Monetary Policy and Inflation (10) Distorted Growth

An economy cannot grow too fast, but monetary policy can distort growth by causing parts of the economy to grow too fast. The dotcom boom and the current housing boom are good examples of economic distortions fostered by monetary policy. Without loose monetary policy, the speculation in housing or Dotcom businesses would have died quickly as supply and demand responded to prices.

The dotcom sector and the housing sector did grow too fast, but these distortions only occurred because central bankers put their foot on the accelerator at the wrong time. Now they want to take their foot of the accelerator, but disrupting the entire economy does not make sense.
Monetary policy does distort the economy. Worse still, monetary policy cannot eliminate the distortions it creates. The best that central bankers can do is create a different distortion, so allowing them to “correct” an economy that has been distorted by their mistakes is totally foolish. Punishing exporters to control a housing boom is unwise.

Economic growth does not cause inflation. Inflation of the currency causes economic distortions that disrupt the economy.

Most of the time, central bankers are taking actions to fix up problems caused by their own mistakes. Allowing them to slow the entire the economy to eliminate a problem they have caused is like giving the key of your house to the pickpocket who stole your watch.

Monetary Policy and Inflation (9) Banker Fraility

Central bankers who think they need to manage the speed of the economy face two major problems. The first is that the economy does not have a speedometer. The best statistical measures of economic activity are not sufficiently precise and are available to late to accurately measure the speed of the economy. So most of the time, the central bankers do not know whether the economy is growing too fast or too slow. They will often take the wrong action.

The other problem is that controlling the interest rate is a very blunt instrument. When using interest rates to slow the economy, central bankers hurt all businesses, not just those which are lest efficient. Higher interest rates prevent efficient businesses from expanding and may cause some to shift overseas. Exporters are often hurt by the consequential rise in the currency.

On the other hand, reducing interest rates to speed up the economy encourages all businesses to expand, when it would be better if only the more efficient ones grew. Worse still, the low interest rates can cause distortions in the economy, by encouraging speculation in fashionable assets.

Monetary Policy and Inflation (8) Cooling It

The current fallacy is that inflation is caused by an economy growing too fast. The governor of the central bank is worried that the New Zealand economy is overheating. He has announced that he may have to increase interest rates to cool the economy, so inflation does not get out of control.

This idea that someone has to slowdown the economy is absurd. For a start, economic growth does not cause inflation. More importantly, an economy cannot grow too fast.

There are natural limits on how fast an economy can grow. It is constrained by the size of its labour force. The availability of raw materials and capital equipment also act as a constraint on economic growth. If the economy is growing fast, the price of the types of raw material and capital equipment that are scarce might increase. However, these price increases are good, because they weed out the inefficient producers. The entrepreneur who bids up prices to obtain scarce resources must be able to use them more efficiently than those that miss out. Bidding productive resources will make the economy stronger; it does not cause inflation.

The wage rates for the skills that are scarce might also increase, as new businesses vie the skills they need. Those who are able to attract skilled staff by paying higher wages will need to use their skills more efficiently, so rising wages are also good for the economy. The rising wages shift some of the benefits of the economic growth to employees. Growing incomes provides buyers for the extra goods and services.

An economy cannot grow faster than the engine that propels it. As economic growth comes up against the constraint of scarce skills and resources, less efficient producers will be forced out of business because they cannot compete and the weaker parts of the economy will contract. This process will make the economy stronger as inefficient producers are replaced by those that are more efficient. Once all resources are in the hands of the most efficient businesses, a new business will have to extremely efficient just to get started, so the rate of growth will slow to match the growth in productive resources.

The economy can look after itself. It does not need a government appointed monetary policy expert to slow it down.

Monetary Policy and Inflation (7) - Managing the Future

Governments used to believe that they could control the supply of money. Now they realise that is impossible and the best that they can do is control interest rates. But even this is too much for them.


The interest rate represents the value that society puts on the future. It is the price we have to pay to bring purchases from the future into the present. From the other side, it is the price that people get for postponing their spending to the future.

Interest rates should reflect changing attitudes to the future. If people are full of faith and confidence, interest rates should fall. However, if people want to eat drink and be merry, because the future is dark, interest rates will be high. As attitudes to the future change, interest rates should reflect them.

