From: John Forster
Sent: Sunday, November 27, 2011 10:47 PM
To: Thomas Lee Abshier
Subject: Big principles in response.


Well, I read through your treatise that is about to be posted and noted spots where I may want to weave in conversation. Tough topic, this. Tonight as I was waiting for the Lessons and Carols service to start down at the Trinity Episcopal Cathedral, I drafted down some ideas that may help you expand your frame of reference for all this money/banking/value stuff. To define our responsibilities and grasp what the Church is supposed to do to glorify the Lord Jesus Christ and empower His saints to rule the earth, be fruitful & multiply, and take dominion over plants, animals, and real estate -- What do we have to think? What do we have to do?

As a take off from the Advent/Christmas themes - this is the month of the year when folks admit more of the tremendous Biblical emphasis on Jesus as the king who reigns. Kingin' is out of style since William & Mary, and George Washington, but we have to remember that the king was the executive branch of government. Kings may also interpret law, and do judging of criminals, maybe even share in the apprehension at great need.  But, their primary responsibility is to see that the sentences of the law are executed on the criminals or foreign invaders. They need but righteous punishments to keep the wicked in fear and so protect the innocent.

Anytime a King judges and punishes, He is going to do it according to a law. And since the Lord Jesus Christ is busy working out His blessing and curses in the world now, and He will be assigning final rewards and punishments between time and eternity, it behooves us to be alert to what those standards are beforehand. We not only have His infallible Word, we also have a lot of history opened up to us by modern preservation in paper and electronic writing.

So let me bear witness to what I know of His Law that He has revealed to us for our life, peace, prosperity, freedom, and honor - both in this life and the next.

First let me address the foundational properties of Ownership. God has assigned stewardship of STUFF to families. Families can grow and manufacture stuff, trade it, receive it as gifts, or win it in fair fight, just like Jesus acquired all things. God has ordained that if men steal other men's stuff, this is an offense directly against Him who has parceled out the stewardship of things the Way He directed. Woe to us if we tinker with that.

In fact, He specified that we better require thieves to pay double restitution if we catch them taking what is not theirs. Some of the Old Testament contains case laws that help us understand some of the complexity of how to apply this.

Money and banking, especially in the Modern world presents some complexity for us to work out. It is no small task, but a worthy and rewarding study to gain wisdom in how to apply His law of liberty in this area.  And, God gives us incredible liberty in economics. There are only a few things we can't do and the rest is open. Besides direct prohibitions in immediate action, there are also prohibitions of preparations or mechanisms that make sin possible or likely. Like this....

This verse is not talking about stealing from your neighbor, it is referring to not even owning or using tools that would make that possible. This would apply to our discussions of money, banking, and inflation.

This would be sufficient reason to outlaw banking practices if we discovered that they made theft easy or likely. How much more if we discovered that they made theft unavoidable? It is kind of like "controlled substances" like atomic bombs -- one person's decision could cause such horrific mass effects on the human race, we do not let them be sold at K-Mart, or even let certain nations build them for self-defense. Anyway, we would be well-advised to not build or use a monetary system that lent itself too easily to theft, or that made it difficult or impossible to detect theft or apprehend the responsible parties to crime and bring God's prescribed punishments to bear.

Thomas A: It is of course good and right, to not own the tools of deception and fraud.  But, you have indicted fiat money as though it was an inherently unjust system of weights and measures.  I disagree.  Certainly it can be used unjustly, but so can every system of democracy, oligarchy, kingship, and republic.  There is no system of human government or economy that cannot be perverted in this world.  Only when God rules and reigns, and men are subject to His iron will, will men cease in their lies, theft, slander, adultery, debauchery, violence, and idolatry.  

Your central argument against fiat money is that it IS fraud, because it is imaginary.  I have addressed this numerous times in previous essays, and I completely disagree with this assessment of fiat money.  I refer you to my essay on Gold Certificates vs. Federal Reserve Notes for a proof that gold backed currency is just as real as fiat money.  Fiat money is more susceptible to fraud, but it is not fraudulent, nor imaginary.  I do not believe the Old Testament Law against owning measures of different sizes is applicable to, nor should prohibit fiat money.  Yes, fiat money can be perverted, but a righteous and hard working nation can use that system to create incredible wealth and prosperity.

