salvation through inflation the economics of social credit phần 3 pps

Gold and Silver Gold and silver have functioned as money in history.. Anyone who claims to believe in the Bible and who alsorefuses to acknowledge that money is a form of wealth has toco

a week in 1907 to 2,250 in 1918 lb Yet it gained considerableinfluence Why? Because of the influence of Orage.

Orage was a disciple of the atheist philosopher FriedrichNietzsche Nietzsche’s philosophy has been described as follows

by Cambridge University historian David Thomson: “ ananti-intellectual revival of paganism, a frontal attack on theteachings of Christianity”*7 Holbrook Jackson had introducedOrage to Nietzsche’s writings Orage wrote two books on Nietz-sche in 1906 and 1907, introducing British readers to the manwho called for a new world order governed by supermen Itwas in 1907 that Jackson and Orage persuaded the Fabiansocialist and atheist playwright George Bernard Shaw to put upthe money to buy New i4ge.18 Jackson departed from the pro-ject in 1908, leaving Orage as the dominant force For fifteenyears until he left the magazine, Orage attracted some of themost talented authors in Britain to write for New Age, although

he paid them little or nothing for the privilege

Orage was intellectually a socialist, but his commitment toNietzsche made him anti-democratic and intolerant of thepoo~ 19 From 1912 on, Orage was a syndicalisti a defender ofthe need for revolutionary violence by trade unions.20 He be-came a disciple of his old friend A J Penty, who preached thenecessity of a restoration of medieval guild socialism Oragecalled for “a new epoch, new not only in social and economicstructure but new spiritually.”21 This “new spirit” was Easternmysticism, not Christianity

Because of Douglas’ influence, Orage came to believe thatthe manipulation of the national currency was the principal

The Origins of Social Credit 37

cause of economic hardship It was this idea that also stirredEzra Pound, a frequent contributor to New Age.Az They bothregarded Social Credit as a means of destroying the power ofthe credit-manipulators

Orage was not merely a disciple of Douglas; he was a orator Douglas included a 60-page commentary on his ideas,

collab-written by Orage, in his second book, Credit-Power and Democracy (1920).

Philip Mairet was one of the early partisans of Social Credit

He compiled The Douglas Manual in 1934 He was one of the

four founders of the Chandos Group, named after a local taurant, which was begun in 1926 to discuss social and politicalaffairs from the point of view of Social Credit.‘~ This groupoccasionally attracted such luminaries as the socialist G D H.Cole, Lewis Mumford, and the poet T S Eliot~4 Mairet wrote

res-A R Orage: A Memoir in 1936 He was not a hostile witness

against Orage The book was reprinted in 1966 by UniversityBooks, an American firm specializing in academically orientedstudies of the occult It was distributed through the Mystic ArtsBook Club, which was the mail-order outlet for UniversityBooks University Books published it because Orage was adedicated mystic, a senior disciple of the occultist Gurdjieff

In 1922, Orage resigned as editor of New Age to become, inMairet’s words, “a missionary of the gospel according to G I.Gurdjieff.”2s In New York City, he became - again, in Mairet’swords - “Gurdjieff’s right-hand man .“z” This was not amajor theological break from his past By the time he took over

as editor of New Age in 1907, he had become a Theosophist He

22 “Review of Ezra Pound and Itulian Fascism,” The Economist (17 Aug 1991), p.83

23 Finlay Social Credit, pp 168-70

24 Ibid., p 170.

25 Philip Mairet, “Reintroduction, ”A R (1-age: A Memoir (New Hyde Park, NewYork University Books, 1966), p vi

26 Ibid., p vi

was also a disciple of Mahayana Buddhism He lectured widely

on these topics.z’

Orage remained a disciple of Gurdjieff until 1930 When theGreat Depression began, Orage began to re-read economics Healso began giving lectures on Major Douglas’ system.28

In

1931, he broke permanently with Gurdjieff and returned manently to England 29 He launched a magazine, New EnglishWeekly, in 1932 His goal was to create a new outlet for SocialCredit ideas.%” On the dust jacket of the American edition of

per-E S Coulter’s book, The ABC OJ Social Credit (1934), we read:

“She has worked on the New English Weekly, the official organ

of the movement in England .“ Mairet worked with Orageduring this period The journal published articles by Cole,Pound, and other friends from Orage’s New Age years.alOrage discovered the youthful (age 18) Dylan Thomas.~2Orage died in 1934, a few hours after having presented a radiobroadcast defending Social Credit.ss His reputation was sogreat by that time that the funeral service was conducted by theDean of Canterbury As Mairet says, very few of those in 1934who paid tribute to his career “knew anything about the unor-thodox faith in which he died.”~

The Red Dean of CanterburyWhy would the Dean of Canterbury one of the most influ-ential-clerics in the Church of England, preach at the funeral ofsomeone like Orage? Because of who this particular dean was:Hewlett Johnson, public defender of the Soviet Union, known