Interest rates affect the level of investment in the economy. If they are low, entrepreneurs will be keen to borrow money and purchase equipment, because they expect a good rate of return. This investment will make the economy more productive. If interest rates are high, many potential projects will be unprofitable. Investment in machine slow and productivity will decline.

The interest rate is a really important price, as it influences many important economic decisions. If it is set at the wrong level, the economy will become distorted and less productive.

In medieval times, the church set the price of bread (the so-called just price). This caused enormous problems, as the price was generally set to low and bread shortages followed. Sometimes, they set the price to high and there was plenty of bread, but people could not afford it. One of the benefits of the Reformation was that the church got out of the price-setting business and let the market set the price of bread.

The communists in the Soviet Union missed the lesson and attempted to control the price of bread for most of the twentieth century. The result was enormous shortages and people queuing for hours to get a loaf of bread.

If bishops and presidents cannot set the price of bread without making mistakes, how can a banker, determine the price of the future. A truly wise man would leave the people of New Zealand to make their own guesses about the future and decide what price they are willing pay to bring things forward.

The Reserve Bank Act allows the governor of the bank to manipulate interests. This is an absurd authority to give to any man, no matter how clever. The chances of a political appointee getting the price of the future right are fairly slim, given that only God knows the future. Alan Bollard does not know the future, so how can he set its price?

Allowing the government to control interest rates is an enormous mistake. They will generally get it wrong.

Monetary Policy and Inflation (6) - Controlling Cash

A major fallacy is that someone has to control the money supply.

Inflation became a problem when government started printing bank notes to pay for wars and politicians dreams. Therefore the solution to the problem seems be to limiting the printing of banknotes. Governments decided that they would prevent inflation by controlling the amount of cash in circulation. Then someone realized that money on call in a check account at the bank was as easy to spend as a wad of notes, so governments added cash in the bank to their target.

What the politicians did not seem to realise is that the amount of cash in circulation is only indirectly related to the level of economic activity. The amount of cash that I need varies across the month. After I have just been paid, I have a lot of cash on call in my account. Once I have visited the bank, I may have less money in my account, but a stash of notes in my pocket. If can get a better price for something with cash, I may want and even bigger wad of notes. On the day before payday, I may have no cash in my wallet, and all the surplus money in my account may have been put into an investment fund. My cash holdings would be zero.

The need for cash can vary considerably from day to day, but this not something the government should worry about. In theory, everyone could draw all their cash out of the bank on the same day and stock up with groceries. The demand for cash would go up enormously.

On the other hand, it is theoretically possible, though unlikely in practice, that on a particular day, everyone might have spent all their cash and put all their money at the bank onto fixed deposit. Every retail store might have invested their takings, including the cash float. At the end of that day, the level of cash holdings in the economy could be close to zero, but economy would not have ground to a halt. People would go to work the next day and life would carry on as usual.

The demand for notes and coins mostly depends on how quickly people spend their income after earning it. This is not something that governments should be controlling. The volume of cash and notes in circulation is decided by the behaviour of people in the economy and not the government.

The real problem is politicians printing money to pay for their grandiose schemes without increasing taxation. This is what needs to be prevented.

Monetary policy is a fraud. If the government is behaving, controlling the volume of money is not a problem, People can decide how much they want, so monetary policy is not needed. If politicians are misbehaving, then monetary policy will facilitate their misbehaviour. Therefore monetary policy is either not needed or doing harm. We would all be better off without it.

Monetary Policy and Inflation (5) - Bollard and Boom

For most of the last two decades, the Reserve Bank of New Zealand has been fairly responsible and quite successful in controlling the money supply. However, the recent housing boom has shattered any complacency. The Reserve Bank has repeatly raised interest rates in an effort to reduce inflation, but the boom has carried on regardless.

The problem began at the end of the dotcom boom in the United States, when Alan Greenspan turned on the monetary taps to prevent the recessions spreading to the rest of the economy. The result has been a great flood of money sloshing round the world. I suspect the torrent of money is now being fed, by lax monetary policy in the European Union as well. Normally, this excess money would have resulted in runaway prices, but China has saved the day by producing an endless supply of clothing and durable goods at cheap prices. Most prices have been held in check, but inflationary pressure has flowed into asset markets.
This deluge of money caused the housing boom in the US and is now being now being sucked up private equity firms to finance the purchases of businesses all over the world. Some of that money has sloshed in the New Zealand housing market. The result is that New Zealanders have access to an infinite supply of money when purchasing a house.

