Banks, Money, & The Dollar

THE WAGES OF SIN
(are paid in fiat money) 

Psalm 128:2, For when thou shalt eat the labours of thy hands thou shalt be blessed. 

Here the Prophet …  teaches us that we ought to form a different estimate of happiness from that formed by the world, which makes a happy life to consist in ease, honours, and great wealth.  He recalls God’s servants to the practice of moderation, which almost all men refuse to exercise.  How few are to be found who, left to their own choice, would desire to live by their own labour;  yea, who would count it a singular benefit to do so!  No sooner is the name of happiness pronounced than instantly every man breaks forth into the most extravagant idea of what is necessary to it, so insatiable a gulf is the covetousness of the human heart.  The prophet therefore bids the fearers of God to be content with this one thing – with the assurance that having God for their foster father, they shall be suitably maintained by the labour of their own hands; just as it is said in Psalm 34:10, “The young lions do lack and suffer hunger, but they that seek the Lord shall not want any good thing.”  -- John Calvin, Commentaries

By the time you realise you’re lost, you’re already in a mess.  At that point hardly anybody [male] will stop and ask directions, let alone consult the map to puzzle out how he got lost.  With a mess that big, an investigation into “how” would only waste your effort, right?  So, mankind just wanders further and further astray, rather than check the map to find out how we landed here in the first place, and how we can get out.

THE MONETARY MESS

The monetary and financial mess in America and the world has twisted and knotted around itself so many times that who could hope to unravel it? The people in charge certainly aren’t trying.  They are completely satisfied to keep patching and re-inflating the system.  Their lives most likely alternate smugness with terror – smug when they remember how long they have kept the scam going their way, and how many bullets they’ve dodged.  Terrified when they reflect they have only two weapons, liquidity and blarney, and one day both may fail.  Like Louis XIV, they content themselves mumbling over and over, “After me, the flood.”

I have spent a lot of time fighting in the courts for the sound money our common law and constitution guarantee us.  I disremember how long I had been fighting when a frightening thought struck me:  If the Sound Money Fairy suddenly did appear and wave her magic wand, what would we do?  How would banks and businesses and just plain people handle it?  Wouldn’t chaos result?  How could we leap in a single bound from paper money and check books and fractional reserve banking and credit and debit cards and debt and deficit spending into gold and silver money?

Oh, but it doesn’t stop there, by any means.  Out of the root of fiat and fractional reserve has grown a giant’s beanstalk of debt and credit that has entwined itself through and over and around every business and body in the world.

Sound money is not merely a legal problem.  Certainly, it starts there, but it doesn’t stop until it passes all the way through every institution and custom and thought, finally sinking its sucking tendrils into society’s morality.  Precisely here lies the problem’s heart.  Inflation is a sin.  When that sin is institutionalised in the heart and bloodstream of a society (civil government and the economy), then all society is poisoned. 

But more than that, debt and inflation face us with a most practical choice, personally and nationally.  Do we believe that we must obey the High King of Heaven, or do we believe the world around us?  The High King commands us not to oppress our brothers nor to enslave ourselves.  We are to obey, and let the Devil take the hindmost.  The world whispers, “Fool!  Follow the high road to riches.  Wealth first, then morality.”  Of course, the world lies, but our deeds don’t.  We act because we believe, and the act betrays what we really believe.[1]

ENTER THE SIAMESE TWIN

The fiat money system is the jugular vein of a far larger and all-embracing monster.  Contrary to the blather you’re taught in civics class, the United States is ruled by a single entity, a Siamese twin of government and big business.  As a practical matter, these are one and the same creature, although they peek out through different masks and wear (as occasion demands) different robes. 

Technically this system is called “fascism” or national socialism, but names like that, having hardened our ears and brains over the years, don’t mean much.  In fact, the spectrum of economic choices from socialism to capitalism and fascism doesn’t offer much choice.

For the last 500 years  thinkers and peoples have tried to run a middle way between socialism and capitalism.  They tried to restrain the excesses of the industrial age, or predicted its death from those excesses.  Malthus and Marx don’t differ much.  And the results of Marx that we know weren’t much worse than the results of Adam Smith that we didn’t know, varying only in the class of their victims.[2]

The last great heave of the “middle way” came when the South fought for its independence. A Christian, agrarian, hierarchical, familial society took on secular plutocratic capitalism and lost.  Never mind, the same set of ideas has kept on popping up its head ever since, with distributism, agrarianism, and areas (much the better areas) of environmentalism today. 

