Counterfeiting

What do you think about counterfeiting? Is there anything wrong with it? Counterfeiting is illegal, but should it be? Does it hurt anybody?

When a person counterfeits a dollar bill, he can immediately spend it (assuming he did a good enough job), so the faux bill has some value. It is worth roughly a dollar. Where did this value come from?

With a new dollar in circulation, everybody else's dollars are worth slightly less. If there were only one thousand dollars in existence before the counterfeit, then every one of those bills lost value equal to one-tenth of a cent, in order to make up the value that the new bill received.

This effect is trivial for one single one dollar bill. Nobody counterfeits "one spots," anyway. But if an operation cranks out hundreds and hundreds of twenties, suddenly the effect is not so insignificant. If a person or group were allowed to keep manufacturing money in this way, they would eventually steal a large portion of the value of the rest of the money supply. So counterfeiting hurts everybody.

Here's the lesson: your government can do the exact same thing. I'm not just talking about the ability to print money: through the sale of treasury instruments, through banking mechanisms, and through good old fashioned printing, the United States government has the power to manufacture new money. When this happens, it hurts people, just the same as if it were done by somebody else. It doesn't magically become helpful just because the government does it instead of a common criminal. It doesn't magically become safe just because we took a vote on it. And it doesn't magically become a good idea because some economists (paid by the government -- go figure) claim that the money supply needs to "expand." I already showed you above what happens when the money supply is expanded like this, and it is not a good thing.

Creation of money is stealing. It changes the value of everybody else's money. It violates the command of Leviticus 19:36 -- it makes the measure of our dollar unjust and changing. Originally a dollar was equal to about one ounce of silver, or about one-twentieth of an ounce of gold. If people wanted more dollars, they had to work for them, either by selling goods or services that they labored to produce, or by digging them out of the ground.

Should Christians support the government producing more money out of nothing? Because this is one area where both of the major political parties have the same stance. They are squarely in favor of government continuing to have this power.

Pizza for pesos, part two

Pizza Patrón has announced their intention to continue accepting the Mexican Peso at their stores. Good for them! I'm sure they are making a lot of money off of this service. Good for them! Unless somebody was using force to affect the transaction (for example, by pointing a gun at someone, or passing a law requiring authorities to point a gun at someone), such voluntary transactions mean that people were served, and society, on balance, advances. In general, they will prosper in proportion to the value of the service they provide.

Money liberty is a freedom we don't often think about. The authors of the United States Constitution intended American money to be limited to gold and silver. It is impossible for the government to inflate the supply of gold and silver. Inflation is a means of stealing some value from the entire money supply and using it to create new (stolen, counterfeit) money. It is a violation of Leviticus 19:35-36. Inflation does not add value to the total money supply; it merely redistributes the value that already exists. (And unlike other government programs, it usually doesn't make any pretense of redistributing the value to the poor. This value tends to go to bankers and other credit-driven industries like real estate.) After millenia of human existence, the free market had selected gold and silver as money, the medium of human exchange. Governments used force to confiscate gold from their citizens and force their populations to use paper money instead, giving government powers over the money supply, such as inflation. (They call this power "flexibility.")

The sole reason government insists on paper money is in order to have this power over the money supply. If left to the free market, trade would probably resume again in some commodity like gold or silver. Platinum has presented itself as a modern choice that some people think could be a good medium of exchange. In older times, some societies were known to trade in butter, cartwheels, and even cigarettes. But over time, gold and silver have always tended to win out as being the most convenient for trading.

If you own your property, you have the right to do whatever you want with it, including trade it to another property owner for whatever he is willing to trade for it. But we have decided that modern societies need to have limits on freedoms like this. We tell people they may keep their property, but then we limit what they may do with it. This is a violation of God's command that we honor private property: "Thou shalt not steal." If I tell you how to use your property, I've stolen it and left you as a mere custodian. On top of this fundamental abuse of freedom that occurred in order to bring about our present money situation, the whole reason for this system's existence is so that the government can create new dollars at will: in other words, so that the government can steal from every single dollar holder at once, any time it wishes. Is this a power that Christians should vote for?

The Constitution granted Congress the power to make coins out of gold and silver, and to establish their value. In its first act pertaining to money, the Congress declared the United States dollar would be equal to the amount of silver in a one ounce silver coin that was circulating at the time. This coin had a lengthy history: in the middle ages, some of the best silver coins came from the German area of Joachimsthal. The coins came to be known as the Joachimsthaler, or later the Thaler. If it's not obvious, this is where the name "dollar" came from. Eventually there were lots of sources for Thaler-sized coins, and they were all called Thalers or Dollars. It doesn't matter where an ounce of silver comes from as long as its the same weight as every other ounce.