The governor of the Reserve Bank has cranked up interest rates in order to quench the flow, but like King Canute, he is powerless, trying to stop the tide. Raising interest rates has just increased the flow of money by making New Zealand a very attractive place to lend money. One measure of money (M3) increased by 16.5 percent during 2007, so it is not surprising that house prices have continued to grow.

The problem is that is a small open economy like New Zealand cannot be insulated from the rest of the world. If the world is awash with money, we cannot avoid getting wet. Gumboots and raincoats make life uncomfortable, but they will keep us dry. Raising interest rates has not stopped the housing boom, but it has really harmed the productive part of the economy.

Monetary Policy and Inflation (4) - No Excuses

The following often get blamed, but they cannot cause inflation.

• Businesses cannot start inflation, because they do not control the money supply.

• An oil shock cannot cause inflation by itself. If the price of major commodity doubles, those who buy it will no longer be able to afford other things that they used to buy, so the prices of those are likely to fall. There will be a change in relative prices, not an increase in overall all prices.
• A housing boom cannot cause inflation. If people suddenly get obsessed with owning houses, the prices of houses will go up. However, if people are spending their money on houses, they will have to stop buying other things and the denand for those things will fall. A housing boom can only turn into inflation, if the government supports it by increasing the money supply. Alan Greenspan supported the Dotcom bubble in 2000 by reducing the discount rate.
• Tax cuts do not cause inflation. Money that was previously spent by the government will be spent by the taxpayer. They may spend their money differently, which would result in a change in relative prices, but no extra money should be spent. Tax cuts only become inflationary, if the government continues to spend the money that it no longer receives in taxes. In this case the money is spent twice, once by the tax payer and once by the politicians, who give tax cuts, but are not willing to give up any of their wonderful schemes.

Only governments have the power to cause inflation. I would not expect a Parliamentary committee to discover new and better ways of managing money. They are the cause of the problem, so they will be unlikely to find a solution. They are more like to come with more creative ways of avoiding the blame for the damage that governments do to our money.

Monetary Policy and Inflation (3) - The Culprit

A review of the history of money shows that all serious inflations have been caused by governments. If you go back far enough currency was issued by banks. Often the notes and coins issued by several different banks would be in circulation. However, people did not trust the bankers because they saw them getting rich. So gradually governments took over responsibility for issuing notes and coins. Now in most countries, the government has a legal monopoly over the issuing of currency.

However, this did not solve the problem. Sure banks could inflate their own currency, but this was dangerous, because they could eventually face a run and the bank would be forced out of business. For a bank, it paid to be honest.

Governments do not face this constraint, because they cannot be forced out of business. The history of banking is littered with stories of governments that have inflated the currency of their nation. Initially, the governments turned on the printing presses and printed more banknotes. More recently, they have become more sophisticated and set up a central bank to manage the process. They can then inflate the currency by borrowing issuing securities and selling them to the central bank.

In the modern world, rampant inflation is always caused by the government expanding the money supply. Politicians like inflation, because it allows them to increase their spending without increasing taxation. Big spending politicians are usually to blame.

The worst inflation of during last century was in Germany. During 1922, prices rose by 700 percent. The cause was obvious. 300 paper mills were working top speed and 150 printing companies had 2000 presses going day and night turning out currency order by the government bank. During the following year, prices increased by more than 7000 percent, before the currency collapsed and was replaced.

More recent examples of runaway inflation include Bolivia (1985), Nicaragua (1988), Poland (1989), Brazil (1989 – 90), Peru (1990), Zaire (1990 –94), Russia (1990), Georgia (1992–94) Angola (1994– 97), Argentina (2002), Zimbawe (2006-). In every case, the cause was the government.

Monetary Policy and Inflation (2) - Definition

A serious obstacle to understanding inflation is the fact that the meaning of word has changed. The word inflation is now commonly used as a description of the CPI. Whenever the CPI increases, the news media announce that inflation has increased. However, a little thought about the meaning the word “inflation” gives a hint that something is wrong with this view.

The word “inflate: means blow up, dilate, enlarge, swell or expand”. The word inflation was used in the economic context to describe what was happening to money. The amount of money in circulation was expanding rapidly or being blown up like a balloon. Inflation was a description of a situation where the volume of money was being increased excessively. The consequences of this inflation of the money supply was rapid increase in prices. Over time the word inflation has changed to mean a rapid increase in the general level of prices.

