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God's Answer to the Debt Crisis

Aug 01, 2011

The political parties appear to have come to an agreement in regard to raising the debt ceiling in exchange for budget cuts without tax increases.

If this is passed as advertised, it will essentially negate the effects of the stimulus programs of the past few years. In other words, it will remove money from circulation.

The problem is how to increase the money supply without going further into debt, so that Americans can enjoy "prosperity."

The last President to try to do this via the Constitution was John F. Kennedy. He signed Executive Order 11110 on June 4, 1963 giving the US Treasury the power "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury."

In other words, whatever silver was in the vault of the Treasury would be monetized by issuing Silver Certificates. The Treasury then issued $4,292,893,815 ($4.3 billion) in debt-free Silver Certificates, real money that did not raise the national debt. These notes were in essence pieces of paper that people could use to claim silver held in the Treasury.

I have personally seen some of these notes. Kennedy, of course, was assassinated five months later, and his Silver Certificates were immediately removed from circulation. After that, the policy of the government was to sell off its silver so that no one would ever be able to do that again.

Kennedy's Executive Order was actually an amendment of Executive Order 10289, relating to the Department of the Treasury. Kennedy amended the previous E.O. to allow the Treasury to issue this debt-free money. This E.O technically remained in effect long after Kennedy's death, even though these Silver Certificates were quietly withdrawn from circulation.

Finally, however, President Reagan rescinded Kennedy's plan on Sept. 9, 1987 by Executive Order 12608 called "Elimination of Unnecessary Executive Orders and Technical Amendments to Others." Kennedy's amendment was rescinded in Sec. 4(e)


Kennedy apparently believed that paper had to be backed by something. The Constitution defined a dollar as an ounce of silver, so that was the obvious choice. A biblical money system includes silver, but also barley. That pretty well covered their entire agrarian economy. Paper money simply provides a more efficient means of barter or trade, because it is backed by everything money can buy, rather than by a single item like silver or gold.

See my booklet, Biblical Money, The Silver-Barley Standard.

So one does not need silver or gold in particular to back up a currency. As long as the currency has the ability to purchase goods and services from the country that issues it, it is honest money. So today's debate in congress should have been about issuing debt-free Treasury Notes of some sort and paying off the debt-bonds coming due after August 2nd. That way, money would not be lost from circulation, but merely replaced with a debt-free form.

All of the Federal Reserve Notes could be replaced gradually in this manner until all the bonds were paid. If this resulted in too much money, the government could then increase taxes (or tariffs) to remove the excess liquidity until the supply stabilized without inflation or deflation.

But since the government has chosen not to debate the issuance of debt-free money, we are stuck with a compromise that everyone hates on both sides of the aisle. Once again, the debt ceiling has to be raised, because the only money they want to issue must be borrowed from the Federal Reserve (or from others who might be willing to buy the bonds).

I am saying that the bonds due after August 2nd did not need to be paid by the issuance of more bonds. They could be paid back by real money without issuing more bonds (debts). If government has the right to print a bond, it also has the right to print money without bondage.

America (and the world) will remain in financial bondage as long as we keep issuing bonds instead of debt-free money. One of the biggest problems we face is that few people understand a biblical money system. We have lived so long in Babylon that we do not know what it means to be a free people. The Church hardly knows what the Kingdom of God is, or how it would function in the earth. The Church (in general) stopped studying biblical law quite some time ago. They have lawyers who are experts in Babylonian law, and a few who know Constitutional law, but few have studied biblical law in any serious manner.

Perhaps we think that when Jesus comes, He will know what to do, so we can just wait until that time. But do we have no responsibility to learn as much as we can ahead of time? What about being faithful to preach the Kingdom of God? What about knowing and teaching the Word?

Ancient Israel was cast out of their land for violating the Covenant, whereby they had vowed to establish the Law of God as the "law of the land." They put away the law and legalized sin. After warning them for centuries, God finally cast them out and put them into bondage to other nations. These are the biblical patterns that ought to teach us the reason why God put us into this bondage to Mystery Babylon.

The biblical prophets presented the differences between the two systems--the ways of God vs. the ways of men. The people were presented with a choice between the two. The majority preferred to legalize sin, because that was the desire of their hearts and their carnal minds. But when people demand of their governments the right to sin, they become liable for divine judgment (correction). Hence, Israel and Judah went into captivity.

The situation is similar today. We ought to understand biblical law, so that we can present God's definitions of sin and righteousness. "By the law is the knowledge of sin," Paul says in Rom. 3:20. The Church has always had a struggle with the idea that usury is a sin in the eyes of God. Usury was technically a sin since the first century, but as time passed, the Roman pontiffs got around this law by giving Jews the right to loan money at interest. They soon became the Pope's financiers.

Many Protestant reformers in more recent centuries fought against the sin of usury, but finally they too lost the battle. When America was established--largely under biblical law principles--government was given the right to create money, instead of borrowing it at interest. However, usury was not outlawed altogether. Many were induced by the prospect of gaining a tiny percentage of interest from bank deposits, and soon they were buying government bonds as a patriotic act.

A bank is technically a Babylonian entity, and God's law does not forbid charging interest to a foreigner (Deut. 23:20). I have covered these laws of usury in chapter 3 of my booklet, Biblical Money. It is not a sin to get interest on money in a bank. The problem is that by not understanding biblical law, we think that interest (usury) is okay in all other circumstances. We ought to study this more carefully, so that we do not find that we are sinning in ignorance.

This may seem like a small thing, but it is the foundational law that could have prevented the Federal Reserve System from putting all of us into bondage a century ago. If Congress had known Scripture these past few months, they might have avoided this lengthy conflict over the debt ceiling as well. The Bible has all the solutions for righteous government.

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Category: Commentary

Dr. Stephen Jones

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