Lies and Misconceptions

Throughout history, some have used propaganda to get normally intelligent people to do things against their own good. When we hear the word propaganda, most of us probably think about how it is used by dictators to control the citizens of their country. But we have propaganda in our culture today, also. 

In particular, the banking and financial industries have been very good at telling us how to handle money their way. It leads us to buy something and, of course, to borrow the money to do it. After all, look how cool you will look when people see you in that new car. And you can rationalize the cost because it is good for the environment. Besides, everyone knows 'that's the way it's done' or 'the only way you will ever have anything in life is buy it on credit.' Nonsense.

Following is an examination of some the propaganda that has been pounded into the social fabric over the last few decades, to the point that it is accepted as truth. As you will find out, most of it is very clever lies that prey on human emotions.

The Lies About Debt

Lie #1: Debt is a tool that should be used to create prosperity.

In reality, it rarely brings prosperity, adds considerable risk to your life, and isn't used by wealthy people as much as the banking establishment would have you believe. For years I remember being told that the people that have money don't use their own money, they use Other People's Money to get rich. You'll find lots of books written on the subject and many a professor telling us how sophisticated investors use debt to their advantage.

The truth is that debt creates a lot of risk and in time, that risk will offset any gains achieved. The economy works in cycles in a free market. There will be times of growth and times of recession. Always has. Always will. Those business people that refuse to realize this will ultimately fail. They borrow money in the growth years to expand their businesses, only to end up owning a lot of money with no business in the recession cycles. General Motors and Chrysler and two recent examples of what problems this causes.

On the other hand, Walgreen's, Cisco, Microsoft, and Harley-Davidson are run debt-free. While they may scale back a little during a recession, they have no concerns about being able to weather the storm.

Forbes magazine recently surveyed the 400 hundred richest people in America. They found that 75 percent said that the best way to build wealth is to become and stay debt-free. They lived on less than they made and purchased only when they had cash. No payments.

If you study economic history, you will find that debt as we know it is a fairly recent practice. For instance, the 1910 Sears catalog said, 'Buying on Credit Is Folly.' The founder of J. C. Penny department stores - nicknamed James 'Cash' Penny - detested the use of debt. Henry Ford regarded debt as the lazy man's way to purchase items to the point that Ford didn't offer financing until ten years after General Motors did. Yet today, all three companies make more money from selling credit than they do selling products. Yesterday's business people saw the folly of debt; today's business people see the opportunity to take advantage of people with debt.

What is sometimes missed in an increasingly material world is what some of the great philosophies and religions say about the subject of borrowing. For example, according to Proverbs 22:7, 'The rich rules over the poor, and the borrower is servant to the lender.'