The meaning of words change all the time, but we need to understand what is going on here. The word inflation was once used to describe the cause of the problem, whereas now it is used to describe the result. People have started to think that the result is the problem and forgotten about the cause of the problem. That is nice for those who are the cause of the problem, because they go unnoticed, but it does not help us to resolve it.

The verb inflate always has a subject. Someone pumps up the tire. Someone blows up the balloon. It cannot inflate itself. Nor can the money supply increase itself. If the money in circulation has expanded rapidly, someone has inflated it. We must not respond to the change in the meaning of word inflation by drifting into a view that inflation just happens. A rapid increase in the price level is caused by inflation of the currency.

Inflation of the money supply does not just happen, but is caused by someone. The expansion of a balloon cannot be stopped by squeezing it. The person inflating it must stop blowing into it. To get rid of inflation, we must stop those who are doing the inflating.

Monetary Policy and Inflation (1)

A select committee of the New Zealand parliament is investigating new ways of managing the money supply. The reason for the renewed interest in monetary policy is that the Reserve Bank of NZ has increased the official cash rate (OCR) to 7.75%. The consumers price index (CPI) has crept above their target of one to three percent and the Reserve Bank is concerned that economic activity is getting too strong.

Adjusting interest rates is the only instrument available to the Reserve Bank. Home owners are becoming concerned as mortgage interest rates have increased to nearly 9 percent. People are claiming that the monetary policy is making housing unaffordable and causing problems for the economy. Exporters are complaining about the strong New Zealand dollar. Many pundits are suggesting that we need new ways of managing monetary policy.

There will be a lot of “huffing and puffing” about monetary policy, but the main truth will not emerge. What we will not be told is that monetary policy itself is a fraud.

The entire monetary policy edifice is built on several economic fallacies that need to be exposed. I will have a go at doing this in the next few posts.

Ten Commandments (20) - Conclusion

So what do we have in the Ten Commandments? Well quite a lot actually.

We have ten standards that all people will have to give an account against when they stand before God on judgment day. These standards are also useful those preaching the gospel, when a description of sin is required. Those who claim to have never sinned and want a definition of sin will find the Ten Commandment quite challenging.

We also have ten principles for life. Resting one day a week and not coveting may not make you holy, but you will avoid ulcers and anxiety.

We have one principle for judicial processes.

We have two sins that are also crimes. Murder and theft are crimes that should be enforced by civil authorities.

Ten Commandments (19) - Why Bother?

No doubt some readers are wondering why I bother with the Ten Commandments. Why do I spend so much effort digging around in the Old Testament. Why not just focus on the gospels? Why not just get on with life.

The answer is that I want to understand God's will for civil government. I am after a biblical approach to political issues. When I go to the scriptures to look for answers on these issues, it quickly becomes clear that there is not a lot on them in the New Testament. There are some hints in Romans 13 and Matthew 22, but I cannot create a political theology just from the New Testament.

If I go back to the prophets and the historys of the Old Testament, I find a little bit more about civil government and politics. However, the prophets put most of their efforts into describing what is wrong. They do not describe a godly system of government.

So to find a complete political theology, I have to go back to Exodus and Deuteronomy. That is where I find most of the biblical teaching on the role of civil government. The reason that these issues are not covered in the New Testament is not that God does not care, but that they are already covered in the Torah, so they do not need to be dealt with again. The New Testament just modifies, where appropriate, what has already been given in the Old Testament. It does not repeat all the good stuff again.

The problem with looking for political theology in the Old Testament law is that a lot of stuff is mixed up together. Universal laws are mixed up with rules peculiar to the nation of Israel. Stuff that is still relevant is mixed up with stuff that was fulfilled by Jesus and is no longer relevant. My aim in digging through this stuff is to develop a political theology that is relevant for today. That is part of what I have been trying to do in this series of posts.

Ten Commandments (18) - False Testimony

Woops!! This is a re-write of post 16, because I have just realised that I got this commandment wrong.

The ninth commandment has an application in modern society, but it is not a law to be enforced across the entire community. The command is only relevant to the judicial process. It applies to judicial procedure and is not a general law.

You shall not give false testimony against your neighbour (Ex 20:16).

Honesty and truth are essential for the working of the judicial system. Witnesses much not give false testimony, whether to protect themselves or to protect someone else. Judges must always follow the truth, no matter where it leads.

