December 2021: The Dollar Is Not Money
About a year and a half ago a lot of information about our current economy began coming to Us. We have studied this for over three and a half decades and have reached some simple conclusions about the world and Us economies; what they are and what is wrong with them. One of the articles proposed that modern currencies, such as the dollar, euro, yen, ruble, etc. are not money, but something else. After reading the article, We looked for a definition of money from the aspect of The Church, both Scripture and Tradition. We did not find much for an actual definition, so We ended up with Aristotle
Aristotle defined four marks of true money:
Durable- the medium of exchange must not weather, fall apart, or become unusable. It must be able to stand the test of time.
Portable- relative to its size, it must be easily movable and hold a large amount of universal value relative to its size.
Divisible- should be relatively easy to separate and put back together without ruining its basic characteristics.
Intrinsically Valuable- should be valuable in of itself, and its value should be totally independent of any other object. Essentially, the item must be rare.
Saint Thomas Aquinas (Summa II-II Q78 A1) does tell us that money is a commodity. He compares it to wheat and wine, which are both consumed when used. Money is also consumed, when used, because we exchange it for something else, whether for wheat, wine or to buy a house.
Modern currencies are portable and divisible, but they are not intrinsically valuable or durable. One author years ago observed that government is the only entity capable of taking something valuable, paper, and making it worthless by applying ink. Modern currency is certainly not durable. An average dollar bill lasts about six and a half years, which is not durable. As we go cashless, currency will be durable as long as there is electricity. Modern currency is certainly portable, since we can easily make transactions. It is also easily divisible.
If these currencies are not money, then what are they? We have chosen the term currency to identify them. They are being used in place of money at the moment, although they have no real value in any way, shape or form. They are backed by the full faith and credit of the issuing entity, whatever that means. People may complain about our faith in God, and yet they have equal or more faith in something that is intrinsically worthless. Once people lose faith in modern currencies, they will return to their true value, which is nothing. It has happened in the past in Germany prior to World War II. Inflation became insane. A book on this had a small chart showing the inflation rate. It had a caption that said that if we tracked the last year, this chart would be over 200 miles tall.
A very short history of how we were led away from something that fits the above definition of money to where we are today is in order. For millennia gold and silver were the main forms of money. Look up gold and silver in Sacred Scripture and you will find many references to it. Gold and silver have one drawback. In large transactions they are not easily portable. So replacements on paper were invented to facilitate their transportation. Also similar contracts were invented to reduce the risk of robbery for traders on long journeys. This occurred before the Protestant Revolt.
The word salary comes from the Latin word for salt, because one time salt was used for money. After word War II, cigarettes were used in Germany as money, because the Reich Mark had collapsed with the collapse of the Third Reich and it took time to rebuild the government and issue something to replace cigarettes.
More recently it was decided to issue currency as a replacement for physical gold and silver, such as dollars, pounds, etc. The pound, for instance, originally was one pound of silver. A hundred pound note is far easier to carry than a hundred pounds of silver. So for every pound of silver or gold you deposited you would receive a note worth that amount, which someone else could redeem from the place you deposited it. What those issuing these certificates realized is that usually there was not any demand for more than ten percent of what they had on deposit. And so they issued certificates that were not backed but anything but people's faith in them.
Father Fahey explains this: "Given the defective principles of money manipulation outlined in the last section, it is easy to see how financiers came to occupy their present dominant position in modern States. The bankers observed that about 90 per cent of their total stock of gold remained in their vaults, entirely undisturbed, and that only about 10 per cent of the precious metal was required for the normal transaction of business. The Banks then began to circulate far more promises to pay gold than they had gold to meet and to collect interest on the fictitious money." (Money Manipulation and Social Order, Fr. Dennis Fahey, page 19)
Today the pound has lost a lot of weight and is only worth about two thirds of an ounce of silver. The reason is simple and the the next steps. Once this currency is accepted in place of money by people, the underlying support, such as gold and silver is removed. All that is left is a piece of paper or an electronic entry in cyberspace backed by the full faith and credit of some central bank.
More recently a new form of money has been issued, which is backed by the full faith in the internet. These are called cyber-currencies. Some think they will rival and possibly replace government currencies in the future. Governments are also trying to get into the mix by issuing their own rivals. In the past two years We have received a great deal of information about what the future may hold.
We will not be offering a solution, which everyone will ignore, but attempting to offer moral guidance of what to do in an insane economy, which is based upon faith in those who are unfaithful.
The solution to the problems in the world are found in Sacred Scripture where Saint John the Baptist advises us: "Bring forth therefore fruit worthy of penance." The Douay Rheims footnote tells us: "Which word, according to the use of the scriptures and the holy fathers, does not only signify repentance and amendment of life, but also punishing past sins by fasting, and such like penitential exercises." The only way to fix our economy is to convert the world, because only God can repair things.
There is an old joke about baseball. Joe was sent out to left field and dropped ball after ball and couldn't make a play. The coach pulled Joe out and put John in left field. John proceeded to do the same thing in the next inning. When the coach asked John what was wrong, John said: "Joe messed up left field so that no one can play it." The government of the world have messed up economics so that no one can fix it, except God. Our fear is that a god will come along to be the man with the plan.
Let us pray and ask God's guidance through these troubling times.