The simply-typed $\lambda$-calculus is *not* stronger than second-order logic. The simply-typed $\lambda$-calculus has: * product types $A \times B$, with corresponding term formers (pairing and projections) * function types $A \to B$, with corresponding term formers (abstraction and application) * equations governing the term formers and subtitution The simply-typed $\lambda$-calculus does *not* postulate the existence of *any* types. Sometimes we postulate the unit type $1$, and often we postulate the existence of a collection of *basic* types, but without any assumptions about them being inhabited. This is akin to using a collection of propositional symbols in the propositional calculus, where we make no claims as to their truth value. Simple type theory is simply-typed $\lambda$-calculus *and additionally* at least: * the type of truth values $o$, with the corresponding term formers (constants $\bot$ and $\top$, connectives, quantifiers at every type) * the type of natural numbers $\iota$, with the corresponding term formers (zero, succcesor, primitive recursion into arbitrary types) * equations governing the term formers and substitution There are several variations: * we may postulate excluded middle for truth values * we may include a definite description operator * we may include the axiom of choice * we may vary the extensionality principles We quickly obtain a formal system that expresses Heyting (or Peano) arithmetic and more, which suffices for incompleteness phenomena to kick in. What I think is confusing you is the fact that there are *two* ways to relate logic to type theory: 1. The Curry-Howard correspondence relates the propositional calculus to the simply-typed $\lambda$-calculus by an interpreation of propositional formulas as *types*. 2. Higher-order logic embeds into simple type theory by an interpretation of logical formulas as *terms of the type $o$* of truth values. There is a difference of levels, which makes all the difference. To illustrate, consider the propositional formula $$p \land q \Rightarrow (r \Rightarrow p \land r).$$ In the simply typed $\lambda$-calculus it is interpreted as the *type* $$P \times Q \to (R \to P \times R).$$ To prove the formula amounts to giving a term of the type. In constrast, in simple type theory it is interpreted as the *term* $$p \land q \Rightarrow (r \Rightarrow p \land r) : o$$ (with parameters $p, q, r$ of type $o$). Now proving the formula amounts to proving the equation $(p \land q \Rightarrow (r \Rightarrow p \land r)) =_o \top$ in the simple type theory. A higher-order formula, such as $(\forall r : \mathsf{Prop} . r \Rightarrow p) \Rightarrow p$ cannot be encoded in the simply-typed $\lambda$-calculus, whereas in the simple type theory it is again just a term of type $o$ (just replace the sort of propositions $\mathsf{Prop}$ with the type $o$). Also note that the *pure* simply-typed $\lambda$-calculus does not postulate the natural numbers. If we add the natural numbers to the simply-typed $\lambda$-calculus we get a fragment of simple type theory known as Gödel's System T (or a version of it, depending on minutiae of how equality is treated), which suffers from – or enjoys, depending on your point of view – the incompleteness phenomena already.