The Bible applies a reverse golden rule to those who give false evidence: having done to yourself what you were doing to others (Deut 19:16-19). The liar receives the penalty that they person they were lying about might have received.
So that actually leaves just two of the ten commandments as general laws to be enforced by the civil authorities in the modern world. I have corrected post 13 to reflect this change.

Michael Knows Best

Yesterday was budget day in Kiwiland; the day when Michael, our wise minister of finance, dishes out our pocket money for the next financial year.

The response was normal. Some people think he should have spent more on this. Other thought he was spending too much on that. Others felt that they were forgotten or unloved.

The whole exercise strikes me as absurd. Why do mature adults allow a politician to spend a third of their money for them. Do they not trust themselves to spend their money correctly, that they need someone else to do it for them.

According to opinion polls, most people trust politicians about as much as they trust used car dealers. Yet they trust a politician to spend a third of their income.

And they do not even complain. If I snatched a twenty dollar note from someone's hand and said, "I can spend that more wisely than you can", I know what would be the response. Yet people gladly hand over a third of their income to be spent to a politician, they do not even like, because he knows better how to spend it. Something is seriously wrong.

Ten Commandments (17) - Political Power

A benefit of the Ten Commandments in the modern world is that they significantly limit state power. If my analysis is correct, only two of the Ten Commandments should be enforced by civic authorities. This severely limits their authority to pass laws.

These two commandments are comprehensive, because they provide protection for life and property. That is about all that law can do. Laws can influence external behaviour, but they cannot change hearts. They cannot make people be good. The most that the law can do is provide limited protection against theft and violence. Law cannot produce good people or eliminate evil. Only the Holy Spirit can work miracles.

Ten Commandments (16) - False Witness

False witness is the third commandment that has an application in modern society. Honesty is essential for the working of the law and business. The Bible gives several examples of what is meant by false witness.

1. Giving false evidence to a court is the most serious form of false witness (Deut 19:16-19).
2. False witness can lead to disputes about ownership of property (Ex 22:9).
   Slander is another form of false witness.

False witness is a form of theft, because it robs a person of their reputation.

Appointing Presidents

Timor Leste, one of the newest and poorist countries in the world, has just appointed a new presidents. The Timorese people seem very excited. By all accounts, Jose Ramos-Horta is a good man, but I am not sure why the Timorese want a president. A president costs a lot money, but cannot create wealth of for ordinary people. I am not sure if Timor Leste can afford a President.

The French have elected a new president too. Most accounts are not sure whether he is a good man or not. He problably will not be able to change things, any more than the President of Timor Leste. But at least, the French can afford him.

Ten Commandments (15) - Theft

Stealing something that belongs to someone else is a sin that should be deal with by civil authorities. The Bible gives a number of examples that assist with the definition of theft.

1. Stealing another person’s property is theft. (Ex 22:1).
2. Distorting the records of property ownership is a form of theft. (Deut 25:1).
3. Assault is a form of theft as it robs a person of their freedom and ability to earn.
4. Breach of contract that has been freely agreed is also theft. (Ex 22:7,8).

Ten Commandments (14) - Murder

Murder is a crime that should be dealt with by civic authorities. Murder is unlawful killing of another person. The law gives examples that enable the boundaries around murder to be defined.

1. Killing a person in self defence is not murder (Ex 22:2).
2. Killing a soldier during a war is not murder (Deut 20:12,13). This rule does not apply to all wars, but only where a community is being defended.
3. Intent is important. Murder occurs, if a man schemes and kills another man deliberately (Ex 21:12). A person cannot be held accountable for something that was beyond their control. An accidental death is not murder (Ex 21:12).
4. Allowing a dangerous animal or machine to wander without restraint could become murder if someone is killed (Ex 21:29).
5. Murder is an extreme form of assault, so all assault is covered by this command.

Ten Commandments (13) - What is Left Behind

So far in this discussion I have knocked out eight commandments. They are still relevant for those who choose to please God, because they tell us something about what pleases him. However, they are not to be enforced by the civil authorities. This leaves just two of the Ten Commandments that are relevant to civil order in the modern world. The two that are relevant are murder and theft. These two laws should be enforced by the civic authorities. There would not be much controversy because murder and theft are accepted as crimes by everyone everywhere.

Ten Commandments (12) - Adultery

The seventh commandment prohibits adultery. However, this command was not enforced, even in Israel.

