I appreciate all of the feedback from my readers.  One of the responses I get most often is to clarify what I’m talking about when I refer to “completed labor” versus “claims on future labor”.  This concept is not taught very many places – but it is the essential underpinning to understanding economics, especially biblical economics.

I’ll try to make this tutorial as straightforward as possible.  In return, I ask the reader to not jump ahead as they’re reading – thinking that they already understand the principles from things they may have been taught in other places.

Labor
We cannot ever have a talk about money without first having a talk about labor.  Labor is what builds economies.  Money is just the good that is used in a commerce transaction.  Labor is what we need to understand, and we should be able to apply our understanding to all areas of finance.

Let’s begin with God’s Word  on the subject:

1 Timothy 5:18 – “For the Scripture says, “You shall not muzzle an ox while it treads out the grain,” and, “The laborer is worthy of his wages.”

We see here that a laborer who completes their work has worth of a certain amount of wages.  Notice how it doesn’t say that those wages need to be paid in silver or gold – just that the labor has worth, and should be financially remunerated.  It’s great if the wages are paid in silver and/or gold, but another other form of money that is satisfactory to the worker would be just as great.

1 Corinthians 3:8 – “Now he who plants and he who waters are one, and each one will receive his own reward according to his own labor.”

All rewards are based on labor that has been accomplished – not on labor that is going to be done at some future date when we get around to it.

Matthew 20:8 – “So when evening had come, the owner of the vineyard said to his steward, ‘Call the laborers and give them their wages, beginning with the last to the first.’”

Money is to be paid on completed work in a biblical economy.  Money should not be paid on work that is going to be accomplished in the future, while pretending that the money represents completed labor.

Ecclesiastes 5:18-19 – “Here is what I have seen: It is good and fitting for one to eat and drink, and to enjoy the good of all his labor in which he toils under the sun all the days of his life which God gives him; for it is his heritage. As for every man to whom God has given riches and wealth, and given him power to eat of it, to receive his heritage and rejoice in his labor—this is the gift of God.”

Does this passage say that gold or silver is a person’s heritage?  No.  It says that completed labor is their heritage.  Being able to rejoice in our labor is a gift of God!

Ecclesiastes 2:24-25 – “Nothing is better for a man than that he should eat and drink, and that his soul should enjoy good in his labor. This also, I saw, was from the hand of God. For who can eat, or who can have enjoyment, more than I?”

We are to enjoy good in our labor.  Our completed labor allows us to use it to God’s glory!

Proverbs 21:24-26 – “A proud and haughty man—“Scoffer” is his name; He acts with arrogant pride. The desire of the lazy man kills him, For his hands refuse to labor. He covets greedily all day long, But the righteous gives and does not spare.”

We should seek to do good labor and not be lazy.

Proverbs 14:22-24 – “Do they not go astray who devise evil? But mercy and truth belong to those who devise good. In all labor there is profit, But idle chatter leads only to poverty. The crown of the wise is their riches, But the foolishness of fools is folly.”

There is profit in labor – not always in a monetary form.

Exodus 23:16 – “and the Feast of Harvest, the first fruits of your labors which you have sown in the field; and the Feast of Ingathering at the end of the year, when you have gathered in the fruit of your labors from the field.”

God is given the first fruits of labor.  However, the first fruits don’t exist on labor unless it is completed.

These are just a very few of the Bible verses dealing directly with labor.  Labor can be good or bad.  It’s meaningless if it’s done to our own glory, but profitable when done to the glory of God.

The ABC’s of Our Economic System

There are a lot of different viewpoints regarding our monetary system – and quite a few of them are demonstrably wrong.  Most of us were never taught the subject of economics in school, and we’ve learned a lot of incorrect economics from the government, media, and even within the Christian community.

What is a US dollar?  We’ve been told that it’s “fiat” currency – which is true.  Fiat is Latin for “Let it be done”.  We’ve been told that the Federal Reserve can create new money “out of thin air”.  That’s true…as can regular banks when we take our loans.  We’ve also been told that our US dollars are not backed by anything – that they used to be backed by gold, but our country has moved away from using “God’s money”.

Here’s the question….if our fiat US dollars can be created out of thin air then doesn’t that mean that they’re just paper and ink – with no backing whatsoever?  Aren’t the people that want to go back to a gold standard right?  The answer is ‘No’ to both questions.

Here’s where an hours long debate could ensue.  But let’s simply investigate what the US dollar actually is and how it gets created.  At the end you will see that, yes the US dollar is sinful as used in our current economy, but it has absolutely nothing to do with the fact that we’re using fiat currency.  It is also my goal to show that the handling of labor is what defines an economy as being biblical or unbiblical.  It has nothing, nada, nil, zilch to do with gold or silver.

Before I get started, am I stating that gold and silver are bad forms of money?  Of course not.  I’m saying that even gold and silver are sinful forms of money if the labor is handled in an unbiblical way within an economy.

The Debt Machine of the Federal Government

It would surprise most people to know that money can never exist in our current economy without the US Federal government going into debt to bankers.  This is because our entire economy is completely controlled by international bankers.  They use a “central bank” known as the Federal Reserve as their “pipeline” to the Federal government.

You should now be asking yourself the question: “Why in the world would any government allow private bankers to take over their entire monetary system? Are they crazy”  The answer is ‘Yes’ – and greedy too.

