Years of Plenty, Years of Famine
- Mark Biller Sound Mind Investing
- 2008 10 Oct
Joseph has always been one of my favorite Bible characters. His roller-coaster ride from favorite son to slave to master of the house to prisoner to Viceroy of Egypt is both amazing and inspiring. The culmination of the story in Genesis 50:20holds out hope to every believer going through difficult times: "You intended to harm me, but God intended it for good." What an inspiring example of God at work in the affairs of men to accomplish His ultimate purposes!
Lately I've been pondering the story of Joseph from a different perspective, specifically the lessons it holds from a financial standpoint. The turning point of Joseph's experience in Egypt occurs when he interprets a pair of dreams for Pharaoh. He realizes that Egypt will soon experience seven years of abundance, followed by seven years of famine. Joseph is put in charge of the preparations during the years of plenty, so that the people can survive the coming years of famine.
As I've pondered this recently, I've wondered if Americans are facing a similar "years of plenty, years of famine" scenario. Over the past 26 years, the U.S. has experienced a phenomenal run of economic prosperity. Since 1982, we've had only two short, mild recessions of nine months each. How unusual has this period been? Consider that from 1900-1982, there were 19 recessions, with a new one coming an average of just 3.5 years after each finished! In addition to strong economic growth, the huge increases in the financial markets and home values further increased our wealth. Make no mistake, the economy of the past quarter-century and the degree of incredible prosperity it has produced have been quite unusual.
Ideally, we would have used a period of such financial abundance to prepare, personally and nationally, for future financial storms. Sadly, the opposite has largely been true. Consider a few statistics:
- In 1982, servicing our household debt took a little more than $1 of every $10 of after-tax income. By 2005, it had increased to almost $1 of every $7.
- Personal bankruptcies rocketed up 31.6% in 2005 as people raced to file before tougher laws took effect late in the year. In 2005 alone, 1 in 53 households filed for bankruptcy.
- The national savings rate fell to -0.5% in 2005, the first time Americans have spent more than their after-tax income since 1932-1933 when the Great Depression was raging. (The calculation of the national savings rate has some flaws, but it's noteworthy that the savings rate was 10.8% in 1984 as our years of plenty were starting.)
Things are no better at the national level. We've accumulated a staggering debt, and the coming shortfall in Social Security and Medicare is well documented. Yet despite our past prosperity, no serious efforts have been underway to fix these problems.
The Bible is clear in its warnings about debt, and looking at the financial statistics and trends, it's entirely too easy to see how we've reached an economic upheaval. Yet, God has given us principles to show us how to prepare during what few days of plenty may remain: diligently work to get debt-free, fund an emergency savings reserve, invest for the future, and diversify broadly.
Joseph wisely saved 20% of the harvested grain, and was able to save not only Egypt during the famine, but the surrounding nations as well. That should be our goal — to be faithful stewards while times are good, in preparation for hard times. With the current economic crisis we have a lot less to work with, but many of us still have some opportunities to learn from our current situation by paying down debt and increasing their savings. In being faithful this way, we may find ourselves being used, like Joseph, as instruments of God's deliverance in time of distress. (Naturally, we should always continue to be generous givers.)
Don't lose sight of the major theme of Joseph's story: God is at work even in times of hardship. Perhaps it will only be through financial "famine" that some people will ever become "hungry" for spiritual food that truly satisfies. Now that we face this on a large scale, our actions during times of plenty will largely determines if we're ready to help those in need.
© Sound Mind Investing
Published since 1990, Sound Mind Investing is America's best-selling financial newsletter written from a biblical perspective.