Long before our modern paper money, the most popular coin for trade in America was a Thaler coin called the Spanish Milled Peso, or the Spanish Dollar. America's founders couldn't care less what was stamped on their silver and gold coins, as long as the coins were of the right valuable substance, and of the right weight. Even though America eventually started minting its own coins, Spanish Pesos and American Dollars circulated side by side for over a century. Nobody thought this was strange. Benjamin Franklin, George Washington, Alexander Hamilton, Thomas Jefferson -- all of them almost certainly traded in Spanish Pesos at some point in their lives, here in America.

Government came up with the idea that it should have a monopoly on coin production within its territory. It started teaching its people the idea that they should use only their own national coins, as a matter of national pride. Almost all governments did this. Eventually governments passed laws to try to require people to use their own national currencies in most day to day transactions. This was just a step on the road to currency the government could inflate. (If everybody can switch to gold or silver coins from another country or a private mint, then they will do so the minute the government starts issuing inflated coins with less gold or silver in them. Competition, the free market, protects people's interests far better than any government.) Search your Constitution -- you'll find the power to mint coins granted to the federal government, you'll find the power to mint coins and the power to issue paper money denied to the States, you'll find an amendment that says the federal government doesn't have any powers that aren't granted to it by the Constitution (this is in an Amendment because the original writers of the Constitution thought it was obvious). If you compare with the previous Articles of Confederation, you'll find that the phrase used to grant Congress the power to mint coins originally contained permission to issue paper money -- this was intentionally taken out when the sentence was moved to the Constitution. What you won't find in the Constitution is the right for the federal government to monopolize money. You won't find any sentence granting them the right to require people to use American coins. In 1920 it took an Amendment to the Constitution to give the federal government the right to outlaw alcohol. Why did it not take an Amendment to give Congress the power to monopolize money, or issue paper bills?

If you'll check this link, you can see how much value has been stolen from American dollars. Originally, a dollar was one ounce of silver, or one twentieth of an ounce of gold. How much silver is a dollar worth now? How much gold?

Given that America's founders used coins like the Spanish silver Peso interchangeably with American Dollars, and intended us to continue doing so, I find the uproar over Pizza Patrón's private business decision to take Mexican paper Pesos to be somewhat out of place. A more appropriate uproar would be one against the criminals in government who violated the Constitution and required us to start using fake paper dollars.

Three ways to fund government

There are several ways to fund a government. Almost all of them are prohibited to Christians, though we are definitely commanded to submit no matter what they do to us. We just aren't permitted to engage in such actions ourselves. How can you fund a government? You can:

1) Tax. Take money that doesn't belong to you. We're not allowed to do that, even if the money is for good purposes (Acts 5:4).

2) Borrow. Interestingly enough, many Christians believe that verses such as Romans 13:8 prohibit Christians from going into debt (although others disagree and believe this passage is teaching something else. I'm not going to address the theological issues here.). Either way, the Bible definitely proclaims debt to not be a good idea: borrowers become slaves: "The rich rules over the poor, And the borrower becomes the lender's slave." (Proverbs 22:7) And decent finance experts such as Dave Ramsey will tell you what a bad idea debt is. If debt is a bad idea for a person, how much more of a bad idea is it for a whole group of people to go into debt? And if it's bad for a person to be in debt, isn't it wrong to put other people in debt, through the means of the state? And if debtors are slaves, isn't the state enslaving itself and its citizens when it funds itself through debt? How could any Christian support giving an institution (the state) the power to put other people in debt without their consent?

But it gets worse: debts incurred by the government are never paid off by the people who made it. Government loans are paid off a generation or two later. In other words, when you authorize your government to borrow (all those bond issues we vote "YES" on), you are stealing from other people's children, and your own. "Children are not responsible to save up for their parents, but parents for their children." (II Corinthians 12:14) Should we be borrowing from our children's future, or saving up for them?

3) Inflation! This one is my favorite. Inflation is government caused, although you will hear a million and one other alleged causes of inflation. (The government likes for you to think it is not caused by them. They'd rather have you blaming greedy oil companies or something, and coveting what they own and continuing to support government theft.) Inflation is a direct violation of Leviticus 19:35-36. In ancient times, rulers accomplished inflation by melting down all the coins they took in, mixing in more and more base metal, and reminting the coins, so that they could make more coins that were actually worth less, hoping to trick people into accepting them at the same rate for a while. In modern times, we accomplish inflation by producing more and more dollars; the U.S. money supply is constantly growing, when instead it should be constant. Every time we bring a new dollar into existence, every other dollar in the world shrinks slightly in purchasing power in order to "create" the new purchasing power of the new dollar. In other words: creating a new dollar is theft: it steals a small amount of value from every owner of dollars in the world. Repeat it a billion times and you've stolen quite a bit of value. God's ordained free market picked an inflation-proof money; you can read more about this and how government forcibly (and with direct theft) interfered with this decision in order to make inflation easier in Whatever Happened to Penny Candy, by Richard Maybury, or What Has Government Done to our Money? by Murray Rothbard. The Rothbard book is available for free online at the previous link, or you can buy it. The Maybury book is easier to understand (it's written for children) and is actually for sale at most homeschool bookfairs I've been to. Both of them have insights and information that the other does not.