick scheme instead of following the investing principles of the Bible.

It is important to note that investing, by its very nature, does involve taking some risk. And investing is not strictly limited to the stock market either. Some people invest in business ventures or start their own business. Others invest in real estate, commodities, currencies, etc. Regardless of your chosen investment vehicle, the Biblical principles of investing will apply to each.

It’s interesting that the Bible does advocate investing your money rather than just keeping it “under your mattress.”  Jesus criticized the servant who buried the single talent that was entrusted to him, while praising those servants that earned good returns on their investments (Luke 19).  It seems that learning to make good investment decisions is a key part of becoming a wise steward.

So rather than just listening to what the investing gurus on Wall Street have to say or reading the latest investing book, let’s look at some of the principles that the Bible lays out for investing:

Diversification
Cast thy bread upon the waters: for thou shalt find it after many days. Give a portion to seven, and also to eight; for thou knowest not what evil shall be upon the earth.  Ecclesiastes 11:1-2

It’s never a good idea to invest all your money in a single venture. Living under the curse, no investment is a sure thing. Therefore, it is better to diversify your investments so that if one does poorly the losses you take on that investment will be offset by your gains on your other investments.

Invest in a business or product you understand
Through wisdom is an house builded; and by understanding it is established: And by knowledge shall the chambers be filled with all precious and pleasant riches. Proverbs 24:3-4

Whether it’s choosing a stock to invest in or a business to start, choose one where you understand the products and how it makes money. In the late 1990’s, many people were investing in stocks without even knowing what they did or how they would ever be able to make money. As a result they had no way of understanding how the business itself was doing and recognizing when wheels were coming off the wagon.

Investing is not speculating
Wealth gotten by vanity shall be diminished: but he that gathereth by labour shall increase. Proverbs 13:11

Any wealth you gain from gambling, whether it be in the stock market or at the casino soon will vanish. If you choose to invest your money without having any solid rationale for doing so, then you are not investing – you are speculating. Of course even speculators hit gold occasionally, but the odds are you will lose big following that strategy.

Don’t get greedy
Take heed, and beware of covetousness: for a man’s life consisteth not in the abundance of the things which he possesseth. Luke 12:15

Investing can be a part of your life, but it should not be your life. If you live and breathe your money and everyone can tell how your portfolio is performing by your daily attitude swings, then you need to reassess your priorities. Money can be a defense and should be built up in preparation for the future, but obtaining wealth should never be your only purpose in life.

Patience
Rest in the LORD, and wait patiently for him: fret not thyself because of him who prospereth in his way. Psalms 37:7

Any wealth you accumulate should not be measured against what your friends have, but rather it should be recognized as what God has given to you. You should never brag about your investment returns nor be concerned with others who do brag. If you’re following the principles of the Bible, God will bless you on His own time schedule.

No overnight millionaires
Labour not to be rich: cease from thine own wisdom. Wilt thou set thine eyes upon that which is not? For riches certainly make themselves wings; they fly away as an eagle toward heaven. Proverbs 23:4-5

There are many exotic investment vehicles that have been created because of the greediness of man. They offer a pathway to great riches in a short amount of time, but they also offer the chance for great poverty. You should never enter into any type of investment that could cause you to lose more than you originally invest. Investing via leverage or margin thinking you’re going to strike it rich quick is a sure way to end up losing much more than you originally bargained for.

Invest only what you can afford
There is a sore evil which I have seen under the sun, namely, riches kept for the owners thereof to their hurt. But those riches perish by evil travail: and he begetteth a son, and there is nothing in his hand. Ecclesiastes 5:13-14

It’s very sad that so many of the people who buy lottery tickets can hardly afford to live from paycheck to paycheck. Money that should be used to provide for their family’s well-being is thrown away chasing dreams of great riches. Before you put money in any type of investment you should first be able to adequately provide for your family’s needs and even have some money set aside for emergencies in case you need it. Your investments are for your future, not for your emergencies.

Prepare for Economic downtimes
A prudent man foreseeth the evil, and hideth himself; but the simple pass on, and are punished. Proverbs 27:12

Due to the curse, cycles of economic prosperity don’t continue forever.  It would be nice if they did, but unfortunately you must plan for when the economy, stock market, business environment, etc. turns south.  This is what made Joseph such a valuable steward to Pharaoh; he was able to create wealth in both the bull and the bear markets of Egypt.

The Bible provides guidance even on how to execute your investment strategy.  While the investment principles of the Bible are helpful, the desire for riches should never be the guiding principle of your life.  “Seek ye first the kingdom of God . . . and all these things shall be added unto you.”  Matthew 6:33