Part 3 – The Biblical Alternative

Parts one and two of this series described the financial system we currently live under, with fiat money, fractional reserve banking, and inflation, demonstrated these things as violations of God’s law and revealed will for us.  In part three, a Biblical alternative is presented.  One that is not merely burying our talents, but enables good stewardship and growth according to our abilities.

A financial system consistent with Christian principles must reject the sins inherent in fiat money, fractional reserve banking, and the inflation they deliberately cause. Abolishing central banks, as advocated in works like End the Fed by Ron Paul, remains a worthy goal, yet one beyond individual reach. Even if such a goal were attained, banking should be a private function. Individuals can reclaim autonomy through the Infinite Banking Concept (IBC)—a process that aligns with biblical stewardship by offering control, enabling charity, and fostering financial peace.

Control Through Private Banking

Instead of storing money in commercial banks, where deposits fuel inflation through fractional reserve lending, individuals should systematically accumulate capital in a private bank: a properly structured, dividend-paying, whole life insurance policy with a mutually owned company (Nash, 2008).  Through the unique features of such a contract, the Infinite Banking Concept enables the practitioner to capture the opportunity cost of purchases, make more informed decisions on the true cost, and retain complete control of their money. This control encourages greater moderation of our affections concerning worldly goods, allowing for greater charity, greater wisdom in our provision for family, and encourages a diligence in the vocations that God has called us to.

This contract is based on integrity and trust. It is freely entered and represents an asset with a unique feature: the right to borrow from the counter party against its current value. Unlike commercial banks, which lend non-existent money under rigid terms and charge interest for it, IBC empowers individuals to finance their needs directly, retaining complete control over repayment terms.  With capital stored in such a vehicle, the value accumulates at unbroken compounding interest.  There are no withdrawals, only leverage.

Debt itself is not sinful—in fact, the Westminster Divines omit it from Q142’s forbidden acts, condemning only usury as excessive interest (WLC Q142). Scripture warns, “The borrower is slave to the lender” (Prov. 22:7), yet IBC redefines this dynamic. The loans are perfectly collateralized: the lender simultaneously guarantees the value of the collateral. The lender also guarantees the collateral will only go up in value.  This means the loan cannot be defaulted on, repayment will occur either through the individual’s plan, or policy lapse, or death. This structure upholds truth, faithfulness, and justice in contracts (WLC Q141), granting individuals the freedom to adjust money management to their needs. As the saying goes, “He who has the gold makes the rules.”

The alternative is spending out of a sinking fund. In this, compounding interest is broken and capital previously accumulated is liquidated, never to earn interest again.  True, no repayment plan is required, but without repayment the fund will quickly be diminished.  Unless opportunity cost and inflation are accounted for in repayment, purchasing power is lost. Cash spent from a savings account should be treated as a debt to ourselves, and repaid with interest at the market rate.  This is what it means to think like a banker.

A flawed view of debt and a lack of understanding opportunity cost can lead to being stingy and cheap.  Instead of being miserly, IBC brings a freedom to spend without encouraging spendthrift or fear for the future.  It also allows for more peace in navigating the uncertainty of life.

Greater Charity

Aside from our general provision, practicing the Infinite Banking Concept enables greater charity. Charity and generosity with conventional finance and banking methods forces the giver to give not only the immediate cost, but to also forfeit all future interest. A single charitable contribution of $1,000 is not just $1,000. It is $1,000 plus all interest it could have earned over the life of the giver. Assuming just a 3% interest rate, over 30 years, that is over $2,400 paid for the gift, after accounting for opportunity cost.

Practicing IBC, the giver can now accurately assess the true cost.  They realize that this $1,000 represents more if paying cash from a sinking fund.  By financing the gift through their private bank, the giver can instead pay $50 in interest over one year and still earn that future interest.

Knowing this true cost can embolden the individual to give and lend more freely, in each single act and cumulatively over time. For the faithful giver, greater capital accumulation translates to greater giving to God through the Church. Charity is unburdened by the opportunity costs ignored by conventional finance.

