Wednesday, August 17, 2011


Last time we spelled out the fundamentals of the economy: specialized labor, trade, and currency (money).

1 Timothy 6:10
"For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs."
This verse is often misquoted as "money is the root of all evil", but it clearly love of money (elsewhere greed is identified as a form of idolatry).

The Kingdom of Israel (as spelled out in the Old Testament) made use of currency (the shekel). Through most of history, money was in the form of precious metals (gold, silver, and copper or bronze).

Many people today bemoan the move off of the gold standard (where paper currency is tied to physical goods, usually blocks of gold) (Ron Paul, I'm looking at you).

However, it is important to realize currency is simply the "working fluid" of the engine of the economy. It's like only putting 1 quart of oil in your engine, because 1 is such a good number - being neither prime nor composite.

A growing economy needs more money to keep transactions going smoothly. This is also the source of inflation (increase in the cost of goods). As more money chases a limited number of goods, prices increase. As long as inflation is predictable, it can be handled. As long as it is low, it can be handled. Unpredictable inflation is a serious problem, unpredictable high inflation can be deadly.

The real problem is that money is also a proxy for power.

Money is related to time, but not exactly comparable. Wages are paid out per hour of labor, but everyone gets the same amount of time (168 hours per week).

If you imagine power and influence coming through the use of one's time (getting people to agree with you), then money allows you to achieve the same purpose in little or no time.

This allows some people more influence in proportion to their money.

Now, this is ratio thing. If I am a millionaire, and everyone else is only millionaires then we are all equal. But if I am a billionaire, and everyone else is millionaires - I have an edge. We see this in the rising cost of political campaigns. People will spend millions (I seem to recall the last presidential election approached a billion from all sides) for these jobs. Callous people believe this is an investment which will be paid back, but not necessarily so. Once you have enough money, you can effectively view power as the end, and money as the means (power becomes a "good" which can be bought, rather than an investment with a return).

This is a problem outside of economics. It is a political, and ultimately, theological problem.

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