The Origins of Sociul Credit 39

to his critics as the Red Dean of Canterbury He served as Dean

of Canterbury for over three decades, 1931-1963 He was on

the Board of The Daily Worker, the Communist newspaper He

wrote a series of defenses of Communism, including Soviet

Success (1947) and China’s New C~eative Age (1953) A few years

after he preached at Orage’s funeral he was hired by the

Fabi-an socialist publisher Victor GollFabi-ancz to be the general editor ofthe Christian Book Club.ss This was the follow-up to Gol-lancz’s hugely successful Lefi Book Club, begun in 1936.86

Dean Johnson’s own book, The Socialist Sixth of the World (1939),

went through a remarkable twenty printings by 1944 In thatbook, he reminisced about the influence of Major Douglas inhis life:

It was at this time [the early 1920’s], with these new interests,that I came across Major Douglas and the Social Credit Move-ment, perceiving at once what appeared to me to be the essentialcorrectness of his analysis and its bearing on social problems Iflater I have moved on to other solutions, it has been on moraland practical rather than technical grounds, and because a widerhorizon had, in the meantime, opened up Social reformers willalways owe a debt to Douglas.”

This praise came from the most notorious clerical

sympathiz-er of Stalin in the West during the twentieth century It makes

a conservative wonder just how conservative Social Credit really

is It makes a Bible-believing Christian wonder just how tian Social Credit really is If Social Credit is Christian in theway that Hewlett Johnson was Christian, then Bible-believingChristians will have problems with Social Credit A word to thewise is sufficient

Chris-35 Rose L Martin, Fabian Freeway (Chicago Heritage Foundation, 1966), p 55 36 Paul Johnson, I?zte//ec6uak (New York: Harper& Row, 1988), p 279

37 Hewlett Johnson, The Socialist Szdh of the WmU (London: Victor GollanczLtd., 1944), p 40

My point by now should be clear I ask: If Major Douglasdid in fact suggest a Christian and conservative reform of capi-talism, why was he promoted in 1919 by an editor who was adisciple of Nietzsche, a guild socialist, and an Eastern mystic -

a man who returned to England to promote Douglas’ systemduring the major period of his popularity the early 1930’s? IfSocial Credit appealed to such men as A R Orage and EzraPound, let alone the Red Dean of Canterbury in what way is itChristian?

His Christian disciples owe it to their followers to answer thisquestion They also need to answer this one: Is there any state-ment in Douglas’ writings in which he identified himself as aChristian - not just as a person who appreciated this or thataspect of the teachings of Jesus, but as a believer in the uniquedivinity of Jesus the Messiah? If they cannot do this, their fol-lowers need to question the theological origins of Social Credit

3 SCARCITY AND WEALTH

And unto Adam he said, Because thou hast hearkened untothe voice of thy wife, and hast eaten of the tree, of which I com-manded thee, saying, Thou shalt not eat of h: cursed is theground for thy sake; in sorrow shalt thou eat of it all the days ofthy life; Thorns also and thistles shall it bring forth to thee; andthou shalt eat the herb of the field; In the sweat of thy face shaltthou eat bread, till thou return unto the ground; for out of itwast thou taken: for dust thou art, and unto dust shalt thoureturn (Genesis 3:17-19)

And thou say in thine heart, My power and the might ofmine hand bath gotten me this wealth But thou shalt rememberthe LORD thy God: for h is he that giveth thee power to getwealth, that he may establish his covenant which he sware untothy fathers, as it is this day (Deuteronomy 8: 17-18)

Basic to any economic theory is an explanation of howwealth is created and distributed Consider the full title of

Adam Smith’s famous book, The Wealth OJ Nations (1776): An Inquiq into the Nature and Causes of the Wealth of Nations Smith

wanted to know why some societies possess greater wealth thanothers He asked, among many other questions: What are thepolicies of civil government that lead to greater wealth in soci-

ety? He answered: above all, allow the voluntary exchange ofgoods and services without coercive interference from civilmagistrates He concluded that it was the economics of mercan-tilism – State control over the terms of trade - that hamperedeconomic growth The solution is to reduce the authority ofpoliticians and bureaucrats to set the terms of trade: tarifi,quotas, prices, and so forth.

The Critics of CapitalismThis conclusion has not satisfied many generations of critics

of free market capitalism They begin as Smith did, by askingthe same question: What are the policies of civil governmentthat lead to greater wealth in society? They conclude somethingentirely different additional government controls over theeconomy They blame poverty on capitalism’s policy of placingownership in the hands of individuals and then leaving themfree to buy and sell from each other Some critics of capitalismcall for a return to a version of mercantilism: controls over theterms of trade National socialism (Nazism) and Fascism areexamples of this type of thinking: the “corporate state” whichproclaims the “partnership between business and government.”Other critics call for full socialism: the State’s ownership of themeans of production Still others call for a reform in the mone-tary system This was the heart of Major Douglas’ recommend-

ed reform

This is not to say that anyone and everyone who calls for areform of the monetary system is necessarily a hostile critic offree market capitalism Some are, some aren’t Marx surely was

In the Communist Manzfesto (1848), Marx and Engels

recom-mended “Centralisation of credit in the hands of the State, bymeans of a national bank with State capital and an exclusivemonopoly”l This was point five in their ten-point program to

1 Karl Marx and Frederick Engels, Collec6sd Wtwks (New York InternationalPublishers, 1976), VI, p 505

Scarcitj and Wealth 43

replace capitalism with socialism The questions we must answerare these: Which kind of monetary reform did Major Douglaspropose? Was his a socialist solution? Mercantilist-Fascist? Was

he a free market reformer? Or was he something else?

