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Larceny in the Heart: The Immorality of Modern Money and Economics

By Mark R. Rushdoony
May 01, 2006

When a state “creates” money without backing it up with any real, tangible asset (such as gold, or land), is it a sin? Even worse, is it a sin which forces all of the state’s citizens to be involved in it whether they like it or not — simply because they have to use the fiat money?

The gospel of Jesus Christ indicates that man’s problem is sin. As a rebel against God, man fails to understand his circumstance or his need. Until man acknowledges his moral problem, he rejects its solution. It is not enough to confess the presence of sin in general when we are aware of specific personal sins in our lives.

The need for moral examination also exists on a social scale. For example, much of the debate over abortion focuses on the inherent immorality of both the practice and the 1973 Roe v. Wade decision. We need this degree of moral examination in all areas of our lives as individuals and as a society. We must look at the moral questions behind issues. This includes money.

In 1982, my father’s Roots of Inflation dealt with the immorality of modern money and economics. When we republished the book in 2002, we renamed it; few these days are interested in the issue of inflation or its causes. After all, we have grown up with inflation. Inflation is seen as a given, part of the inscrutable mystery of modern economics. We retitled the republication Larceny in the Heart: The Economics of Satan and the Inflationary State to draw attention to the root issue, which is theft.

What is Inflation?

Inflation is an intentional act of fraud by the state on its people. Inflation occurs when the state increases the money supply with a worthless commodity so it can get something for nothing, or at least very little. When money was gold and silver coin, governments increased their spending power by debasing the precious metal content of the coins. They would add cheap metals so the coins contained less gold or silver. Paper money began as an I.O.U. redeemable for gold but became an inviting means of increasing the money supply. After all, what is to stop a government from printing paper money or notes representing two, ten, a hundred or thousands of times its wealth? And now with computers, monetary units can be created without the need for even paper or ink. They can be added electronically to the money supply.

A private bank is limited in its ability to issue paper. The value of its I.O.U.s depends on their perceived value by the public. When governments inflate, however, that free market is removed. “Legal tender” laws require people to accept costless government money. Such notes say “This note is legal tender for all debts, public and private.” The I.O.Us have now been deemed “money” by the government. The government has ordered their valueless notes to be accepted as money. How can they do this? They call it “fiat” money. It is money because the government says it is.

If you or I inflate the money supply, we are counterfeiting. It is, of course, a form of theft to take something of no value, claim it has real value, and exchange it as such. Counterfeiting is a serious crime, which is why it is reserved as a government monopoly. However, the legal tender notes are used at face value by their creator, the government, through the same counterfeiting means. It is a means to power that is more easily tolerated than taxation.

Inflation is Anti-Property

Money should do more than represent wealth; it should be a form of wealth. This is one advantage of using gold as the standard value of money: gold cannot be artificially made. It is a rare commodity for which a market value is easily determined. Because money ought to be a form of wealth, debasing money was condemned by Isaiah. When he said of Israel, “Thy silver is become dross, thy wine mixed with water...” (1:22) he was condemning larcenous dishonesty. The Israelites had a debased coinage full of cheap metal, so identifying the amount of silver in a coin (and thus its value) was difficult, which encouraged fraud in the marketplace.

Inflation destroys the value of money. It is like putting water in wine; although you increase the amount of liquid, you decrease the value of the wine. When money is “watered-down” an economy must stay ahead of the devaluation. Wealth — if measured in terms of a currency that is losing value — has to be constantly increased just to keep up with inflation.

Instead of being based on savings (capital), an inflation economy is debt-based. It represents a government debt that will never be repaid and it encourages individual debt. If the money is worth less and less, it pays to go into debt and pay off the debt with cheaper dollars. Debt outpaces the return of savings and the individual becomes dependent on debt and inflation rather than work and thrift to accumulate wealth. When the government creates fiat money it turns nothing into an asset. When individuals try to preserve their spending power, they have to try to convert their liability (watered-down money) into an asset. Debt becomes a means of doing this.

Capitalism is predicated on the eighth and tenth commandments, which protect private property from theft and forbid covetousness, thereby requiring work and thrift for the accumulation of wealth. Government inflation encourages debt as a means of out-pacing the depreciation of money. Every time the state creates money out of thin air, all the rest of the fiat money it has created is worth a little less. During inflation, saving is fruitless, even foolhardy. You would be investing in the future of a depreciating commodity. Debt and speculation are encouraged. To preserve wealth we must gamble on a rate of return that is more than the depreciation of our money. Methods of calculating vary, but some economists say our U.S. dollar has lost at least 95% of its value since the Federal Reserve Act passed in 1914.

