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A Tale of Two Economies
publication date: Dec 12, 2009
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author/source: Brad Hamill
This Economic Update is going to challenge common thought with regards to what
constitutes a Christian-based economy. We’ve all been told that we need to get
back to a currency backed by gold and/or silver. This will put our economy in
accordance with God’s Word. Conversely, there is no way to obey biblical
economic principles as long as we’re using a “fiat” currency that many call
worthless and backed by nothing.
Let’s turn all of that on its ear and show how it’s LABOR, not the composition of the currency, that determines a biblically-based economy. Ready? Our Current Economy Gets Backed By Gold What if we were to redo our current economic structure by replacing all of our US dollars with pure, precious gold! Can you say Utopia??? All of our economic problems would disappear! The grass would be a little greener, and the sky a truer blue! Or would it? Let’s pretend that we keep our current economic structure, but we start from the beginning. No “money” exists yet, so we’re going to introduce it into the economy. However, instead of “worthless” paper dollars we’re going to introduce sparkling gold! Here we go! Ready??? Remember, we’re going to introduce “money” the same way we do now, just based on gold instead of fiat currency. First off, NO money can enter our brand new economy until the US Federal government creates new debt! That’s right! All new currency in our economy is based on the US government entering into debt. OK, so the Federal government finds some extra paper lying around and stamps “IOU” all over it. We’ll assume that they create IOU’s in the amount of $1,000. Now what? Can these be spent? No…the Federal government has given up ALL authority to create money and given it to private international bankers. So what is the US government going to do with their $1,000 of IOU’s? Answer: They’re going to ask the New York branch of the Federal Reserve to sell them via a Treasury auction. The New York branch of the Federal Reserve (a private institution controlled by international bankers) schedules a Treasury auction to sell the government’s IOU’s. Who is going to buy them? US Treasury securities sold at auction are typically bought by “Primary Dealers” (major international banks) and various Foreign Central Banks (FCB’s). All of those FCB’s are private institutions as well – not government entities. Anyways, the Treasury auction is held and nobody can buy the $1,000 of IOU’s! Why? Because there’s no money yet! J Let’s say that one of the Primary Dealers takes out an overnight loan with the Federal Reserve for $1,000. The Fed is the one with the authority to control money in our economy, so they have the power to credit the Primary Dealer’s account with a $1,000 loan. And guess what? Instead of it just being a computer entry, we’re going to assume that the loan is given IN GOLD!!! Now the Primary Dealer (international banker) gives the Federal government $1,000 in gold – in exchange for the $1,000 of government IOU’s. We need to pause and ask a question. What exactly are those IOU’s? The IOU’s that the Federal government creates at will are actually “promissory notes”. They are a promise the Federal government has made that taxpayers will repay the debt through their FUTURE LABOR. So what do we have so far? The Primary Dealer owes the Fed $1,000 for the overnight loan they took out. The Primary Dealer also holds $1000 worth of claims (IOU’s) on the FUTURE LABOR of American taxpayers. The Federal government has $1,000 worth of gold. We’re going to have the Fed buy the $1,000 of IOU’s from the Primary Dealer. They’ll pay for the IOU’s with $1,000 worth of gold that they take out of their vault. Now the Primary Dealer has a $1,000 loan and $1,000 of gold. The Fed has $1,000 of IOU’s from the Federal government and claims on a $1,000 loan to the Primary Dealer. The Federal government still has their $1,000 of gold. The Primary Dealer is now in the position of having to pay back their overnight loan. So they take the $1,000 of gold they have and use it to pay off the $1,000 loan from the Fed. They have no money and no loans. The Fed has claims on $1,000 of American taxpayer FUTURE LABOR, and the Federal government has $1,000 of gold. The Federal government will now spend that $1,000 of gold into the economy. Various people will get some of it, and it will eventually work its way into banks as various deposits. The banks will use these deposits as a base from which they make loans to other customers. Banks keep 1/10 of their deposits as reserves and loan out the rest. Those “loans” are based on the debtor promising to pay the banks their FUTURE LABOR to repay something which cost the bank nothing to produce. This allows the economy to leverage the “base” money