Everyone who wants to win the lotto or inherit millions from a rich uncle has a little bit of criminal tucked away in their personality because they want to gain something without paying for it. In Emerson’s classic essay “Compensation” he teaches us that a price has to be paid for everything: “Justice is not postponed. A perfect equity adjusts its balance in all parts of life. {Oi chusoi Dios aei enpiptousi}, — The dice of God are always loaded.”Â
Since 1913 and the creation of the Federal Reserve, the US and World economies began a serious but not new change in the way everyday markets and the basic economy operates. The entire national and international banking system is now based on lending what the banks do not have or creating “something from nothing”Â. The USA has had a past history of similar attempts to create wealth out of thin air. The world also has had many of its own attempts of the same. The first may have occurred around the 5th century BC fable of the first bank.
The fable goes something like this: A goldsmith, in a prosperous kingdom city-state, was making an honest living making jewelery and other items out of gold and silver. However, as with many prosperous historical situations, greed and covertness set in. The goldsmith’s wife wanted to keep up with the neighborhood but the honest goldsmith’s income cramped her desires. So she applied the necessary emotional pressure to the goldsmith and he relented to her “encouragements” with a plan that would provide her wants.
The goldsmith had a safe place to store gold and many of the local prosperous inhabitants deposited their savings, in the form of gold, in the safe place of the goldsmith for which a storage fee was paid to the goldsmith and he issued a receipt for their “deposit”. In time it became apparent, by the “depositors” that making purchases with the receipts instead of “withdrawing” their gold was much more efficient and convenient. So it became a common practice to exchange gold receipt for goods and services in the kingdom.
The goldsmiths idea to satisfy his wife’s desires was to issue his own receipt for gold he did not own. He gave it to his wife and she went to the bizarre and began satisfying her desires. After a few weeks everything was going fine with no apparent repercussions from the small fraud. The goldsmiths wife soon began again her pleas for more and the goldsmith issued more receipts to himself to satisfy his wife. Weeks went by and no problems occurred until one day a rumor of some fraud in the receipts cause all the persons holding receipts to “run” to the goldsmiths safe place to “withdraw” their gold. When all the gold was withdrawn and there were still people waiting with receipts in hand for their gold, the goldsmith and his wife were apprehended and taken by those people to call on the king in his court. Finding that fraud had been committed, the king ordered the decapitation of the goldsmith and his wife.
To avoid a repeat of the same situation the king began striking gold and silver coins as a medium of exchange and so the history of money began and the end of our fable.
The same type of thinking that the goldsmith had has penetrated our economy and history. It is what I call “the something for nothing lie”. It is seemingly a small fraud, if there is such a thing as a “small fraud”Â, of little consequence as long as everybody does not show up all at once at the bank demanding their money (commonly called a “run on the bank”). The modern day goldsmiths planned to be smarter than their ancient predecessor with the Federal Reserve. If any individual bank experienced a “run”, the central bank would just send them more “liquidity” and satisfy the “depositors”. This practice became extremely simple with the major part (or most all) of the bank deposits held as computer entries. Since the 1930′s, bank “runs” have been very rare. The reason is the same as in the above fable; people had confidence that their “deposits” were in a safe place. Once the confidence is lost, the “depositors” “run” to the bank to get their deposits. Perhaps this is one reason why Fed Chairman Bernanke would not reveal to Congress which banks he was sending billions and trillions of “liquidity” because that might create a “run” on those banks. Now days it is not necessary to run to the bank but to a computer to make a “withdrawal” so we have the so called “silent runs on the banks”.
I believe one of the reasons for a shortage of “liquidity” in the Great Depression was the fact that people had a mistrust of banks and, when they heard of a bank in trouble, they immediately withdrew their gold and silver and went home with it. The bank of course had lent out what they did not have and some people were left with receipts for which the bank had no gold or silver. This is an example of people recovering their rightful place as commanders of the economy from the banks. Except of course for those who had only receipts and for them unfortunately there was no king or government to do any decapitating.
The world has functioned on honest weights and measures of commodities since time immemorial. The ancient economies of trade locally and abroad functioned very well based on commodities.
The Egyptian Pharaohs exhibited their commodities bases wealth in their scepters of the shepherds crook and the grain flail. Commodities have been the basis of economies for most all of the planetary history. The last ninety six years have been the goldsmith fraud with a new twist; however the jig is up.
The world is now returning to its historical economic roots as demonstrated in Zimbabwe of late where people are searching for gold to buy bread. ( http://www.youtube.com/watch?gl=US&v=7ubJp6rmUYM ) Three grams of gold will purchase a loaf.
The fraud of something for nothing will soon end and we will return to a sound economy based on commodities, not however without much turmoil. The central banks will not go down easily.
Moses was commanded against these types of frauds by the Lord God in Exodus 22:25 and Leviticus 19:35–37. The Muslim world has heeded these commandments by avoiding usury in their banking.
There would not be a need for a ransom to be paid for our sins if there were truly “something for nothing”Â. We all could return to live with Heavenly Father with our sins and mistakes. However this is not the case, we need a Redeemer to pay the price that the eternal law of justice demands.
The “something for nothing lie” permeates our entire world from social ideologies to central banks. It also denies the existence of a Supreme Being because it ignores our dependence on raw material and commodities for our very existence and that He created these for our benefit. True wealth comes from the commodities and raw materials provided by God and the labor of man, not the central banks.
Marvin Colley has been studying and teaching the functioning of law for the ordinary person for over 20 years.