Jesus replied, “Moses permitted you to divorce your wives because your hearts were hard. But it was not this way from the beginning (Matt 19:8).

Moses did not enforce the law against adultery, because the people’s hearts were hard. There were so many people committing adultery that applying biblical sanctions would have been unacceptable. God does not want his law to be enforced on a society that is opposed to it.

If a law is constantly being disobeyed, the authority of the entire law will be undermined. If adultery were widespread, a law against it would become a joke. Far better, to put the law against adultery on hold until society changed. God has changed his mind; rather he is realistic about what can be achieved by the Law.

A law that is being widely ignored cannot be enforced. This is what Moses understood. Instead of undermining respect for the law by trying to enforce adultery laws that the people did not want, he chose not to enforce them. If Moses showed mercy, we should too. In modern society, adultery is so widespread that enforcing a law against it would be impractical. Adultery laws must be taken off line in our time, due to “hardness of heart”.

This hardness of heart principle means the adultery command cannot be enforced in a society where the majority of people are not Christian and once the majority have been converted adultery laws should be unnecessary.

Ten Commandments (11) - Coveting

The tenth commandment forbids the sin of coveting things that belong to other people (Ex 20:17).

A sin becomes a crime when there is a civil penalty attached to it. No punishment is ever specified for coveting, even for the children of Israel, so coveting is not a crime. The obvious reason for this is that it is impossible for civil authorities to prove that a person is coveting. No one can testify that another person is coveting, because we cannot see into another person’s heart. Civil authorities can only deal with coveting, when the coveter acts on his thoughts and translates them into theft or adultery.

Every sin is not a crime. This commandment is a good example of a sin that is not a crime. Even in Israel, coveting was outside the scope of the civil authortities.

Coveting is still a sin, and should be avoided by God's people. The best protection against coveting is a new heart and a renewed mind.

Ten Commandments (10) - The First Table

The first five commandments belong to God. He reserves the right to judge the first five commandments himself.

1. You shall have no other gods before me.
2. You shall not make for yourself an idol in the form of anything in heaven above or on the earth beneath or in the waters below. You shall not bow down to them or worship them; for I, the LORD your God, am a jealous God, punishing the children for the sin of the fathers to the third and fourth generation of those who hate me, but showing love to a thousand generations of those who love me and keep my commandments.
3. You shall not misuse the name of the LORD your God, for the LORD will not hold anyone guiltless who misuses his name.
4. Remember the Sabbath day by keeping it holy.……. Therefore the LORD blessed the Sabbath day and made it holy.
5. Honor your father and your mother, so that you may live long in the land the LORD your God is giving you.

All except the first have a statement that God will deal with offences against them. God will punish and he will bless. He will work out the consequence of breaking these five commands in history, or on the day of judgement. He does not need the state to deal with these sins for him.

Ten Commandments (9) - Honouring Parents

The fifth commandment requires everyone to honour their parents. There were civil penalties for children who insulted their parents (Exodus 20:15,17). These penalties are no longer mandatory, because they were part of the system specifically given to Israel, to distinguish them from the surrounding nations.

You must purge the evil from among you. All Israel will hear of it and be afraid (Deut 21:21).

Christians should still honour their parents, but this should now be voluntary rather than mandatory. Civil penalties are no longer required now that the Holy Spirit is able to change our hearts and attitudes.

Ten Commandments (8) - Sabbath

God gave the Sabbath to Israel as a gift to mark them off from the surrounding nations. Resting from work was a way of expressing their trust in God as their provider.

Remember the Sabbath day by keeping it holy. Six days you shall labor and do all your work, but the seventh day is a Sabbath to the LORD your God (Ex 20:8-10).

The civil authorities in Israel rigorously enforced the sabbath (Num 15:32-36).

Since the coming of Jesus, love for each other is the distinctive that marks Christians off from the world (John 13:34,35). Jesus fulfilled the new commandment by washing his disciples feet.

We achieve our rest through faith in Jesus. According to Hebrews 4, we have a better rest through believing in Jesus.

Now we who have believed enter that rest, just as God has said (Heb 4:3).

This means that the Sabbath laws have been fulfilled in Jesus and that they no longer need to be enforced. Christians have often succumbed to the temptation to use the power of the state to enforce a Sunday rest. This has done a great deal of harm to the gospel.

