Honest money : the biblical blueprint for money and banking

184 Pages·2015·0.626 MB·English

by  North, Gary

HONEST MONEY

HONEST MONEY
The Biblical Blueprint for
Money and Banking
Second Edition
Gary North
MISESINSTITUTE
More information on biblical economics can be obtained from
garynorth.com. See the section, “Capitalism and the Bible.”
Copyright © Gary North, 1986, 2005
Copyright © 2011, 2015 (2nd Edition) by the Mises Institute
and published under the Creative Commons Attribution-
NonCommercial-NoDerivs 4.0 International License 4.0.
http://creativecommons.org/licenses/by-nc-nd/4.0/
Mises Institute
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ISBN: 978-1-61016-637-9
TABLE OF CONTENTS
Introduction vii
1. The Value of Money 1
2. The Origins of Money 17
3. Maintaining Honest Money 31
4. Debasing the Currency 45
5. The Contagion of Inflation 55
6. When the State Monopolizes Money 67
7. Biblical Banking 81
8. Fractional Reserve Banking 95
9. Protecting the Counterfeiters 109
10. A Biblical Monetary System 127
Conclusion 141
Bibliography 151
Index 155

INTRODUCTION
This is a book about money, a subject that has defied
analysis by professional economists for as long as there
have been professional economists. At the same time, it
is a topic for which the most ill-informed people think
they have the answers. Very often the most ill-informed
people are professional economists.
I will give you an example. In the fall of 1985, I
suggested to a research assistant to Congressman Ron
Paul that he conduct a quick study of the Mexican peso.
I thought that the sharp increase in cash—American
money in circulation—might be explained by Mexican
nationals substituting dollars for pesos in Mexico. At the
time that he began his investigation, the peso was selling
for about 250 per dollar. I suggested that he ask a staff
economist at the Federal Reserve System, our nation’s
central bank, if he thought that Mexicans were hoarding
cash dollars. I suspected that Mexican citizens were using
the U.S. dollar as a substitute for the collapsing peso.
He phoned back a few days later. Two staff econo-
mists, one of whom was a specialist in the Mexican
economy, had told him that it was quite unlikely that
Mexicans were hoarding dollars, because Mexicans could
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viii Honest Money
take cash dollars to their local bank, exchange their dol-
lars for pesos, and the bank would pay them interest in
pesos.
Within one week, the peso fell to 500 to the dollar.
Thus, anyone who had followed the advice of the expert
economists had lost half of his capital. On the other hand,
those who had bought cash dollars with their pesos and
never went near a bank had doubled their money (pesos).
In short, a lot of illiterate Mexican peasants knew more
about practical economics in an inflationary economy
than Federal Reserve economists knew. Somehow, this
discovery did not surprise me.
A few months later, a report on the apparent disap-
pearance of American cash appeared in the newspapers.
It said that Federal Reserve economists now think that
people in foreign countries are using American bills
instead of their depreciating national currencies. So much
for the consistent views of economists. They just don’t
agree on much of anything, except the need to keep
economists on the payroll.
The Crisis We Face
There is a debt crisis in the making. It is international.
Every industrial nation on earth faces a crisis that could
dwarf the crisis of the 1930s. There are no pain-free solu-
tions. There will be widespread defaults on a scale greater
than those in the fall of 2008. The practical forecasting
questions we need to get answered are these: How soon
will the default come? What kind of default will it be?
This book asks a different question: What violations
of the principles of the Bible did the West commit that
Introduction ix
led us into this mess? It also asks this question: What
should we build on the ruins of the present system after
the collapse?
There are Biblical alternatives. If we had adopted
them 500 years ago, or 100 years ago, or even 50 years
ago, we would not be facing the monetary crisis that we
now face. But we didn’t adopt them, so we are facing it.