5 Financial Principles That Survived Every Economic Collapse
5 Financial Principles That Survived Every Economic Collapse
By Dr. Gerald House
Last week, I came across a Facebook video that really resonated with me. I’ve been thinking about it a lot. For years, I’ve believed in focusing on building cash flow rather than just accumulating assets. Maybe that's why this video left such a strong impression. It’s titled: “5 Financial Principles That Survived Every Economic Collapse.” I know that Facebook videos aren’t always about facts, and many are created artificially. But this one truly caught my attention, and I found it quite intriguing. Additionally, it aligns with the teachings of the Bible.
Principle 1: Own Hard Assets That Endure
The first principle is to own durable hard assets because paper can burn, but physical assets last. These include land, buildings, factories, farms, and gold. Of course, there's always a risk that the government might seize these assets. For example, when Franklin Roosevelt signed Executive Order 6102 in 1933, requiring many to turn in their gold coins, bullion, and certificates to the Federal Reserve System through the Federal Reserve banks. As a result, people received $20.67 per ounce for their gold, and the next year the government set the price of gold at $35.00 per ounce. Who gained a windfall here? Jesus had something to say about government currency.
The scribes and the chief priests sought to lay hands on him at that very hour, for they perceived that he had told this parable against them, but they feared the people. So they watched him and sent spies, who pretended to be sincere, that they might catch him in something he said, so as to deliver him up to the authority and jurisdiction of the governor. So they asked him, “Teacher, we know that you speak and teach rightly, and show no partiality,[a] but truly teach the way of God. Is it lawful for us to give tribute to Caesar, or not?” But he perceived their craftiness, and said to them, “Show me a denarius.[b] Whose likeness and inscription does it have?” They said, “Caesar's.” He said to them, “Then render to Caesar the things that are Caesar's, and to God the things that are God's.” And they were not able in the presence of the people to catch him in what he said, but marveling at his answer they became silent. (Luke 20: 19-26, ESV)
Principle 2: Own Productive Assets, Not Just Speculative Ones
The second principle emphasizes the importance of owning productive assets instead of just speculative ones, like growth stocks, Bitcoin, and derivatives. For example, farms, rental properties, dividend stocks, and businesses are excellent types of productive assets. These assets continue to generate income regardless of fluctuations in their market prices. Personally, I enjoy rental properties, owning businesses, and dividend-paying stocks — I have invested in all of these myself and find them rewarding. Many financial and investment professionals only see the downside of investing in dividend stocks. Every time they pay a dividend, the stock's value decreases by the payout amount. However, they overlook the true value of dividend-paying stocks, dividend reinvestments that create a multiplying effect on your investment portfolio, and the ultimate cash payout when you need it. David Bahnsen, in his book “The Case for Dividend Growth,” highlights that dividend-paying stocks offer two main benefits:
1. Management aligned with shareholders and managed the income statement to generate stable, growing earnings, and
2. A mathematical structure that provides improved compounding for accumulators and prevents negative compounding for withdrawers.
Principle 3: Avoid Debt That Destroys
The third principle is that understanding how debt destroys you is important. During tough financial times, owing money can become risky. It's often best to own your assets outright, without any debt. When you own your assets free and clear, banks can't take them away because they no longer have a claim. The Bible also emphasizes the value of eliminating debt; Proverbs 22:7 says, “the rich rule over the poor, and the borrower is the slave of the lender.”
Principle 4: Develop Portable and Valuable Skills
The fourth principle highlights an asset that no one can take away from you: skills. Skills are the only true and portable form of wealth. They stay with you for a lifetime. Doctors, engineers, builders, and mechanics all possess skills that will always be in demand. Knowledge provides the foundation for developing skills. We all have skills. God has blessed us with unique talents that we can use and develop into valuable skills for the greater good. 1 Peter 4:10 reminds us: "as each has received a gift, use it to serve one another, as good stewards of God’s varied grace." If all other assets are taken from you, skills will remain. It’s not only practical skills that are useful, but also intangible ones. I have recently become engrossed in watching a television series called “Falling Skies.” Can you guess what the main characters had in common? Portable skills. The main characters were a doctor, an engineer, a mechanic, a soldier, and a teacher. The central character was a teacher, not just for his teaching skills, but also for his God-given talent as a leader.
For by the grace given to me I say to everyone among you not to think of himself more highly than he ought to think, but to think with sober judgment, each according to the measure of faith that God has assigned. For as in one body we have many members, [a ] and the members do not all have the same function, so we, though many, are one body in Christ, and individually members of one another. Having gifts that differ according to the grace given to us, let us use them: if prophecy, in proportion to our faith; if service, in our serving; the one who teaches, in his teaching; the one who exhorts, in his exhortation; the one who contributes, in generosity; the one who leads, with zeal; the one who does acts of mercy, with cheerfulness. (Romans 12:3-8, ESV)
Principle 5: Build Local Trust Networks
The fifth and final principle is to build local trust networks. Local networks are the lifeblood of thriving communities. A person involved in a community network can not only survive but also flourish in a world of chaos and uncertainty. Once again, the Bible clearly emphasizes the importance of staying connected within a community of believers.
And they devoted themselves to the apostles' teaching and the fellowship, to the breaking of bread and the prayers. [ a ] came upon every soul, and many wonders and signs were being done through the apostles. And all who believed were together and had all things in common. And they were selling their possessions and belongings and distributing the proceeds to all, as any had need. And day by day, attending the temple together and breaking bread in their homes, they received their food with glad and generous hearts, praising God and having favor with all the people. And the Lord added to their number day by day those who were being saved. (Acts 2:42-47, ESV)
God did not intend for us to carry these burdens alone. Galatians 6:2 tells us to: “Bear one another’s burdens and so fulfill the law of Christ.” When institutions fail, local community networks still stand. Before modernization changed our way of life, local networks thrived because of the strong bonds they built. Today, we live in isolation. We do not know our neighbors or their struggles, and they do not know ours. We rely on the government and local law enforcement, as if these institutions can solve our problems. This is not what God intended.
Summary
This document highlights five key principles for building and maintaining wealth: owning durable hard assets, investing in productive, income-generating assets, avoiding destructive debt, developing portable and valuable skills, and establishing strong local trust networks. Supported by historical examples and biblical references, it emphasizes the importance of resilience, community, and stewardship to succeed in uncertain times.
Your faithful servant
