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HOW FRACTIONAL RESERVE BANKING OPPRESSES THE POOR


I repudiate the "modern," "scientific" world, and champion the "primitive" "agrarianism" of the Bible. I strongly believe that Biblical laws on economics should be applied in our society today. Virtually every university professor and every political economic advisor would find such an idea ridiculous.6 To those unacquainted with God's Law in the Bible, these verses will sound weird; utterly out-of-date; totally inappropriate for application in the "scientific" world in which we live.

THE BIBLE ON MONEY

Leviticus 19:35 Ye shall do no unrighteousness in judgment, in meteyard, in weight, or in measure. {36} Just balances, just weights, a just ephah, and a just hin, shall ye have. I am the LORD your God, which brought you out of the land of Egypt.

Deuteronomy 25:13 Thou shalt not have in thy bag divers weights, a great and a small. {14} Thou shalt not have in thine house divers measures, a great and a small. {15} But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have; that thy days may be lengthened in the land which the LORD thy God giveth thee.

It only takes a little thought to see what these verses prohibit. It's not that modern scholars don't understand these verses, it's just that they think they know better.7

THE FUNCTION OF MONEY: "WEIGHTS AND MEASURES"

Someone comes to me and offers to sell me grain. I want a couple of pounds. I'll give him a couple of ounces of silver in exchange for his grain. I take out what God's Law calls a "large" weight, announcing that it is a shekel (call it a pound). It is in fact more than a pound. I put it on one side of my scale, and fill the other side with my neighbor's grain. When balanced, I have more than one pound of grain. Now I take out my "small" stone, and, announcing (dishonestly) its weight, proceed to weigh out my silver. It is called "small" because it is less than what I say it is. When balanced, I have given my neighbor less silver than bargained for in payment for (more) grain. I have stolen from my neighbor.

And I got away with it because my neighbor was ignorant8or powerless to stop me.9

This isn't just a childish prank. This practice - especially when engaged in by the civil magistrate - threatens civilization itself. Let me cite two authorities for this judgment: The Bible and the U.S. Constitution. First the Bible:

Solomon comments on the Mosaic Standards in his Proverbs:

11:1 A false balance is abomination to the LORD, but a just weight is His delight.

16:11 A just weight and balance are the LORD's; all the weights of the bag are His work.

20:10 Divers weights, and divers measures, both of them are alike abomination to the LORD.

20:23 Divers weights are an abomination unto the LORD; and a false balance is not good.

Remember: "abomination" is as low as you can get in God's eyes.

Even if I didn't understand how fractional reserve banking and the abandonment of fully-backed currency leads to inflation and cripples the economy, I would still oppose it just because God said it was an abomination to Him.


In an introduction to his notes on the Constitutional Convention's deliberations in Philadelphia, James Madison, the "Father of the Constitution," noted that one of the defects the Convention was assembled to remedy was that

In the internal administration of the States, a violation of contracts had become familiar, in the form of depreciated paper made a legal tender.

Accordingly, the U.S. Constitution prohibits paper money, or the emitting of "bills of credit." (Art. 1, 10, 1) That provision reads:

"No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make any thing but gold and silver a legal tender in payment of debts; pass any bill of attainder, ex-post-facto law, or law impairing the obligation of contracts; or grant any title of nobility." ...

In Federalist Paper No. 44, possibly the most authoritative source for constitutional interpretation, Madison explained the provision:

The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it. ... No one of these mischiefs is less incident to a power in the States to emit paper money, than to coin gold or silver. The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency.

A paper money economy is designed to foster a consumption mentality. No one saves for the future if they know the money will be worth less. People are inclined to go into debt, rather than to work, to get the things they want NOW, rather than defer gratification for some future-oriented purpose. Thus, corporations are able to capitalize quickly, without providing goods or services which are valued by people of good character, and they can depend on debtor-consumers to buy their goods with newly-printed money. Paper money is the antithesis of everything the Hebrew-Christian religion stands for.

But can we legitimately apply Biblical laws against "unjust balances" and "divers weights" to our money today? Excuse me for being a fundamentalist, but I say Yes. Let us continue our examination of the Scriptures by moving from Moses to the Prophets.


THE FUNCTION OF MONEY: "MEDIUM OF EXCHANGE"

What we now call "money" emerged as an advancement over direct trade. Indirect trading is made possible by exchanging one commodity (grain, in our example above) for a highly marketable commodity (silver or gold), and then trading that commodity for what we really wanted - say, a pair of shoes. It would be difficult to find a cobbler who wanted our grain, but everyone accepts gold and silver because they can be traded for anything. So we trade for gold, knowing we can trade that for what we really want.

Money is the most highly marketable commodity.