The concept of a weekly rest remains a principle of life. Having a day of rest each week is good for human health. We should all try to have a day of rest each week and employers should allow their staff to rest at least one day a week. It does not matter which day people rest, but having a break from work is good for their physical and mental health.

Ten Commandments (7) - Blasphemy

The third commandment forbids blasphemy.

You shall not misuse the name of the LORD your God (Ex 20:7).

Under the old covenant, this commandment was enforced by the civil authorities. Leviticus 24:10-16 describes how a man was stoned for blasphemy. I have shown in other articles that the book of Leviticus only applies to Israel and not in the new covenant situation. God’s command in Leviticus 24:15 was specifically addressed to Israel, so it does not apply in today. God has sent the Holy Spirit to protect and honour his name.

Christians are often tempted to use the power of the state to protect the name of God. They have sometimes to get blasphemy laws adopted and enforced. This is a dangerous mistake. God is perfectly capable of protecting his name. By the work of the Spirit, every knee will eventually bow and confess that Jesus is Lord (Phil 2:10,11).

Christians should honour the name of God. They will do this because they love him. They must not attempt to force people who do not love him to honour him.

Ten Commandments (6) - No Other Gods

The first and second commandments are hard to separate.

You shall have no other gods before me. You shall not make for yourself an idol in the form of anything (Ex 20:3,4).

The requirements of these commandments still apply to Christians. Part of the act of becoming a Christian is a declaration that Jesus is Lord; that there is not other god that can match him. The warning about the dangers of idols and images is really important in a culture where image is everything.

However, these sins are no longer crimes punishable by civil authorities. In Israel, the death penalty was required for those who chose to worship other gods. As Israel had chosen God to be their King, following another God was a form of treason and the normal penalty for treason and sedition was death (Deut 13:12-16). Under the new covenant people freely choose the Lord as their God. His greatest gifts to us is freedom, so he will never force sinners to love him, if they are unwilling. God wants people to obey him, because they love him, not because they have to. The most that he will do to make them love him is the Holy Spirit’s stirring in their hearts. Following God’s example, we should never use political power to force people to believe in God.

Ten Commandments (5) - Basis for Civil Law

The Ten Commandments are often described as the basis for Civil Law.
Every legal system needs a moral basis for law making. In a society where most citizens are Christians, basing the law on the Ten Commandments seems like a good idea. In the following posts, I will focus on this third use of the law.

The first thing to understand is that the Ten Commandments cannot be translated directly into civil law, because they were designed for the old covenant. They need to be fed through the lense of the new covenant before they can be used as a guide for civil law. I plan to examine the Ten Commandments in detail and identify those that are still relevant after the death and resurrection of Jesus.

Ten Commandments (4) - Modern Use

The Ten Commandments have three uses that are relevant to Christian life in the modern world. Here are the first two.

1. Sharing the Gospel
The Ten Commandments are a useful tool when sharing the gospel. They provide a good summary of the sins that can separate the unbeliever from God (Rom 7:7-12). This was the method Jesus used with the rich young ruler (Mark 10:17-21)

2. Guidance for Christian Living
Although we are not saved through obeying the law, we express our love for Jesus by living holy lives. The Ten Commandments provide a little guidance about how Christians should live. A new Christian should stop stealing and cursing God. However, these commandments do not take us very far. A new believer can stop stealing, killing and cursing God, but that does not take them far as a Christian. Learning how to follow the guidance of the Holy Spirit is far more important for growing as a Christian.

More Terror

The United States has experienced the third terrible event in month. Terror seems to be rampant. I was thinking about visiting the US next month, but maybe it is too dangerous, with so many guns in the hands of dangerous groups. I think that Dubai might be a safer option.

Ten Commandments (3) - New Covenant

We no longer live under to old covenant. The basis of the new covenant is that Jesus fulfilled the conditions of the old covenant. He perfectly obeyed each of the Ten Commandments throughout his life. We receive salvation through trusting in everything that Jesus accomplished; including his perfect life and perfect death. The benefits of the new covenant are received through faith in Jesus, not through obeying the Ten Commandments. So those who believe that we live under grace and not law are correct.

Does this mean that the Ten Commandments are no longer relevant to the Christian life? The answer is No and Yes. The most important point is that they are no longer relevant as a basis of salvation. We have a much better way of salvation through Jesus. However, the Ten Commandment have three other uses that are still relevant to the Christian life. I will deal with these in the next few posts.