Written by Jeffrey M. Herbener |
Tuesday, April 4, 2023
At least one former Federal-Reserve insider recognizes that our central banking system has made moral hazard a way of life. What’s needed is fundamental reform. When will we abandon the foolish path of enacting policies that extend the scope of moral hazard? If we refuse to abandon the foolish path, we risk burning our house to the ground.

Moral hazard occurs when an agreement people make to act in concert for their mutual benefit results in an incentive for one of them to act immorally. The classic case is insurance. When an insurance company contracts with a homeowner to provide fire insurance, the homeowner now has incentive to pay a few premiums and then burn his house down and collect a full insurance payout. In committing arson, not only does the homeowner harm the material well-being of the owners of the insurance company and the innocent homeowners who are abiding by their promises, he injures his own spiritual well-being. He has defrauded those who trusted him to keep his word. In response to the possibility of arson, the insurance company assembles an arson investigation team to detect such immoral behavior. Mitigating moral hazard is a wise course of action because it limits the harm to all involved. It would be foolish for the insurance company to overlook the harm of moral hazard or, even worse, to arrange its affairs in a way that augmented moral hazard.
The potential for moral hazard permeates human relationships. Wisdom councils us to look for ways to mitigate the damage of moral hazard and avoid acting in ways that create moral hazard. In one area, regrettably, moral hazard has become a way of life.
Moral hazard is endemic to a banking system regulated by a central bank. Consider the current banking crisis. As reported by Dr. Peter St. Onge on March 19, total unrealized losses in the banking system are between $1.7 trillion and $2 trillion. The capital buffer for the entire system is $2.2 trillion. The banking system, therefore, is on the verge of insolvency. Furthermore, there are 186 banks in distress and hundreds with losses bigger and capital buffers smaller than Silicon Valley Bank.
The main culprit in these losses is the Federal Reserve’s more than decade-long policy of suppressing interest rates. Cheap credit has given an incentive to investors and entrepreneurs to pour funding into all kinds of projects and practices that will prove to be financially unviable. Monetary inflation is the fuel needed to increase the supply of credit and keep interest rates suppressed. The unwinding of the quantitative-easing policies of the Fed after 2014 was quickly abandoned in the repo crisis of 2019. But it was the monetary inflation of the Fed to fund the fiscal explosion of the federal government during the Covid lockdown that has resulted in the current return of significant price inflation. In turn, higher price inflation rates are now causing interest rates to rise. Rising interest rates on newly issued Treasuries have collapsed the market prices of the low-interest-rate Treasuries that banks acquired in the past and are holding now because regulatory bodies consider them safe. Of the nearly $17.5 trillion in bank credit in the banking system, roughly $4.4 trillion is Treasury and Agency securities and another significant but unknown portion of bank credit is now unprofitable loans undertaken during the period of cheap credit. Clearly, the Fed’s policy actions have led to the current crisis.
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Written by Carl R. Trueman |
Monday, May 30, 2022
I would anticipate that within five years we will witness a significant disruption across all major representatives of the Christian faith. The fault lines will run between those who find a way to accommodate to the world’s terms of good citizenship and those whose fidelity to Christ will lead to varying degrees of internal exile within this earthly city. The former will ultimately accept the collapse of biblical anthropology, repudiating its implications for sexual morality, for human identity, and for addressing the various socially constructed problems we now face, such as those of race and gender. The latter will maintain Christian teaching and be decried as being at best naïve, at worst bigoted.

Archbishop Chaput recently wrote that holiness, above and beyond all other things, should mark the church and her members. It was an encouraging reminder that, in an age when church leadership is often characterized by bureaucratic skills rather than piety, the Lord has yet a few who have not bowed their knee to the various Baals of efficiency, wokeism, and wonkery. And though the archbishop did not make this point explicit, it is clear that holiness is a corollary of a high and orthodox doctrine of God.
At this moment in time, Christian churches face an unprecedented challenge. Western nations have (with few exceptions) experienced the collapse of the broad moral vision that made them coherent entities. This collapse means that even the most basic terms of membership in wider society are increasingly antithetical to the most basic terms of membership in the church. Some deny that this is happening, but they tend to be those who enjoy what we might term “progressive privilege”—temporary protection from the left’s culture warriors because they engage in ritual acts of Christian self-loathing and focus only on the doctrines that comport nicely with whatever is the bien-pensant penchant of the day. But the changeling morality of the secular elite is a fickle mistress. Progressive Christians will learn, as did the liberal Christians of a previous generation, that conceding too much is never enough for Christianity’s enemies.
I would anticipate that within five years we will witness a significant disruption across all major representatives of the Christian faith. The fault lines will run between those who find a way to accommodate to the world’s terms of good citizenship and those whose fidelity to Christ will lead to varying degrees of internal exile within this earthly city. The former will ultimately accept the collapse of biblical anthropology, repudiating its implications for sexual morality, for human identity, and for addressing the various socially constructed problems we now face, such as those of race and gender. The latter will maintain Christian teaching and be decried as being at best naïve, at worst bigoted.
How should we prepare to stand in the face of what is to come? I agree with Archbishop Chaput that holiness and devotion must mark the church’s witness. After all, if we do not take the faith seriously, how can we expect others to do the same? Furthermore, holiness is not simply, or even primarily, an apologetic strategy. It is in part a response to the doctrine of God. Only when we grasp this can we truly place our own lives in perspective and anchor our faith so as to resist the cultural moment. If our imaginations are not fired by the greatness of the eternal communion with our glorious God that will be consummated at the end of time, then the problems of this present age will loom large and always threaten to overwhelm us.
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Boundless compassion—rooted not in any sentimentalism, but in his own blood-stained cross—that ought to make us want to root out every vestige of remaining sin in our lives. We can’t live in the sin he died to free us from. We must be driven, by his own loveliness, to make war on our sin. 