The longer I think on it the less it seems that there is any way between socialism, capitalism, and fascism, and the more it seems they are all one creature with several faces.  After all, Capitalism begat Socialism, and Socialism begat Communism, and Communism begat Fascism, and Fascism begat the New Deal, and the New Deal begat the Welfare/Warfare State, which looks an awful lot like his great-great-great granddaddy.  Passing over the accidental outwards and viewing the essential inwards, communism is only monopolistic capitalism raised to the nth power.  The state is the sole monopolist in every business, the sole owner of all land, capital, and property, and the sole entrepreneur and employer (sort of like living in West Virginia and working for Peabody Coal Company).  How does communism differ, other than degree and efficiency, from the government-co-ordinated oligopolies that rule us throughout the West?  They allow just enough freedom and competition to keep the system on its toes and the innovations flowing.  For if the innovations ever stop flowing, the system stops growing, and the system must grow or die.[3] 

All the talk about free markets from the right and social welfare from the left are just so much talk.  The ideologues who promote them haven’t a clue how cynically the plutocracy uses their naivete.  Both free markets and welfare are merely patches aimed at rationalising the system – fixes to keep it from blowing up.

CANNIBALS ALL!

Purely by providence (You thought I was going to say “accident,” didn’t you?) I came across the work of the Virginian George Fitzhugh.  Fitzhugh was an apologist for slavery and published in 1850 the first American book with the word “sociology” in the title:  A Sociology for the South.  He made several speaking tours through New England, and two years later he followed that up with Cannibals All!

Fitzhugh’s work follows a simple thesis.  Freeing the serfs in the middle ages created a permanent poverty and overpopulation problem.  Where before the serfs had rights and were entitled to support and sustenance whether old or young, healthy or sick, afterward their employer had no such obligation and certainly no such interest.  Freeing the serfs literally threw multitudes of unemployable or marginally employable people out onto their own – and onto the labour market.  Because economic power divides so unevenly between capital and labour, and because labour is so numerous, capital would always bid down the price of labour to the lowest starvation wage.  The entire social arrangement, the whole economy, had undergone a transformation from a familial system ruled by love to a commercial system ruled by greed.

Fitzhugh’s proof presented itself in the world’s most capitalist nation, England.  The terrible poverty, privation, and maltreatment of free labourers there amply proved Fitzhugh’s case.

Now we get to the fascinating point.  The work of this obscure Southern apologist for slavery is kept in print by the Belknap Press of Harvard.  But I jump quickly to conclusions.  Maybe that is only coincidental.  Maybe, on the other hand, our ruling elite, so many of whom pass through Harvard’s ivied cloisters, believe Fitzhugh was right.  Maybe that explains their unrelentingly fanatical push against humanity, from population control to abortion.  Maybe that explains the welfare state.  Maybe that explains the full employment act of 1948.  Maybe that explains minimum wage laws and early retirement and Social Security.  Maybe the plutocrats want their slaves kept warm and cosy, and don’t mind making the system pay for it.  Maybe that keeps the restive starving proletariat from becoming restive and starving.  Price, as they say, is no object, when somebody else is paying.

THE NATURE OF FRACTIONAL RESERVE

Think about how the fractional reserve banking system works.  Joe Bleaux makes a deposit, say a hundred bucks.  Your friends at the bank then loan out the money, keeping a small fraction “in reserve,” say, 83¢.

Now think about it.  A bank is not a vault.  No bank makes money storing money.  The real value of the banking franchise lies in the legal power to create money out of thin air (fiat money).  Therefore logically and practically fractional reserve banks will always loan out the maximum amount the law allows.  Banks will never leave reserves unemployed, given a choice.  Can you imagine a gold miner sitting atop a working, profitable gold mine, but refusing tomine the gold.  Nope.  Not imaginable.  So banks have every reason to encourage as many borrowers as possible – and no dirt to move.

Obviously, when banks promote borrowing, then the number of borrowers will proliferate.  Slowly the custom and tradition which shunned debt is changed, until everyone is a debtor.  Daddies urge their 18 year-old sons to get a credit card so they can begin building their credit rating.  Now where is freedom, if ‘the borrower is the lender’s slave”?

