Victory! (2012) by Gerry James

Wednesday, February 22, 2012


Financial Deception—Smart People Use Other People’s Money

I know that I made more than a few of you anxious yesterday in our discussion on borrowing.  I mean, if you're like me, when I first encountered the Lord's slant on borrowing, I panicked.  How would I ever afford a home.  Heck, a washer & dryer!   LOL So I want to go a little deeper in looking at this issue of borrowing in order to invest.

Many people believe it is good financial thinking to use borrowed money to make a lot of money. In other words, “smart people use other people’s money,” not their own.   Have you heard that teaching?  That is not a Biblical Truth.  The only way that could be true would be if you could predict the future—that is, know with certainty the direction of markets and the economy.

The Biblical Truth is that only God knows the future. We can make our best guess about the future, but frequently we are wrong. The past 100 years have shown that no human being can consistently predict the direction of the world's markets.   For example, from 1993 to 2000 the value of most stocks in Canada and the United States increased significantly.  With false confidence, many people “used other people’s money”—that is, borrowed capital—with the objective of increasing their returns. From 2000 to 2002, on average, the shares on the Toronto and New York exchanges decreased about 50 percent in value. People who used debt lost a lot of money.