Honest Money - Biblical Principles of Money and Banking

Honest Money

Biblical Principles of Money and Banking

By Dr. Gary North

Honest Money by Dr. Gary North is about where money originated from, the value of money, and the uses of it. It was written so we may have a better understanding of the value and purposes of money.

Daniel Defoe wrote a novel about a man whose ship sank, and who ended up on a deserted island for twenty-eight years. Economists use this book as an illustration about economics. They use it to show that in a world of almost nothing, a person has to make choices about how to achieve his goals and that value is based on or influenced by personal feelings, tastes, or opinions and is dependent on the mind for existence. The value of something is in terms of what he thinks it will produce for him in the future. A real historical example is the famine era in Egypt, when compared to the value of life-giving grain, money was worth nothing. In that land, voluntary exchange took place. That meant that people evaluated what the other had as more valuable and the exchange took place. That was when grain became the new form of money. Grain became the new money because it had five characteristics all forms of money have. It was divisible, portable, durable, recognizable, and scarce. If people couldn't trade forms of money, they couldn't specialize in production and increase their personal wealth. This is why people have always traded.

One of the earlier things people used to trade with was gold, which was referred to several times in the bible. It was probably where money originated from, since it had the five characteristics of money. People want to know that this is where money originated from because if we didn't know anything about money's value in the past, we would not except it's value today. Gold became one of the first common uses of money, because people recognized it's beauty and close connections with the gods. Before it became money though, it was a commodity.

Having money, wether gold or otherwise, means having to pay taxes. The state has the power over taxes. It also has the power to influence the value of a kind of money and the popularity of it, because the state is a big buying and seller of goods and services. However the state can't create money and impose it on the market if market participants don't want to use it. While the state influences money, they are not a committee to tell the market what to produce. This is called free market activity, which is described as a process of learning. With no one to tell us what to produce of how to market it, we have to learn things on our own. What we learn, we can profit from later.

In old testament times, people would exchange an item for another item that was