But the borrowing comes with baggage.  First of all, it stimulates consumption, and consumption allows the system to keep on growing.  But for us personally there is other baggage, the whole question of Christian character.  What does the borrowing/debt mentality do to the Christian ideal of self-control?  Self-denial?  Moderation?[4]  Its purpose is the very opposite of those virtues.  Its purpose is not to control natural appetites, not to bring your body into subjection to God and your will, but to turn loose and grab all the gusto you can get.  Moderation?  Hey, wassa matter witchoo?  I’m being moderate.  I only bought one twelve-pack.

THE MORAL QUESTION

Thus far we haven’t run afoul of any moral question – or have we?  Here’s where we bump face to face with the modern spirit – and God.  For the Bible never keeps silent on any relation between man and man, and speaks quite loudly on dealings between borrower and lender.

Problem is, nobody today – Christian or unbeliever – wants to hear what it has to say.  Borrowers don’t want to hear “content yourself in God’s provision” or “the borrower is the lender’s slave.” [5] Lenders don’t want to hear inflation and usury called sin.

Whoa!  That’s a mite strong, isn’t it? “Sin”?  Where’s your proof?

Inflation is easy.  That’s just outright theft by fraud and adulteration, so start with the Eighth commandment,[6] “Thou shalt not steal,” and the Seventh Commandment, “Thou shalt not commit adultery.”[7]  Then work your way through all the applications of those commandments to honest weights and measures.[8] 

Usury isn’t quite as easy to prove a sin, and getting less so all the time.  Twenty-five years ago most states had laws forbidding “usury,” generally defined as “interest of more than 10% annually.”  But conquering greed has swept away even that feeble vestige, so that credit card companies are proud to brag that their interest rates are a “low” 18% and usury shops (check and title loans) can charge 800% [sic] yearly.

All Christians agree that no usury may lawfully be charged on loans to the poor.  After that the free-for-all begins.  Personally, as much as I have studied and wrestled with usury, I still come to the same conclusion (although close friends disagree):  no Christian may charge interest on a loan to another Christian, regardless whether he’s poor or not.  Charging interest to unbelievers is not forbidden at all.  The medieval church shared my opinion, but following Calvin, the Protestant world shifted its interpretation to forbid usury on poor loans alone.  That opened the floodgates of usury, although Calvin surely spins in his grave to think of it, so opposed was he to usury.[9]

But don’t let the real point get lost in the argument.  American society does not argue the fine line that divides usury from not-usury.  Rather, usury and debt enslavement have shot through the whole society like blue mould in Roquefort.  The American system is debt and usury.  Why?  Because that is the necessary and logical unfolding of the fiat money and fractional reserve system.  Your ship may pull out of New York harbour two points off course, but by the time you get to the middle of the ocean, you’re headed for Capetown instead of London.

THE WHOLE MATTER

I have tried to explain that the money issue cannot be teased out of the snarled mess of our financial system and its social progeny.  Yes, it’s true that a tiny group of plutocrats has been granted an unlawful and unconstitutional monopoly to create money.  It’s true this gives them a stranglehold on our economic life and our children’s future.  But from that starting point of fraudulent money, our nation’s whole character has been foully corrupted.  How many teaspoons of manure, after all, does it take to ruin a whole tanker-truck full of ice cream?  It is not enough to fix the money issue alone.

Where does that leave us?  Back in September, after the 9-11 catastrophes, I wrote that our primary protection lay in distance.  Here our primary protection lies in value. 

Not value as the world calls it, but value as God defines it.  Struggle against it as you may, there is no other protection for us than obeying God.  The world always called that foolish, and tempted us with the thousand rewards of disobedience, but in the end they are gravel in the mouth and cold death in the heart.

What is the only practical, and practicable, solution for us?  To seek out true value – value in our investments, value in our money, value in where we place our affections and efforts, value in how we live and bring up our children.  Eternal value.

The Preacher explained it all long ago.  “Let us hear the conclusion of the whole matter: Fear God, and keep his commandments: for this is the whole duty of man. For God shall bring every work into judgment, with every secret thing, whether it be good, or whether it be evil.”[10]

-- F. Sanders

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