All the fiat money has cost the government nothing. When it enters our money supply it is actually a universal tax, because we all pay when our wealth is devalued. As the creator of fiat money, the state has gained massive economic political power. Moreover, money, rather than the creation of wealth, becomes the fuel of the economy. This is the reason why the actions of the Federal Reserve (which, though ostensibly a “private” institution, has been granted government power by the state) are watched more closely by investors than any aspect of our economy. Our economy is based upon debt, which requires a constant cash flow. Like a drug addict, our economy is now stimulated by the cash flow generated by the Federal Reserve. If the flow of fiat money is interrupted, our economy goes into convulsions, so we continue the suicidal flow because the cure is too painful.

Fiat money is also socialistic. The state distributes the money and thereby increases its power. Because money represents wealth, a government’s fiat money represents governmental control of wealth. Congress does more than buy votes through entitlements and pork-barrel projects; it buys power. Power is the motive behind all inflation; it is the theft of wealth by which the state purchases control over the lives and fortunes of its people.

In good Marxist fashion, the state presents man’s problem as materialistic: a lack of spending. The state therefore supplies this spending power not from its own resources or even taxation, but through its phony money which must, by law, be accepted.

The Immorality of Inflation

Theft is taking what is not ours to take. Fiat money takes value by means of valueless money. The state acts as a sovereign creator of money; it decrees that its money has value just as it decrees that its laws are justice.

Satan’s first temptation of Christ in the wilderness was that He satisfy His hunger by turning stones into bread (Mt. 4:3). This was a challenge to Christ to evade the constraints of His humanity and live by means of miracle. It was a temptation to reject God’s economy, that of work in a fallen, cursed world, and demand the good life by the use of miracles.

Likewise, inflation is the attempt of the state to reject work and capital and turn, not stones into bread, but paper or computer digits into spendable wealth. The state spends its fiat money as if it and its favorites deserve the good life without work.

The love of money (not money itself) was called the root of all evil by Paul (1 Tim. 6:9-10). Wealth is a measure of work, thrift, and responsibility. It can represent generations of labor. Money is a valid and necessary representation of our assets, but it is a temptation to consumption and power. A man who says of his property “I love my farm” or “I love my store” does not have the same desire as does a man who says “I love my money.”

Money is more easily wasted by the improvident. The love of money can therefore represent the love of irresponsible wealth and the power it represents without the responsibility of tangible assets. One need only remember the prodigal son’s desire for a windfall rather than a life of responsibility and work on the family land. Inflation makes us constantly measure wealth in monetary terms. More than a few have fallen to its siren song and divested themselves of real wealth in favor of cash, only to find themselves the losers in speculative investments. The love of money is more dangerous to us if that money is itself a dishonest and hence a more vulnerable measurement.

Our money represents a fraud that has long empowered larceny by our government. It has, moreover, encouraged irresponsibility rather than savings and thrift. The U.S. dollar is itself a speculative commodity to which we are all tied. It behooves us all to learn more about it and how we can protect our families from the day the bubble bursts.


Topics: Biblical Law, Economics

Mark R. Rushdoony

Mark R. Rushdoony graduated from Los Angeles Baptist College (now The Master’s College) with a B.A. in history in 1975 and was ordained to the ministry in 1995.

He taught junior and senior high classes in history, Bible, civics and economics at a Christian school in Virginia for three years before joining the staff of Chalcedon in 1978. He was the Director of Chalcedon Christian School for 14 years while teaching full time. He also helped tutor all of his children through high school.

In 1998 he became the President of Chalcedon and Ross House Books, and, more recently another publishing arm, Storehouse Press. Chalcedon and its subsidiaries publish many titles plus CDs, mp3s, and an extensive online archive at www.chalcedon.edu

He has written scores of articles for Chalcedon’s publications, both the Chalcedon Report and Faith for all of Life. He was a contributing author to The Great Christian Revolution (1991). He has spoken at numerous conferences and churches in the U.S. and abroad.

Mark Rushdoony lives in Vallecito, California, his home of 40 years with his wife of 42 years and his youngest son. He has three married children and nine grandchildren.

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