that was created off of the Federal government’s debt by a factor of 10. This means that the money supply of our economy could grow to a maximum of $10,000 worth of gold. Notice what has happened. The Federal government got $1,000 out of the deal – plus whatever taxes they took from the other $9,000 the banks created. The bankers got CLAIMS ON FUTURE LABOR worth a total of $9,000 for doing absolutely NOTHING except taking IOU’s from citizens that wanted their “stuff” NOW instead of working for it first! The Federal Reserve (owned and controlled by the international bankers) got CLAIMS ON FUTURE LABOR of the remaining $1,000 of US government IOU’s. Think about this. What profession should you enter if you are a lazy sloth that wants to enslave others to do your labor for you – and get incredibly rich from the process? Answer: Banking! Also, think about this. The banks were only able to create those $9,000 worth of debt slaves by having other people deposit the initial $1,000 in the form of deposits at the bank! The banks are telling us how “safe” our money is, and how “responsible” we’re being by storing our money with them. In reality, they’re playing us for fools and using those same deposits to enslave our nation. What happens if our economy needs more than $10,000 to run? Simple. The Federal government has to issue some more new debt in the form of Treasury securities – and the process begins all over again. Banks get richer, while taxpayers become more enslaved. But don’t worry! We still have our video games!!! and football!!! and the Colorado Rockies!!! and we get to immerse ourselves in the tawdry details of Tiger Woods’ marriage!!! What….us worry? Besides, our economy in this example was based COMPLETELY on gold as a currency. It’s biblically based! Right??? Now let’s turn the tables and see if we can have a biblically based economy using “worthless” fiat currency. A Biblical Economy Backed By Fiat Currency Is it possible to have an economy backed by paper currency? Or do we need gold and silver to keep it biblical? Let’s investigate an economy that is very biblical, yet uses fiat currency. Again, let’s begin with a new economy that has zero dollars. But this time, we’re going to design our economy around the concept of COMPLETED LABOR, and the banks only keep our money safe for us – they don’t use our deposits to create new debt. Also, the Federal Reserve ceases to exist. The US government becomes the issuer of our nation’s currency. So how does this work? The US government prints a certain amount of money for our money supply – let’s say $1,000. It then spends the money into the economy. This spending does not include “handouts”. All “handout” programs are stripped from the Federal government and relegated to the states, municipalities, and churches. People earn the money by completing labor, with the value of the labor based on supply and demand. People take their money to the bank and deposit it for safe keeping, paying a small fee to the bank for the service. Commerce happens as normal, except for the fact that everything is based on completed labor. If you don’t work then you don’t get paid. If you’re an able-bodied man who refuses to work then you don’t eat. What if the economy needs more money to function? Then the government creates it and spends it into the economy. What if the Federal government decides it needs to print and circulate $100 trillion dollars? Then we exercise what is written in the Declaration of Independence and take back control from the tyrants – by force if necessary. Notice how this economic system is completely biblically based. And it has NOTHING to do with gold or silver. It simply affirms that a true, honest, biblical economy is structured around the concept of laboring before you get paid. Banks would not be able to create debt slaves in this type of economy, since they would not have the authority to issue debt. If they tried, then they would be summarily shut down. Does this mean that not all people can own houses? Yes. Does this mean that not all people can own two cars? Yes. Does this mean that people will need to rely more on Christ and the biblical model of relationships to survive? Yes. And most importantly – people would no longer be serving two masters. They would be free to serve Jesus Christ alone! They would have true liberty! Warmly, Brad I welcome your questions and/or comments. brhamill@hamill.com  Christian Economics, Christian Finances, Christian Money, Christian Wealth, Christian Mortgage, Christian Mortgage Advice, Christian Mortgage Counsel, Christian Mortgage Consulting, Christian Investing, Biblical Economics, Biblical Finances, Biblical Money, Biblical Wealth, Biblical Mortgage, Biblical Mortgage Advice, Biblical Mortgage Counsel, Biblical Mortgage Consulting, Biblical Investing, Creating Wealth, Mortgages For Christians |
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