“When economics becomes a branch of politics, it ceases to be economics and becomes messianic. It becomes an instrument of power whereby men play god and plan to use human beings as their raw material.”1
~ R. J. Rushdoony
Much attention has been focused on the messianic nature of the images and promotion of Barack Obama. The criticism of political leaders is often party-selective; such imagery has been part of modern politics for many years, most obviously in the rhetoric of political nominating conventions. It behooves us to see as equally offensive the tendency of all statists to project themselves as noble paragons of truth and justice.
In 1982 my father published Roots of Inflation, which included an essay describing what he referred to as the “economics of Satan,” as displayed in the first temptation of Christ in the wilderness. It was such an important point, we used it as part of the subtitle when we retitled the book’s re-release in 2002 as Larceny in the Heart: The Economics of Satan and the Inflationary State.
The first temptation dealt with an economic need, food (immediately Christ’s but also for those Christ came to save). Satan suggested Christ turn stones into bread, to obviate the need for work and responsibility and provide prosperity by supplying food, man’s fundamental economic need. This was the “economics of Satan”—an economic salvation, solving man’s problems by creating an artificial, work-free prosperity. Later, when Jesus did miraculously feed those who came to hear Him teach, they wanted to force Him to be their king, a political leader who would usher in prosperity by miracles. Such men looked to Jesus as their savior from want, not from sin. Imagine what went through their minds as they envisioned a miracle-working king!
The response of Jesus to Satan’s economic stimulus plan was to quote Moses (Deut. 8:3): “Man shall not live by bread alone, but by every word that proceedeth out of the mouth of God” (Matt. 4:4). As God incarnate, this was Jesus’ message for man, that He was responsible to the every last word of God. Satan’s plan was for Jesus to solve man’s economic need and prove Himself to be the Son of God. Satan’s definition of a valid messianic ministry was not atonement and reconciliation to God and His every word through repentance and faith, but in meeting sinners “where they are” and filling their material need. For Satan, Jesus should be a service provider giving man back an artificial Eden of economic security.
Work is a prerequisite to food and all other forms of wealth. Work was prescribed for Adam in Eden before the fall. The curse for Adam was not work itself, but thorns and thistles, a creation no longer fully responsive to his labors. Work would, after the fall, no longer be fully productive. One of the repeated themes of Scripture is that man is responsible to provide for his own by work without the theft of the labor or capital of others. Moreover, his accumulation of wealth through honest labor was then to be his personal resource for works of charity.
The modern state now sees its role to be that commissioned by Satan but refused by Jesus, to turn stones to bread, to create prosperity out of thin air. In pursuing this goal, it follows the economic theories of John Maynard Keynes, the grand architect of our current fiscal house of cards. Keynes tried to free the state from economic limitations by promoting its growth by means of fiat money and legal tender laws. Fiat means it is only money because the state says it is, and legal tender means that you are required by law to accept it in trade—look at the notice on the front of every U.S. Federal Reserve Note.
Fiat money never stops at substituting paper for gold or silver coin. It always involves the creation of money, because the state thereby gains power by spending money it created by fiat and requiring its citizens to accept the money for real goods and services.
Fiat money is counterfeiting as a monopoly of the state. Other counterfeiters are imprisoned for exchanging their worthless notes for something of value, which is rightly regarded as theft. The modern state, however, allows itself this prerogative of theft. The result of these government-created notes is rising prices. As the new fiat money moves through the market, the money supply is “watered down”; the monetary unit is devalued, and goods and services require more of the increasingly worthless currency in trade.
Keynes’ method was for the state to increase its power by fiat money but to slow the devaluation of the currency by careful manipulation. Too sudden an inflation of the money supply leads to rapid price inflation; constricting the money supply slows this but can result in recession or depression. This results in an entirely artificial economy controlled not by the marketplace but by the state. The state’s currency is a drug given to revive the economy. If the economy overreacts to this stimulus, the monetary drug is withheld, but as with the drug addict, this can send the patient into withdrawal.
