This is part of a series of posts on the sin of Assimilation. Click here to see the entire series.
Exodus 20: 15 says, “You shall not steal.”
The Constitution of the United States grants the right to “coin money” to the government. God has an opinion about how the right to coin money should be exercised. Leviticus 19: 35-36 says, “You shall do no wrong in judgment, in measurement of weight, or capacity. You shall have just balances, just weights,…” This terminology, despite being found in the Bible and in the Constitution, is foreign to most people.
“Coining money” simply means the right to declare that some entity is going to be established as the legal entity for financial transactions. Laws related to the coining of money are known as legal tender laws. The United States has legal tender laws that specifically state that only Federal Reserve Notes (dollars) are permitted to be used in financial transactions. Any attempt to use private money in personal financial transactions is illegal and punishable by law. The legal tender laws of the US are the logical extension of the Constitution’s right to coin money and they grant a monopoly power over money to the government.
God commands that we are to have “just weights”. This is a reference to the weight of a coin that is used as money in a society. Ancient governments also frequently asserted monopoly privilege over the issuance of money. Those societies generally utilized a metal, typically gold or silver, as the form for the money. Paper money was unheard of. The money that the government produced was in the form of a coin, usually with the current potentate inscribed on the face of it. Since the value of a coin was directly related to the weight of the metal in it, God commanded that the weight of the coin stamped on the face had to correspond to the actual weight of the coin.
The temptation always existed for the government that was in power to “shave” coins. By doing this they could remove small parts from each individual coin and combine the numerous small parts into a new coin. When done carefully it was difficult to determine that the coin had been shaved and was not actually worth what it was stated to be worth. The new coin was essentially a counterfeit, in that it was created from the shavings of the other genuine coins. The temptation for the government to do this is obvious. By creating counterfeit coins that circulate as genuine coins they are able to create money “out of thin air” and by being the first to use the new coins they are able to purchase goods and services for free.
Eventually the marketplace realizes that somebody has been shaving coins. They come to realize that there are more coins in circulation than there had been before. As a result, businesses raise the prices of their goods and services to correspond to the increase in the number of coins. The net effect is that prices rise and the value of the original coins declines. Those who were able to use the counterfeit money first were able to profit because the market had not yet figured out that prices needed to rise. Those who did not have access to the counterfeit coins experienced losses because the value of the coins that they held in savings declined. In economics, the creation of new money out of thin air is known as inflation. By commanding that the weights and measures used by a society must be just, God prohibits the practice of inflation.
What does all this have to do with the Eighth Commandment? Precisely this, counterfeiting is a form of theft. The civil government recognizes this and prosecutes any private citizen who attempts to engage in the practice of counterfeiting money. That is a good thing. Unfortunately, the government itself is by far the biggest practitioner of counterfeiting in the country. It is therefore necessarily the case that the government is the biggest thief in the country. Since most Christians are unaware of the practice of monetary policy utilized by the government it is worth a quick explanation.
Early in the history of the United States it was not uncommon for private banks to circulate notes that served as legal tender. The fact that the Constitution granted the right to coin money to the government did not prohibit private banks from doing the same. During the Great Depression there were a great number of “bank runs”. A bank run would occur when people who had money deposited in a particular bank came to realize that the bank did not have the reserves to cover their deposits. A panic would ensue and it was not unusual for the government to declare a “bank holiday”. A bank holiday was little more than a way to prevent people from withdrawing their money from the banks. It was hoped that the time spent during the bank closure would be enough to convince people to leave their money in the bank.
The reason that banks experienced devastating runs in the first place was directly related to the practice of fractional reserve banking. Under fractional reserve banking a bank is permitted to only keep a percentage of its demand deposits in reserve. What is not kept on deposit is free to be loaned out. Without the accountability of having to have one hundred percent reserves on demand deposits the banks quickly succumbed to the temptation to loan out far more money than they actually had received in deposits. As long as the economy was humming along smoothly nobody cared. However, when economic difficulties arose people would want their money back and when they went to the bank to retrieve it they were informed that it was no longer there (think of that classic scene in “It’s A Wonderful Life where George is trying to explain why the depositors money is not in the bank).