Instead of banning the use of fiat money, I would threaten the nation that we are facing a potential financial crisis due to the expansion of money without commensurate expansion of value.  The nation has two choices, 1) Live within the boundaries of expenditures as dictated by domestic production, or 2) Limit all future expansion of money to the rate at which gold is purchased by the treasury.

Of course, enforcement is the key.  Your argument is that if something is exceptionally powerful, with high degree of skill required to operate safely, then it should not be given to children and idiots.  Fiat Money can be a tool of rapid expansion of wealth -- it is exceedingly powerful as a tool of growth.  But, if misused it can produce untold misery and destruction.  Thus, the wise counselor would advise that this tool be used only by a righteous society.

Think of Bernie Madoff. How do you require a single individual to restitute billions of dollars? The provision of indentured servitude, and the limitations of making a guy work under a less-than-hired-man status for six years, max, (at least for covenant members), should give some pause to certain contracts.

Another principle that affects deposits, trusts, and chain-of-custody issues.....

If we are tempted to use a mechanism that makes it impossible to apply these principles, maybe we shouldn't "have them in our house"?

Another big issue for loaning and debt has to do with the prohibition of receiving usury, interest, or increase on borrowings between covenant members.....

It is pretty easy to observe that there came a big switch in Calvin's day. I don't believe he really resolved it. He couldn't avoid that taking interest on a loan was prohibited from covenant members (not every passages specifies "poor" brother), yet he couldn't quite see how to have "free enterprise" and open contracts agreed upon without having "rent" on the use of money. He ended up saying that you have to love your neighbor, not oppress him, and even though you agree on some interest rate, it must not be "excessive". Who knows how to define that?

Somewhere else I have explained that the normal situation might be that silver and gold would naturally increase in market value relative to other goods, unless you lived in mining country. So that even without interest charged, there would be increase over time on money held, hoarded, saved, or loaned-and-paid-back. The other possible resolution is with venture-capital arrangements, where there is no security of increase, but each party in the venture takes their chance to win or lose on the investment.

No usury in our present system, means that Christians would not put themselves in a position to be paying interest rates on money borrowed. So, no mortgages, no credit cards, no student loans. They would either save up prior, or borrow money at no interest from private parties. This, by itself, would cut way back on the price of certain things like housing and tuition, and severely dampen the damage that bad government and bank practices might produce. Did I mention that this would be "sin" issue, and not a "crime" to be punished by the Govt? Only unbelievers would be enslaving themselves, and most likely to the Christians - since they would be more likely to be wealthier and have savings if they were following this.

Another point on the tremendous freedom of God's Law and its minimum prohibitions. You always have to remember in your "scenarios", there is no restrictions allowed by the govt on monopolies or cartels, either in Stuff or Labor (unions). If a monetary/banking practice is lawful, then anyone is free to do it, just like they should be free to buy/sell/rent with rice or milk or real estate. If money can be owned, you must let every body own it. If money can be rented, you must let everybody rent it under the same laws. The law cannot be favoring any one individual or corporation over anyone else.

And, of course, under all this is the requirement for honesty, that is, a faithful witness regarding all Stuff and Labor. Traders always have to be truthful about the substance they are selling, how they are measuring it, and how they are counting it. You can't be representing a dozen when you mean each, you can't be representing Troy oz, when you mean Avoirdupois, you can't be representing liters when you mean quarts, you can't be representing gold when you mean gold-plated copper.

You can't be sneaking in any meaning of silver dollars when we mean imaginary unit divisors representing the AllValue that a private cartel regulates for their own advantage. But we have argued this to death. We would do well to expand our frame of reference beyond dollar definition and "value".

Thomas A: Again, you have impugned the fiat dollar as though it is imaginary.  This is not true.  Granted the fiat dollar is elastic, but it is no imaginary.  Your degradation of fiat money as “imaginary” is spoken as thought it was a proclamation of truth.  Your declaration is an unsubstantiated diminishment of a working system of symbolizing value with physical tokens.  

Beyond just "not stealing", there is admonition to be proactive toward caring for your neighbor's possessions as much as your own.

There might be a call for responsible action here for any individual that thinks certain accepted practices in our culture are actually stealing from people who might not even know it. For instance if he saw forces at work - inevitable and immediate - that would decimate the value of dollars and multiply the value of quantities of measurable substance. This concludes this quick overview of Biblical laws pertain to our topic. I think some of them would outright preclude some of the accepted practices of today.
Other overall observations I think you need to consider to tighten up your reasoning will follow.