By the time of the prophets, new twists on an old formula had developed. The "balance" spoken of so often in Scripture was made obsolete when silver and gold were minted into pre-weighed, ready-to-trade ingots of various shapes and sizes, the predecessor of modern coins. A creative and Godly innovation.11

But covetousness and theft were not far behind. Demand "just weights" if you want, but take a closer look:

Thy silver is become dross; thy wine mixed with water. (Isaiah 1:22)

The silver ingot was in fact minted from the worthless base metals which were refined out of the silver, and was merely coated with silver to give a deceptive appearance.

Sure it was a full shekel; but a shekel of what?

But as the saying goes, you get what you pay for.

Sure you got a full gallon. But a gallon of what? Liquids were diluted down, fillers were added to grain. Everybody was cheating everybody else. Economists of the day may have been lamenting an "inflationary society."

And of course, the ones who got hurt the most were the ones caught in the middle without power; the ones Isaiah spoke of most often:

Put away the evil of your doings from before mine eyes; cease to do evil; learn to do well; seek judgment, relieve the oppressed, judge the fatherless, plead for the widow. (1:17)
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. (1:23)

CURRENCY DEBASEMENT AND VIOLENCE

The Prophets were far more spiritually discerning than those of us who spent years in State-accredited Universities instead of hearing and doing God's will. As students of God's Law, the Prophets were quick to see the oppression framed by the laws of men.12 The Prophets saw that there is a connection between "false weights" and oppression of the weak. Just as Isaiah did, Ezekiel proclaimed this devastating correlation:

{45:9} Thus saith the Lord GOD; Let it suffice you, O princes of Israel: remove violence and spoil, and execute judgment and justice, take away your exactions from my people, saith the Lord God. {10} Ye shall have just balances....

Modern Man does not understand the connection between violence and debased monetary systems. The Prophets did. Micah's message is similar to Ezekiel's:

6:8 He hath showed thee, O man, what is good; and what doth the LORD require of thee, but to do justly, and to love mercy, and to walk humbly with thy God? {11} Shall I count them pure with the wicked balances, and with the bag of deceitful weights? {12} For the rich men thereof are full of violence, and the inhabitants thereof have spoken lies and their tongue is deceitful in their mouth.

But do 20th-century people have unjust weights in their purses today? Take out a quarter or a dime and I'll show you: "your silver has become dross" (Isaiah 1:22). You and I are carrying Hollywood currency: coins which are worthless melted-down coke cans coated with a shiny substance that looks like silver.13 The dimes and quarters in our pockets and purses tell lies. Their lies come out of our mouths each time we spend them.

But haven't modern economists pretty much done away with gold and silver? Aren't our coins mere tokens? Don't we have a completely different economic system in our day, one which the Bible says nothing of? Is there any reason to worry about "just weights and measures" in the modern age?

Only if you're concerned about oppressing the poor. Understanding alchemy may make the connection clear.

THE ALCHEMIST: IDOLATER AND THIEF

All those singled out by Isaiah were trying to get something for nothing. They wanted what others had, but at no cost to themselves. They wanted to receive, but not to give. Jesus says we are to be the servants of others; Paul says covetousness is idolatry, the worship and service of self (Colossians 3:5; Ephesians 5:5).

During the Renaissance, Alchemy again flourished. One of the least occultic goals of the Alchemist was to turn wood or lead or something worthless into gold. "Better living through chemistry." The ivory-tower alchemist was looking for a way to put the wealth of the workers into his own pockets. His goal was not service (to increase the amount of things he could give to other people) but self-worship (to increase the amount of things he could buy for himself).

People accepted gold in trade for their grain or their shoes or whatever they produced, because it was universally accepted.14 But if everyone could turn worthless substances into gold, the economy would be flooded with gold, and soon gold would no longer be accepted in payment for things produced "the old fashioned way." The alchemist's hope was that only he could discover the secret. As long as he was the only one creating new gold, the economy might not notice.

In fact, however, the economy as a whole would notice, but he hoped he could go undetected because, as the lone alchemist, his only impact on the economy would be to raise prices by an insignificant amount.15 A conscience-stricken alchemist rationalized his actions by anticipating that the effects of his actions would be dissipated throughout the economy and would go unnoticed. Unnoticed, perhaps, except by God, Who sees that theft has occurred.

"But this is ancient history," some will say. "This has nothing to do with me. Why should I worry about gold and silver when homelessness is on the rise?16 Why should I worry about some greedy old mad scientist when the U.S. is sending arms to kill children in Iraq or Latin America?"17 There are many reasons. To understand them, we need to understand how covetous, archist18 economists have gone beyond Isaiah and beyond the alchemist into new realms of oppression and theft. The computer is their weapon.

