There is an old saying that goes, “If you want to dance, you have to pay the fiddler.”  It is a short phrase which conveys the basic meaning – actions have consequences and if you want to engage in certain activities, you must pay the cost.   Everything under the sun is affected by truth and this is no less true for economics.

Several years ago, my wife and I sat across from one another with our mouths hanging open as a mortgage lender told us how much house we could afford to buy….  Wow, there it was, the kids had been given the keys to the candy store.  I don’t know what my wife was thinking at that moment, but a natural wave of excitement rushed over me until that dirty little “B” word smacked me up-side the head, you know the one – “Budget.”

We simply couldn’t afford to pay back what he was suggesting we were approved for.  And even though a desire welled up inside of us for a bigger, more beautiful house, we knew that we still wanted to eat.

And so it was several years ago in the midst of the American housing boom.   Lenders all over the country were offering up the cash to buy more and more house for less and less money and the outlook never seemed to look brighter.

The wide-eyed buyers were buying, the lenders were lending, the banks were bundling, and the Bond traders were trading.  The American economy was chugging along like a 19^th Century steam locomotive burning through cash like coal to keep it all moving.  The only problem seemed to be that annoying little detail known as reality.  The truth had been temporarily suspended, and when people check out of reality, disaster is not far behind.

Very little associated with the housing bubble was real and as we foolishly seemed to forget, debt building is not the same thing as wealth building.  Now don’t get me wrong, this is not an attack on capitalism, but rather a sobering look at greed, debt and truth in relationship to economics.

In the Gospel of John 18:37-38 – Jesus confronted Pontius Pilot with this, – “You say that I am a king. In fact, the reason I was born and came into the world is to testify to the truth. Everyone on the side of truth listens to me.”   ³⁸ “What is truth?” retorted Pilate. (NIV)

For thousands of years since God laid down His law in the Ten Commandments and Jesus came to confirm God’s perfect standard and himself as the only acceptable gateway into God’s eternal presence, people have questioned God’s absolute truth and tried to find ways around it.

While there are many simple ways to prove absolute truth exist in the physical world such as the Law of Gravity and Thermodynamics, it is often somewhat more dicey to prove to a non-believer the reality of Jesus Christ and that his physical presence here on earth was the ultimate confirmation of truth.

You see, God’s word hasn’t changed, but people continue to tell Christian’s that they need to change to keep up with the times and that even the scriptures need to change to reflect our current culture.   However, let us not be tempted by this, as even our economy, when scrutinized under the light of scripture, reveals that biblical principles are still as relevant today as they were when written thousands of years ago.

In fact, the truth of God’s word is like a brick wall that all of us eventually run into when trying to live outside of reality.  Debt is the reality of purchasing beyond our means.  The truth of debt manifested is still slavery, whether a physical chain around our neck, or the spiritual weight of the obligation for which we owe. The same holds true for lying, stealing and cheating on your wife.

And though my wife and I did buy a house, and we did get a mortgage, thankfully we did not yield to the greater temptation and buy a home of the size and cost that the lender was offering.   In retrospect, I would now even argue that we shouldn’t have bought the house we did at the time, but that is a story for another time.

So, back to the mortgages.  Perhaps one of the clearest and most relevant examples in recent history of why truth is important and has logical and real world impact is the recent global economic disaster of 2008 which some would argue is still not over yet.

Up until 1993, it was a sizeable hurdle to get a mortgage on a home primarily because bankers were interested in both lending and being repaid.  You had to prove you had stable employment, provide a decent down payment and you had to have the appropriate amount of income to buy a home that was proportionally measured to your ability to repay the loan and still be able to eat and meet your other bills and obligations.

It was in 1993 that much of this began to change through Fair Housing and Equal Opportunity legislation at the Department of Housing and Urban Development (HUD).  The assignment from the Clinton Administration was to increase home ownership among minority’s and the economical disadvantaged (the poor).  And though seemingly a noble pursuit, it is still not a valid reason for throwing sound lending practices out the window.

Over the next decade, mortgage lending standards began to deteriorate until just about anyone with a pulse could get a mortgage.   The adjustable rate, interest only loan or Sub-Prime mortgages were made available so people could get more house for their money in the hope that their income would eventually catch up, or they would have to refinance after two years to a more affordable rate, or they would have to sell in what seemed like a real estate bull market that would never run out of steam.

The summit of this arrogance, foolishness and greedy feeding frenzy was what became known as the “Ninja” Loan, a mortgage term used in the financial world to identify significantly more relaxed income, job and asset requirements for a mortgage.    As more and more of these mortgages were made, packaged and resold in the broader bond markets, the quality of these bonds deteriorated until the collective weight of these horrendous and poorly scrutinized mortgages started responding to the pressures of reality (truth).

The result was a catastrophic number of home foreclosures that left the world’s economy on the brink of collapse and our own future freedom in jeopardy.

From the least to the greatest in our world-wide economy we were all fully confronted with truth as it pertained to the economy.  And though we may successfully hide from its consequences for a season, it inevitably shows up on our doorstep on Reality Avenue and like the harassing collection agency who won’t leave you alone, truth demands its due!

Yes, when the dance is over the fiddler wants his pay!

What does all of this have to do with anxiety and depression……?  Well, we’ll talk about that next time.