It helps to make comparisons sometimes. Even an arbitrary amount of imaginary monetary units that have no substance, or no way of measuring or counting them, could be used in an 100% reserve timed-contract fashion. In this case there would be no inflation if the counts were not modified, and the units might actually grow in their market value (you say "bad", I say "good" on the "deflation"). At the same time, as in Murphy's mini-scenario, you can have inflationary theft all in the context of using the actual gold coins, if there was not full honesty about the QMS involved. Thus we had between 1913 and 1968 with the help of "paper" money, both FRN's and Silver/Gold Certificates. Thus if we had a "lock-down" in quantities of the non-existent "money" (my ideal) or even tight compliance to appropriate "growth" in quantities to keep pace with the overall GDP growth (your ideal) -- there might be very little overt theft, and the only Biblical objection would be that if the parties would be honest about what they were trading it would be so obviously ridiculous and crazy.

So, we should always ask, "How would this work with real substance instead of imaginary substance"? and "What would be the difference between fractional-reserve operation, and 100% reserve, timed contracts?" "Why can only the central banking cartel do this? Why not Govt? or the individual?" Why should money be the only valued item to do this with? Why not do it with all other things that are valued in the market?"

What would happen in your comparative systems if people decided to pay down most of their debts? Do you realize in the current system it would severely deflate the money stock if folks paid debt? So many dollars would disappear it would have the potential to decrease prices a lot, which would be anathema to your system? In the 100% reserve, or QMS system I don't think it would affect the inflation/deflation much, because the monetary quantities are not changing.

The other huge question, which you are well aware of, but I have never heard tackled, is, giving this system, or even an ideal system -- what civil punishments or reimbursements will be executed on loaners if they are caught adding not enough, or too much money to the money supply? How should the king punish the bank officers/Fed officers? How should government officials be punished if they influence the Fed officers to lean the wrong direction?

And, as a practical measure, with the current problems with the system as it is, the acknowledged abuses; What is the Biblical way of reforming this and making it more in compliance with God's law, reducing the theft and deceit? Are you going to do it through the church, family, or Govt? Doesn't it seem that the financial world has preempted the Civil arena, such that the tail wags the dog now and there is no way any political action can control the banking system? Probably won't look that way to you, but clear to me.
Do you see how your principles would fix Europe's mess? How it could have prevented the lack of confidence in the Euro? Should anyone over there be punished by law? What would be the Biblical principle?

Another perspective: At any moment in time, AllMoney equals AllValue (this is assuming money has no value, and doesn't corrupt the pure relationship between money [the representative of goods/services] and the goods and services themselves. Increases/decreases in either the AllMoney, or the AllValue doesn't change this fact. It doesn't matter where you put the decimal point in your money numbers, or what quantities of money stock you have - it will still be what is traded for all the goods and services out there. What good does it do everybody to change it?

Also, seems to me all the goods and services in the marketplace all have relationship to each other. IF you boost the production of rice it is going to take selling less consultant time (for money) to trade that money to obtain a pound of rice. Are we thereby obligated to artificially increase the amount of "consultant" hours" or "consultant" hours-certificates" so that the relationship of these things constant with each other? Or if decrease the harvest of wheat, now each pound of wheat will trade for even more rice. C'mon, Master Central Planner! Aren't you obligated to fix this as well?

When you offer your Doctor work as a naturopath, out there in Medical land. You are slightly increasing the supply of that kind of thing in the marketplace. This tends to make naturopathic services cheaper for everybody. That is good for everybody, except maybe the Old Naturopaths? Everybody else likes you making those services a little cheaper. Why would you want to prevent this?

Why wouldn't it work to just have a truck-load of gold for the world money stock. Each grain of gold could represent one unit of the AllValue. Then, if AllValue "increases", you could just adjust the measure of the gold. We did have 20trillion grains. We will just change "unit of measure" and now call 3/4 of a grain, the new grain. Why doesn't that work? now we have 25 trillion "grains". But who owns and benefits from the additional 5,000 imaginary grains (that are now lesser in value than an old grain)? In the real imaginary world, all those new sayowe's added to the money stock belong to the bank and they are collecting rent now on stuff that cost them nothing to "make".