BORROWER: IDOLATER AND THIEF

Inflation is the modern equivalent of alchemy. "Inflation" does not refer to a rise in prices. Rises in prices are caused by inflation - inflation of the supply of money in the economy. The government increases the supply of money so it can buy more guns. This is why in 1965 the government decided to get more guns for the buck by minting more bucks for the guns.

But this nickel-and-dime stuff is penny-ante. Although far more efficient than replacing the silver in coins with zinc, even the ability to print up paper dollars on the printing presses19 is small potatoes. Let's talk about the banks and their computers.

The alchemist dreamed of turning some worthless substance into wealth. He never dreamed that the day would come when wealth could be created ex nihilo - "out of nothing." But that day is here. In fact, in our day, wealth is created out of debts - by employing the U.S. Government to transfer wealth from marginally-poor working producers to the paper-shuffling upwardly-mobile. Here's how it works:

Imagine a young man from a fine upper middle-class background, fresh out of a name-brand University, climbing the Secular Humanist "ladder of success." The big corporations and military contractors have been to his university, interviewed him, and he already has a slot on "the fast-track." With all this under his arm, he walks into a bank, informs the loan officer that he just got married and wants to play his part in the system: he's ready to pursue "the American Dream." First step: "buy" a new home in the right part of the right town (i.e., away from the poor). The loan officer is only too ready to help out. After a few phone calls and signatures, the young man walks out with a quarter of a million dollars.

Where did the money come from? The piggy-banks of a million children who brought their tu'pence to the bank? No. This money does not represent underconsumption and "saving for the future." The money was created out of thin air. An account was opened up in the name of Mr. Rising Young Executive on the bank's computer, and 250,000 electronic blips were put inside.20 The U.S. Government calls these blips "legal tender," and all law-abiding people are compelled by the State to accept them in exchange for the fruits of their labor.21

"Are you saying borrowers create money?" Yes.22 Let's look at a statement or two from a book published by the Federal Reserve Bank of Chicago (a branch of the U.S. Central Bank), entitled, Modern Money Mechanics: A Workbook on Deposits, Currency and Bank Reserves.

The actual process of money creation takes place in commercial banks. [D]emand liabilities of commercial banks are money. These liabilities are customers' accounts. They increase when the proceeds of loans made by the banks are credited to borrowers' accounts.

Banks can build up deposits by increasing loans and investments.

Expansion [inflation] takes place only if the banks . . . increase their loans or investments. Loans are made by crediting the borrower's deposit account, i.e., by creating additional deposit money.

Expansion continues as the banks . . . increase their loans . . . crediting borrowers' deposits - creating still more money - in the process.

These statements do not constitute a shocking disclosure. We read about it every day in the papers, and hear about it on the Evening News: When inflation gets out of hand, what does the government do? It raises interest rates. This makes it more costly for covetous consumers to go to the banks and create more money to spend into the economy and raise prices.

There is nothing "conspiratorial" here. The Feds (the Federal Reserve System) have nothing to hide. The System was created precisely to manipulate the money supply and allow the government to buy the things it wants - including the votes of the middle and upper classes - by giving them the power to buy the things they want - "at low, low, interest."

And the most important fact to remember: every act of "credit expansion" which is undertaken by borrowing, is an act of currency debasement -- an act of creating false weights. It is an abomination to God.

REDISTRIBUTION FROM "THE UNDESERVING" TO THE FAVORED

Think about the law of supply and demand once again. Mr. Rising Young Executive has just created money, which means he walks into the economy armed to the teeth with DEMAND. Meanwhile, SUPPLY remains the same, because Mr. Rising Young Executive has produced nothing of value. An entire nation of similarly-advantaged debtors are also going to the store to buy their share of a limited supply of goods.

It is the poor, of course, who do not have access to this new money. Lacking their three-piece suits, their slot on the fasttrack, their wife and 2.2 kids, or, above all, a clean TRW, they cannot create money for themselves. They can buy food for their family only after the debtors have bid all the prices up with their newly-created money. The debtors get their corn flakes and milk; the working poor must choose between paying the rent and buying food.

Inflation (whether speaking of an increase in the supply of money, or of a rise in prices) is caused by debtors who exploit an unBiblical money system to their own advantage.24 Inflation can take an average of one paycheck a year from everyone, and there are many people who are one paycheck away from living on the street.

It is no wonder (at least to "Bibliolators" like myself) that the prophets always spoke of oppressing the weak when they reminded their hearers of God's Law concerning honest money. Creating money at the bank is like getting "cuts" in front of the poor in line at the grocery store.

The origin of this system of money is a dark and tangled one, involving powerful banking interests and ignorant or corrupt politicians. The bankers get their usury paid, the politicians get their vote-getting programs funded, and the generals get their "smart bombs" dropped. But above all, Americans get everything the TV says they need for "salvation."