The artificial economy of Keynesianism means that the flow of money must keep moving through the marketplace. Consumer spending is encouraged, as witness the 2008 stimulus checks to individuals. Governments that function on fiat money take financial responsibility very lightly because their debt is payable in paper. Government by debt then leads to a citizenry in debt. An economy supposedly based on accumulated capital (savings) is then shifted to an economy based on debt.
Maintaining a balancing act between the two extremes of runaway inflation and depression is, ultimately, a losing game, because each cycle of inflation takes the currency and economy further away from any measure of soundness. When Keynes was asked about the long-term impact of his ideas, he famously remarked that in the long run we are all dead anyway. Individuals also saw the problems in this balancing act. If they did nothing, their wealth would decline because it is all measured in terms of the increasingly worthless currency. To prevent this, they “got with” the game.
Individuals then joined in the balancing act, trying to stay ahead of the decline in the currency. In an inflationary economy, one must become a speculator, not a saver. Saving fiat currency is investing in something that declines in value. Imagine, for instance, if your grandparents had left you $10,000 in cash forty years ago. Not invested in any way, it would have declined precipitously in purchasing power. Invested in the right booms, it could have kept pace with the decline of the dollar or better. The only way to prevent loss due to the declining value of fiat money is to speculate on what will rise in price during the inflationary bubbles faster than the currency declines in value. Additionally, fiat money encourages debt as itself a means of beating inflation. Consumers contract debt hoping to repay it with less valuable dollars years down the road. For most of the last century, real estate values outpaced the decline of the dollar. That speculative bubble burst in 2006.
The state prospers by fiat money, but its citizens lose. The harm to an economy from fiat money is not a process that can be easily undone; to do so would necessitate decreasing the power of the state. Inflation is a one-way street. The state can only do more of the same—inflate for yet another inflationary bubble hoping that Keynes’ day of eventual death falls in someone else’s administration. In desperation they follow the economics of Satan—they try to produce miraculous wealth, bread from stones. They ignore the necessity of work, thrift, and character in the creation of wealth, and stick to the same script and create more fiat money. They want prosperity, not by producing wealth, but by theft—the creation of fiat money.
On the road to destroying their currency, the state also destroys a people’s concept of wealth as coming by means of work and thrift. Saving fiat currency is pointless; as inflation becomes obvious, men speculate with increasing abandon—hence accelerating the boom-bust cycle. Most individuals will eventually lose the game.
The statists who profit from all this still talk about freedom, and they want us to believe we are still free. But freedom once referred to the right for individuals to be self-governing, and this was in the context of a Christian moral ethic. The new freedom is moral license.
In their new freedom as moral license, men need some sense of comfort. Material prosperity has always given a false sense of security to men, so elections increasingly turn on what Bill Clinton’s people already saw in 1992: “It’s the economy, stupid!” By this they did not mean sound, moral economics and honest money, but the artificial prosperity of inflation that borrows from the future.
Keynesian economics is not just ineffective economic theory; it is immoral economics because it is based on theft with the state as the syndicate that runs the counterfeiting ring. Our wealth is measured in terms of an increasingly worthless commodity—the state’s currency.
Our modern governments have no options but to play out their hand. They are responding to their failed system with the “need” of a messianic leader and more state intervention to solve the problem of their own creation.
The root problem is not economic: it is moral, and it is religious. Man’s main problem is not hunger, it is himself, and his sin. Hunger is indeed real, but man is more than an economic animal; he is a religious creature.2
Our modern economy is in crisis because it is based on Satan’s model. Following his advice, however, has never led to prosperity of any kind, but only to judgment. This seems to be the stop our train now approaches.
1. R. J. Rushdoony, Larceny in the Heart: The Economics of Satan and the Inflationary State (Vallecito, CA: Ross House Books, 1982), 40. Originally published (1982) as Roots of Inflation.
2. Ibid., 39.