Gods Word and Economic Policy

This is from the members only side of Gary Norths web site. It shows the clear connection between Govt policy and how God through his Word claims authority over what governments do. We do not get to hear much on how Gods word comes to bear on economic policy. If you dont think you will find something when you look,you probably wont see it.


...WHY GOVERNMENTS HATE GOLD

When a society's monetary system is based exclusively on private contracts and voluntary exchange, civil governments find it difficult to make money by counterfeiting. They cannot directly control the monetary system. They can influence it through legislation and the courts by altering what constitutes a legally enforceable contract. The main interference here is a government's decision to allow banks and private storage facilities to issue receipts -- IOUs -- for gold or silver that are not covered 100% by the quantity and fineness of the metal promised on the receipt. This violates private contract law. It authorizes fraud. It legalizes counterfeiting. But the government is not helped much by this interpretation of contracts. Banks and warehouse storage facilities are the main beneficiaries.

The history of civil government has been a history of the governments' assertion of sovereignty over money. They do not prove the case for such sovereignty as an inherent attribute of civil government. They do not even mention this theoretical problem. There merely enforce the principle by law.

There is a reason for this. All civil governments, with the lone exception of Byzantium from 325 to 1453, have deliberately tampered with the metal content of the monetary unit. They have practiced counterfeiting. They have added less expensive metal to the silver or gold and have then spent the new money into circulation at the older, higher value.

This is theft. Governments steal from naive, trusting individuals who sell at yesterday's prices on the assumption that the nation's official counterfeiter has not, coin by coin, stolen silver or gold and replaced it with tin or some other base metal. The skeptics see what has happened and raise prices, or they borrow with the intention of repaying the loan with money of reduced purchasing power.

Counterfeiting, when practiced by a private agency not licensed by the government, is denounced as theft and is prosecuted by the government. On the other hand, whenever counterfeiting is practiced by a national government or a government-licensed central bank and fractionally reserved commercial banks, this is referred to as scientific monetary policy. It is heralded by free market economists as being in the public interest.

Central banks are charged with the responsibility of carrying out monetary policy. The major purpose of the Federal Reserve System (and other central banks) is to regulate the money supply and provide a monetary climate that is in the interest of the entire economy. (Gwartney & Stroup, "Economics," 4th edition, p. 281).

A MORAL ISSUE

Sometime around 750 B.C., the prophet Isaiah identified the practice of monetary debasement as one of a series of government acts against the public interest.

Thy silver is become dross, thy wine mixed with water (Isa. 1:22).
The process of debasement, he argued, was initially moral debasement. It affected the entire nation. "Wash you, make you clean; put away the evil of your doings from before mine eyes; cease to do evil" (Isaiah 1:16). Then it became judicial debasement. "Thy princes are rebellious, and companions of thieves: every one loveth gifts, and followeth after rewards: they judge not the fatherless, neither doth the cause of the widow come unto them" (Isaiah 1:23). But its most visible mark was monetary debasement.

This led to the debasement of wine, i.e., product quality debasement. He warned of God's wrath to come.
Therefore saith the Lord, the LORD of hosts, the mighty One of Israel, Ah, I will ease me of mine adversaries, and avenge me of mine enemies: And I will turn my hand upon thee, and purely purge away thy dross, and take away all thy tin (Isaiah 1:24-25).

Academic economists refuse to identify monetary debasement as a moral issue. Economics textbooks at every level discuss fractional reserve banking in terms of technical issues, never moral issues. The only exception is Murray Rothbard's little-known textbook in money and banking, "The Mystery of Banking." He identified fractional reserve banking as immoral. It involves theft. The book was never adopted by any economics department. It soon went out of print. You can download it for free here.


There is moral cause and effect in society. Because counterfeiting by any agency is immoral, because it deliberately forces the redistribution of wealth from those who spend the money late in the process, after prices have risen, society suffers. An assault on the integrity of contracts undermines cooperative ventures.

Whenever the government or its licensed monopoly, the national central bank, spearheads this assault, the public is unable to defend itself. It does not even suspect there is a problem until the rate of price inflation is widespread. Even then, the government and its spokesmen blame speculators for rising prices.

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