Much more could be said about going into debt: how it is offensive to God and self-destructive (Romans 13:8; Proverbs 22:7). But in our nation, debt is supported by a false system of money. Few people are aware that getting the "money" we want through a bank or one of its crony "financial institutions" is theft and oppresses the poor. It produces "money" which a Christian should not want to possess even if it were interest-free; even if they were giving it away.

CLEANSING OUR HOME

"Giving it away." In a sense, the State has been "giving away" this un-money for decades. Anyone willing to go into debt can get their "fair share." It is a satanic bribe. It is a trap. Deuteronomy is inescapably clear:

Thou shalt not have in thy bag divers weights, a great and a small. {14} Thou shalt not have in thine house divers measures, a great and a small. {15} But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have; that thy days may be lengthened in the land which the LORD thy God giveth thee. Deuteronomy 25:13-15

The implications of this verse are staggering.

God is shortening our days because we claim that economics is "neutral." We must cleanse our homes of the abominable currency of the Humanistic, pagan State. Doing so will expose our own indebtedness, our own covetousness, our complacent, self-serving application of God's Law, our idolatrous trust in the State for "financial security," and our failure to avoid being conformed to the world (Romans 12:1-2). Transformation of our lives and culture by the Holy Spirit can then begin.


(6) That's OK; God ridicules the inflationary, oppressive, violent society they have created with their own laws. (Psalm 2:4)

(7) The post-Vatican II world does not think highly of anyone who goes back to the Old Testament and urges the Church and the world to follow its now-obscure laws on Economics. The conflict between Modernism and Traditionalism is most acute when it comes to money. I have explored this tension in an Appendix to this booklet. If I didn't include it, ask me for it!

(8) and I am guilty of deception

(9) and I am guilty of extortion. I am probably also authorized by the State to do so.

(11) Unless the shape you chose was a pornographic image of one of the local or neighboring "gods" (Psalm 115:4; Isaiah 46:6; Deuteronomy 27:15; Ezekiel 16:17).

(12)

"Shall the throne of iniquity, which frameth mischief by a law, have fellowship with Thee? They gather themselves together against the soul of the righteous, and condemn the innocent blood" (Psalm 94:20-21).

(13) Only a nation with 2 TV's in every home could be so easily fooled. (Or could it be that a nation of self-centered, TV-watching consumerists demanded this kind of money?)

Many of my friends made big-time profits when they followed the advice of the think-tank I used to work for (before I was there -- back in 1964). They took their savings accounts and traded them in for dimes and quarters. Literally. Then in 1965 the government stopped minting silver coins and replaced them with Isaiah one-twenty twos. Today you cannot buy one 1964 dime for less than ten 1965 dimes. (It would be even more, but the price of silver and gold is manipulated by the State, because back in the late 1970's and early '80's right-wingers and others started buying large amounts of gold and silver to hedge against the increasingly worthless U.S. "dollar." It took ever-larger numbers of paper dollars to buy a silver dollar or gold coin of any kind, and the word was getting out that U.S. money was worthless. Too many people were clamoring for honest weights and doubting the integrity of the government. The State had to put a stop to that kind of thinking.)

(14) Silver and gold were universally accepted because they were scarce (valued), transportable, divisible, and durable. They were not universally accepted because the State decreed by law that they must be.

(15) The "law of supply and demand." If the demand for shoes increases but the supply of shoes remains the same, the price goes up. If the demand for shoes decreases but the supply remains the same, the price goes down. Etc. etc.

(16) Ask yourself, where did their rent money go?

(17) Ask yourself, where did the government get the money for their "smart bombs"?

(18) Jesus said His followers were not to be "archists" (Gk.: archein) but servants (Mark 10:42-45). Find out more.

(19) If you or I run the presses it's called "counterfeiting." If the State does it it's called "Progressive Monetary Policy."

(20) A poetic over-simplification, of course. It really only takes one bleepin' blip.

(21) Violent, coercive force is applied against all who refuse to use these false weights and measures.

(22) I'm also saying that borrowers debase the currency; the money they create is not gold or silver, but an unjust weight. This makes every other unit of currency worth proportionately less.

(24) These "debtors" include the upwardly-mobile and the State itself.


Next


Cleansing the Home  | | The Ungodliest Man in the World!   | | God's Law Concerning Money    | | Usury and Unabombers   | | What About Borrowing?  | | "The Evils of Capitalism" -- Wrong Enemy  | | FRACTIONAL RESERVE BANKING AND VIOLENCE  | | Getting out of Paper  | | A Purified Life  | | The Freemen of Montana | | For Further Reading


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