[Excerpted from chapter 13 of Guido Hülsmann’s The Ethics of Money Production(2008).]
[CONFIRMATION BY BIBLE VERSES BELOW]
“The spiritual dimension of these inflation–induced habits seems obvious. Money and financial questions come to play an exaggerated role in the life of man. Inflation makes society materialistic. More and more people strive for money income at the expense of other things important for personal happiness. Inflation-induced geographical mobility artificially weakens family bonds and patriotic loyalty. Many of those who tend to be greedy, envious, and niggardly anyway fall prey to sin. Even those who are not so inclined by their natures will be exposed to temptations they would not otherwise have felt. And because the vagaries of the financial markets also provide a ready excuse for an excessively parsimonious use of one’s money, donations for charitable institutions decline.”
Micah 6: 10-16
10 Are there yet the treasures of wickedness in the house of the wicked, and the scant measure that is abominable?
11 Shall I count them pure with the wicked balances, and with the bag of deceitful weights? [modern day fiat currency and fiat fractional reserve credit]
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.
13 Therefore also will I make thee sick in smiting thee, in making thee desolate because of thy sins.
14 Thou shalt eat, but not be satisfied; and thy casting down shall be in the midst of thee; and thou shalt take hold, but shalt not deliver; and that which thou deliverest will I give up to the sword.
15 Thou shalt sow, but thou shalt not reap; thou shalt tread the olives, but thou shalt not anoint thee with oil; and sweet wine, but shalt not drink wine.
16 For the statutes of Omri are kept, and all the works of the house of Ahab, and ye walk in their counsels; that I should make thee a desolation, and the inhabitants thereof an hissing: therefore ye shall bear the reproach of my people.
10 Divers [different] weights, and divers measures, both of them are alike abomination to the Lord.
35 ‘You shall do no wrong in judgment, in measurement of weight, or capacity.
36 You shall have just balances, just weights, a just ephah, and a just hin; I am the Lord your God, who brought you out from the land of Egypt.
37 You shall thus observe all My statutes and all My ordinances and do them; I am the Lord.’”
Now listen, you rich people, weep and wail because of the misery that is coming on you. Your wealth has rotted, and moths have eaten your clothes. Your gold and silver are corroded. Their corrosion will testify against you and eat your flesh like fire. THE MORAL ISSUES OF MONEY
Mises explains inflation so that one can understand why debasing currency (unequal weights and measures) IS AN ABOMINATION TO GOD
They are waxen fat, they shine: yea, they overpass the deeds of the wicked: they judge not the cause, the cause of the fatherless, yet they prosper; and the right of the needy do they not judge. Jeremiah 5
Thornton begins with an important discussion of money creation and Richard Cantillon, writing: “… Richard Cantillon (1680s-1734?) [was] the first economic theorist and proto-Austrian economist …[he] showed how the interest rate and the money supply can create changes and distortions in the economy, a phenomenon now referred to as “Cantillon effects.”
Monetary inflation is affected by who gets the money and credit first and who gets it last. As fiat money is created by central banks, private banks are in a position to expand the amount of loans they make. The wealthy have established relationships with the banks, and they have the real estate and assets to provide collateral for the loans. Large, established companies and wealthy individuals are in favorable positions relative to small businesses and people with low or average incomes. The loans allow big companies and wealthy individuals to invest in capital goods during the boom phase of the business cycle. Central banks thereby create artificial inequality and poverty. This is the primary Cantillon effect of redistributing wealth.”