Let’s go back to the late 1600’s.  William of Orange had just conquered England in 1689 and became King William III.  He and his wife, Queen Mary II, were co-monarchs over England, Scotland, and Ireland.

England had been fighting various wars for most of the 1600’s, and wars are always expensive propositions.  England controlled its own currency, and the citizens had to pay taxes on their completed labor to support the government.  There was frustration on the part of the government that they didn’t have more money in their treasury to do more things – but they were limited in their capabilities since their economy was based on earning wages for completed labor.  The money in use represented completed labor.

Could England have created a lot more money?  Sure.  But they knew that to do so would introduce major inflation – which came with its own set of problems.  In short, England had to behave somewhat responsibly with their currency.

This probably comes as a surprise to most people, since nowadays we hear most folks bemoan the thought of a government-controlled currency.  We’re told that government can’t be trusted to manage a nation’s currency.

That’s an interesting thought – especially since most of the money around the time of Jesus Christ was managed by the Jews, the Greeks, and the Romans.  Jesus didn’t speak out against government-controlled currency.

Anyways, a group of international bankers came to King William III and gave him a “great solution” to his lack of funds.  These bankers would seek a charter for a private bank, named the Bank of England.  This bank would be in the business of buying debt from England and cranking out money in return.  In other words, the entire monetary system would be turned over to the Bank of England!  The Bank of England’s charter was signed in 1694 by King William III and Queen Mary II.

Why would King William III want to do this?  It was because of his lust for power and greed.  King William understood that he could now leverage the future labor of English citizens for money that he could use right away.  He made a promissory note with the Bank of England that enslaved the future labor of citizens for money that the Bank of England just created because they decided to.

What happened here?  The Bank of England created money that was backed by claims on the future labor of English citizens.  That future labor belonged to the international bankers.  The bankers did not have to do much of anything to lay claims to that labor – they simply had to create some money and give it to the English throne.

King William was able to get vast amounts of money, while promising to pay the international bankers in the future with labor that was not his own.  The government was able to gain power through its added resources, while the bankers laid claim to the future labor.

Let me repeat.  A debt-based currency is one that is backed by the future labor of taxpayers – it’s not void of backing like so many claim today.  That future labor is a store of wealth to the international bankers.  It’s also a store of slavery, power, and greed.

Now let’s fast-forward to 1913.  The Federal Reserve was instituted in the United States as a direct mirror to the Bank of England.  Our government sells its debt to international bankers, who also operate central banks in most developed countries.  The Federal Reserve (controlled by the international bankers) then buys some of that debt from time to time and creates new money for our money supply.  Yes, the money is created “out of nothing” – but to say that it isn’t backed by anything is COMPLETELY missing the point.  It is backed by the future labor of American taxpayers.

Let’s review.

The Federal government creates promissory notes that we’ll call IOU’s and sells them to the international bankers.  The bankers pay for these promissory notes with existing money – so no new money is yet created.  The bankers are basically swapping their claims on the future labor of American taxpayers with more claims on the future labor of American taxpayers.  However, the new claims might pay a higher interest payment – which adds claims to yet more future labor.

Now the international bankers decide that they want to increase the money supply in the US.  So they have the New York branch of the Federal Reserve purchase some US Treasury securities from them.  They get new money that has been created by the Fed, while the Fed gets the IOU’s.

All money that gets created by the Fed is debt-based, and backed by claims on future labor.

Other Ways That Money Gets Created

All of the money that the Fed creates is called “base” money.  This is what circulates into our economy, and it can only happen by the Federal government taking on more debt.

This brings up an interesting thought.  Can the Federal government ever pay off all of its debt?  Not the way our current economy is structured.  To do so would be to drastically decrease the money supply – since debt = money.

The only other way that money can be created is by people and businesses taking out loans at banking institutions.

Banks take the deposits of their customers and use them as a base for loaning out money.  A $1,000 deposit that the bank pays 1% APR on will allow them to loan out $10,000 at a much higher rate – say 9%.  The loan money is brand new money in the economy, it’s not the same money from the deposit.  In fact, most people don’t realize that the money is actually in the physical form of a loan promissory note.  Many of you have taken out loans in the past.  The moment that you lift your pen after signing your name is the same moment that our nation’s money supply increases by the amount of your loan.  That note becomes money.

What is the new money created from loans based on?  It’s based upon claims on future labor.  The bank owns your future labor, while they executed no labor in creating the money that is now owed to them.

That’s it!  Those are the two ways of creating new money in our economy.  Either the Fed creates it based on Federal government debt, or the banks create it based on new loans.  And everything is debt based upon claims on future labor.

Conclusion

Economies are based on labor.  God-honoring economies are based on completed labor, while sinful economies are based upon claims on future labor.

Gold and silver have nothing to do with whether an economy is God-honoring.  They can both be used in a “completed labor” economy, and they can both be used in a “claims on future labor” economy.  They really have nothing to do with the equation.

Our nation could back our money supply with gold tomorrow and it wouldn’t change a thing.  This is because gold operates as a commodity in our economy – and that commodity represents claims on future labor.  Commodities are bought and sold with debt-based money.

The ONLY way that our economy can return to a biblical standard is to base things around completed labor.  Is this going to happen?  No.  It doesn’t appear so.

However, there are still other ways that a parallel completed labor economy could run beside our current debt-based economy, and provide a measure of God-honoring economics.

More on that another time.