When I went to Ascension this morning, there is a guy there who I had a brief conversation with probably over a year ago, where I ascertained he did not favor gold/silver. Today after service he initiated/engaged me outright (not hostilely, but intensely), and we hammer-&-tonged it steadily all through the fellowship hall, putting things away, locking up, across the parking lot, and until he closed the door on his family's van on the way home. His view is similar to yours in some ways, but is much more bold, proclaiming himself a Keynesian, saying the Austrians are dead wrong on their system, that our system is working so well it proves it, that it is good for the dollar, now that everybody is panicking out of the Euro, that our deficits will never be a problem. He says there has been huge, unprecedented things going on with our Fed, and in EU over the last week. So we may have some more interesting discussion in the future as well. He works in the financial services world and has contacts in china, etc. Doesn't think China is the huge powerhouse that will take over the world, since it has some problems of its own.

Anyway, food for thought. I will go back to specific "conversational" replies when I have occasion. Meantime keep up any thoughts you have energy for.

Thomas A: Thanks for reading my comments, and commenting on them. It appears as though we are still far apart on our understanding and acceptance of fiat money. Just as a point of reference, these issues of value, dollar, fiat are the fundamental points of disagreement, all the other issues will melt when we have these handled.

I agree that the issue of charging interest is problematic. I believe we should loan money at zero interest to family and close friends. To apply that to everyone in the entire Christian community would basically imply that money could not be loaned at interest is a fully Christian nation. This does not seem right to me. The sacrifice associated with delayed consumption is great, and to not compensate for that seems wrong. I use as my scriptural reference, Jesus’ admonition to the 3 men to whom he gave 10, 5, and 1 talent. He reprimanded the one who did nothing, and said he should have at least put it in the bank to gather interest. Clearly Jesus had no moral compunction against money growing with interest, in fact he expected it. I think money loaned at the market rate is not usury, but money loaned at a rate above market rate is usury, especially when the person needing the loan is in a bind of some sort (e.g. time pressure, not creditworthiness issues) which makes it possible for the lender to demand higher rates. I think loaning to close friends and family should be done at no interest. Otherwise, I think interest on saved money is appropriate.

Regarding theft and reporting it, opposing theft is always a good idea. If the nation/government is printing money (and you know what I mean) and thereby debasing the currency by spending physical dollar symbols into the economy without contracting to increase the amount of value available for consumption, that is theft. There is no reason to tolerate such behavior. Everyone in the society should be objecting, especially the people who are receiving the stolen goods. This is why a moral society is needed so that people will stand against ill gotten gain, and refuse to participate in theft through taxation or counterfeiting. The church and family should educate children and parishioners about the moral consequences of government sponsored/sanctioned theft. The consequences should be voting them out of office at a minimum. We now have a nation of men who are compromised, being in league with the thief.

Don’t call me Mr. Central Planner. You have me confused with someone else you are debating. I have proposed a distributed management system with local and national accountability. This is a slightly managed free market solution.  The distributed nature of the system makes it less likely that an oligarch/tyrant will abuse the system for purposeful gain.  The market is not perfectly efficient, and neither are managed interventions.  The more concerning scenario is the purposeful abuse of the system, rather than the distortions of price and earnings caused by incompetent management.  And, on the other side, the total free market valuation of goods and services produces weird economic distortions of price and valuation.

Regarding fiat money, which you call disparagingly, "imaginary dollars”, clearly you have not yet grasped the concepts that I have labored so hard to try to communicate to you. I have closed every loophole I can see around this issue. The fiat dollar is not imaginary, it corresponds to a unit portion of All-Value. This is not imaginary. It is only difficult to quantify. This is a concept you must struggle to grasp. Please read my other essays that are posted in the same section as the FRB essay. www.drsenator.com/FRB.html.

Regarding China, I tentatively agree with your debating friend at Ascension. Their growth rate is unsustainable, unless the leaders can keep the people working very hard, for a very long time, for very little monetary reward. Their “prosperity” will breakdown when the workers rebel. Regarding Keynesian economics, I think Keynes is wrong. Europe is going down because of the welfare state, spending more money to support the leisure of the poor/disabled/single mothers/criminals/old, while producing too little, and borrowing to fill the gap between production and consumption. The USA looks good only in comparison, not in actual sustainable production vs. consumption ratio.