Churches can also apply IBC to their finances to the same effect. If a member is in need, the church can support them without sacrificing future opportunity costs.  Churches are intended to be perpetual organizations spanning many generations not just 30 years.  Instead of costing $2,400 in 30 years, a gift of $1,000 represents lost opportunity cost of $10,000 in 80 years and growing.

Financial Peace Not Taught in Universities

The cumulative effects of control and charity bring greater financial peace.  Scripture commands us about 70 times to not fear or worry. Conventional finance disregards the opportunity cost and ties future provision to market volatility, breeding worry. This creates a disproportionate and inappropriate affection concerning our worldly goods and provision. For the Christian, this takes their eyes off their Provider and puts their faith for future provision in worldly things and secular constructs.

Practicing IBC brings greater peace through life’s uncertainties.  Consider a typical family with a car loan, but instead of financing their car with a commercial bank, they borrow from their policy.  When life’s uncertainties, such as job loss or urgent travel, reduce income, they can adjust, reduce, or pause repayments without fear of collections, opting for quarterly payments or interest-only terms as needed. Contrast this with a commercial bank loan for the same circumstances: a rigid schedule demands payment regardless of circumstance, with missed deadlines risking repossession leading to additional financial strain.

IBC also leads to peace regarding investing and long-term provision without burying the proverbial talent in the ground (Matt. 25:27).  Instead of speculating in volatile markets, with no knowledge, skill, or control, capital can be accumulated and deployed into actual investments instead of so-called securities.  These investments can be hard assets like Gold or Silver, crypto currency, financing a family member or friend’s business, or starting a personal business.  Instead of speculating in volatile markets, hoping to earn 10% on the 10% of income set aside, the opportunity cost of the total money spent on living expenses is captured.

Yet, this control and ability to set repayment terms does not absolve the obligation to repay the funds. Repayment remains necessary and will occur, either through a plan the individual determines and manages themselves or at the policy’s lapse or upon the insured’s death. This reality fosters diligence in one’s vocation and faithful stewardship. To leave an inheritance for their children and grandchildren (Prov. 13:22), individuals must be honest bankers and repay the loans. 

Finally, come passive income time, it gives a freedom to spend while knowing we will still leave a legacy. Having an asset to draw on that is not affected by market downturns can greatly affect passive income and legacy. (Benefits of Integrating insurance products into a retirement plan, 2024)

Conclusion

Fractional reserve banking, fiat money, inflation, and deficit spending unequivocally violate the commands of God. Christians ought to be operating in a way that creates control and addresses needs of society in a Christian manner. We do not have to be complicit in our own harm and the harm of our neighbors.  Through the Infinite Banking Concept, we can take control of the banking function in our lives, be better stewards, provide for future generations, and contribute to a God honoring economy.

 IBC is the process of systematic capital accumulation through whole life insurance, the ideal vehicle for its guarantees and flexibility. Individuals can apply it to diverse ends: financing the present and future needs, without going into debt with a commercial bank, supporting families and churches, or investing where they hold skill and control.

As Christians, this world IS our home. Before the fall, man was given charge to work and keep this earth (Gen. 2:15). The fall did not take away this charge, it just made our  work more difficult.

We are commanded to love our neighbors and leave an inheritance for our children’s children, to be charitable, prudent, and to build.  It is not enough to create a Christian Financial Services firm that does the exact same thing as the secular industry.  It is not enough to buy “faith based” funds as a Christian version of “ESG” while still supporting the underlying system that is fundamentally designed to steal and enslave us and our neighbors. 

Fractional reserve banking, fiat money, inflation, and deficit spending unequivocally violate the commands of God. Christians ought to be operating in a way that creates control and addresses needs of society in a Christian manner.

How we manage our finances should align with our values. Our values come from the Word of God, not Wall Street and  Jekyll Island.

If you’re ready to secede from the evils of central banks and fractional reserve banking, or just want to learn more, click to book a free call with an advisor today.

Semper Reformanda

References

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