While He was in one of the cities, behold, there was a man covered with leprosy; and when he saw Jesus, he fell on his face and implored Him, saying, “Lord, if You are willing, You can make me clean.“ And He stretched out His hand and touched him, saying, ‘I am willing; be cleansed.’ And immediately the leprosy left him.Luke 5:12-13 (NASB95)

The vile skin disease of leprosy was designed by God to be a picture or a parable of human sin. John MacArthur calls it an “irresistible analogy” of sin. The leprosy of sin has infected all mankind to the core of our being. All our faculties—our minds, our hearts, our wills, our consciences—have all been diseased by spiritual leprosy. Because of that, we all stand in need of cleansing from that great fountain that is the blood of the Lord Jesus Christ. Therefore, we must come to him alone for cleansing, and we must come to him in precisely the way that this leper comes.
Consider five observations from the scene in Luke 5.
1. The Sinner’s Contamination
A leper, unclean and potentially dangerous to others, had long been commanded to live in isolation according to the law. Because of that, a leper was often a stranger to the comforts and pleasures of any sort of companionship. In some cases, he would struggle to remember what it felt like to touch another human being. The man in Luke 5 who approached Jesus would have been an outcast, a castaway. Not only was leprosy defiling and isolating, it was also eminently shameful. A leper’s uncleanness became his identity, as he was required to cry, “Unclean!” signaling his uncleanness to any passersby.
As we consider the awful corruption of leprosy, we must see ourselves in this leper. How appropriate is the picture leprosy is of the corruption of sin that afflicts each one of us by nature. Like leprosy, sin is defiling. Isaiah 64:6, “For all of us have become like one who is unclean, and all our righteous deeds are like a filthy garment.” Like leprosy, sin’s defilement is totalizing. Our entire constitution is infected with sin. Like leprosy, sin isolates. It makes man unfit for fellowship with God. If physical uncleanness couldn’t dwell alongside the manifestation of God’s presence and people in Israel, how much more does our spiritual uncleanness alienate us from the very presence of God himself?
In our sin, we have belittled His glory. We have preferred filth over beauty. Nobody should want anything to do with us, least of all the thrice Holy God of the universe. We are outcasts, fit only for the depths of hell itself. If we had any sense of ourselves at all, we would cry out in grief over our betrayal and for mercy from Him who we betrayed.
2. The Sinner’s Contrition
We can do nothing to rid leprosy from our bodies. Still less can our filthy rags rid the sinfulness from our souls. But the leper in Luke 5 sees Jesus. And when he saw him, verse 12 says, “He fell on his face and implored him.”
This is total brokenness, total humiliation. This man knows who he is. He knows he is undeserving, and so he takes the posture of humility, of reverence, even of worship, as he says in the next word, “Lord.” This man does not try to soft-sell his condition. He doesn’t say “Yes, sure. I’ve got a little leprosy, but on the whole, I think I’m a pretty healthy person.” We certainly hear much of that mindset today as sinners flatter and deceive themselves, convinced their sinfulness isn’t as foul and vile as the Bible says it is.
The leper comes in full confession and acknowledgment of his uncleanness, just as the truly repentant sinner must come to Christ, not making excuses for his sin, but openly confessing that he is totally corrupted, recognizing that he has no hope for forgiveness apart from the mercy of God. And so he falls down, bowed in abject humility, and begs God for undeserved grace.
3. The Sinner’s Confidence
But in one sense, this is not supposed to happen. According to the law of Moses, this leper shouldn’t be approaching anyone, let alone a rabbi. What drives his holy recklessness? Consider the sinners’ confidence. Verse 12, “He fell on his face and implored him saying, ‘Lord, if you are willing, you can make me clean.”
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