Rather than dealing with the problems associated with fractional reserve banking (a form of counterfeiting) by requiring full reserve banking the federal government decided to do something else. The result of their efforts was the Federal Reserve Board (Fed). The Fed was created to be the bank of “last resort” in order to prevent any future bank runs and install confidence on the part of savers in their local banks. This, of course, did little more than push the problem of counterfeiting one step deeper into the recesses of the federal government.
The federal government soon realized that having a personal banker was a good thing when the government needed money. Raising taxes was a good way to lose the next election. Promising new government programs was a good way to win the next election. But, how can a politician promise to cut taxes and raise spending for new programs at the same time? No problem. The solution is the Fed. The Fed promises to provide “liquidity” to the government anytime it wants it. Liquidity is nothing more than the promise to create new dollars out of thin air. If any individual were to engage in the practices of the Fed they would be arrested for counterfeiting. When the federal government engages in counterfeiting they call it “monetary policy” and argue that it is crucial for the survival of the nation.
Most people, Christians included, believe that inflation is an increase in the price of something. That is an incorrect view. The price of something increases because of a prior inflation. Inflation, as Milton Freidman has said, “is purely a monetary phenomenon.” In other words, creating new money out of thin air (called “fiat money” by economists) is the practice of inflation. Once that money hits the streets it is only a matter of time before the counterfeit money causes the prices of things to rise. Hence, price inflation is the result of a prior monetary inflation.
Since granting the Fed the right to counterfeit at will, the Fed has never ceased to use that power. As a result, the supply of money in this country has been continually rising and the value of the dollar has been continually dropping. It is shocking for most people to realize just how much the purchasing power of the dollar has declined. What cost one-dollar in 1990 today costs 1.36 dollars. What cost one-dollar in 1980 today costs 2.18 dollars. What cost one-dollar in 1970 today costs 4.63 dollars. What cost one-dollar in 1960 today costs 6.08 dollars. To put this another way, the value of the dollar has eroded as follows: it cost 72 cents in 1990 to purchase what one dollar buys in 2002, it cost 46 cents in 1980 to purchase what one dollar buys in 2002, it costs 22 cents in 1970 to purchase what one dollar buys in 2002, and it cost 16 cents in 1960 to purchase what one dollar buys in 2002. That is a massive erosion of the value of the dollar in just a little over forty years.
That loss of value in the dollar is theft. It is no different than if a thief had broken into your home and forcibly taken a percentage of your cash. However, in this case, it is the federal government that is taking your cash. Everyday, around the clock, without ever stopping, the Fed continues to inflate the money supply and destroy the value of the dollar. Every dollar that you hold is worth less everyday because of Fed inflation. That is money that all holders of dollars have lost and will never retrieve. Inflation is a direct violation of the principle of the State maintaining a just system of weights and measures.
There is not one in a thousand believers who is even aware of the process of monetary policy in this country. Of those who are aware, not one in a thousand understands that the policies of the Fed constitute theft. Of those who are aware and who understand that monetary policy constitutes theft, not one in a thousand of those folks think anything needs to be done about the problem. No doubt there are hundreds, perhaps thousands, of Christians who work in the Federal Reserve System. There no doubt are Christian bankers who practice fractional reserve banking everyday. Certainly there are Christians in the Fed itself who go to work everyday and create new money. The belief of evangelicals that all we need to do is get more Christians into positions with the government as a means of bringing about change is once again proven to be false. What we need is for Christians to stand up and declare theft to be theft and demand that it stop immediately. We do not need Christians joining the system, even if it is a good way to make a living and have a nice retirement pension.
The Church has been assimilated to the culture of the United States by not even recognizing a gross violation of the Eighth Commandment that is taking place in the federal government on a daily basis. The sin is flagrant, public, and continual. Where is the outcry? Where are the demands for repentance? Where is the leadership of the Church? Who is asking the question, how can a believer be a part of this system and not be guilty of theft? The Church, and individual believers, have been blinded by our patriotism to the gross immorality that is going on right under our noses.