To evaluate the wisdom of any reformer’s proposals, weneed a standard I have declared in Chapter 1 that this stan-dard must be the Bible We need to survey what the Bibleteaches on wealth and money before we examine the details ofSocial Credit Those who claim that Social Credit is consistentwith the Bible must prove their case from the Bible They havenot accomplished this task, as of early 1993 I intend in thisbook to prove the opposite: Social Credit is inconsistent withthe Bible, as well as inconsistent with the logic of economics

The Biblical View of WealthThe Bible begins with the doctrine of creation: God createdthe world (Genesis 1) This means that everything that mankkdpossesses is a gift of God Christianity calls such gifts grace So,each person begins life as an heir of the grace of God, what is

sometimes called common grace Jesus said of God the Father in

heaven: “He maketh his sun to rise on the evil and on thegood, and sendeth rain on the just and on the unjust” (Mat-thew 5:45b) Men do not earn these blessings

Ownership-Stewardship

God gave to Adam and Eve the ownership of the world:

“And God said, Let us make man in our image, after our ness: and let them have dominion over the fish of the sea, andover the fowl of the air, and over the cattle, and over all theearth, and over every creeping thing that creepeth upon theearth So God created man in his own image, in the image ofGod created he him; male and female created he them AndGod blessed them, and God said unto them, Be fruitful, andmultiply, and replenish the earth, and subdue it: and have

What do we mean by the word “scarcity”? Biblically, scarcitymeans that nature, which had not thwarted mankhd before thecurse, now thwarts the entire human race Men must sweat inorder to obtain what they want That is, they must suffer un-pleasantness in order to gain benefits While air conditioninghas reduced the burden of sweating for modern workers inwealthy societies, people now “sweat” internally They sufferstress They get ulcers There is no escape in history from thecurse on man’s labor

The economist offers a different definition of scarcity “Atzero price there is greater demand for something than there isavailable supply to meet all the demand.” Thus, men mustmake bids in order to obtain a scarce resource They enter akind of auction They must give up one scarce good or service

in order to obtain another good or service So, the economist

describes the e~ect of scarcity The Bible tells us why we face

scarcity

The earth was cursed by God because Adam was cursed Theearth was like a military man whose commanding officer rebels,fights the wrong battle, and gets everyone killed, wounded, orcaptured Nature suffered a penalty because of the rebellion ofman

I have said that there is no full escape from the curse on theground in history, but this does not mean that there cannot be

a progressive reduction in scarcity and its oppressive effects.Economic growth is proof of this A very good definition ofeconomic growth is this one: “An increase in the number of ouroptions.” We have more choices because we can a~ord morechoices

The Bible teaches that as we progressively obey God andovercome our sin and rebellion, He will reward us with greaterexternal blessings We read of this promise in the Book ofDeuteronomy, chapter 28, verses 1-14 On the other hand, if

we disobey, we will be cursed: Deuteronomy 28:15-69 So, the

46 SALVATION THROUGH lNFLATION

Bible teaches, our external prosperity is related to our externalobedience to God’s law

The Grace of God

How can we obey God? Only through God’s grace The

Bible is very clear about this: grace always precedes obedience We

do not earn our way into heaven We do not earn God’s favor.God graciously grants us saving faith, and He also grants usopportunities to obey him by performing good works: “For bygrace are ye saved through faith; and that not of yourselves: it

is the gift of God: Not of works, lest any man should boast For

we are his workmanship, created in Christ Jesus unto goodworks, which God bath before ordained that we should walk inthem” (Ephesians 2:8-10) In short, the Bible teaches that graceprecedes obedience We are always in debt to God We arealways paying off our obligations to Him

The only reason we are granted the grace to continue to pay

is because Jesus Christ, the Son of God, died on the cross inorder to pay God full price for our sins “But God commendethhis love toward us, in that, while we were yet sinners, Christdied for us” (Remans 5:8) “For the wages of sin is death; butthe gift of God is eternal life through Jesus Christ our Lord”(Remans 6:23)

This means that while there can be no full escape in historyfrom the painful effects of the curse on us and on the earth,there can and should be a progressive escape horn the mostburdensome of these curses: Why is it impossible to escapefully from the curse of God in history? Because there cannot bemoral perfection in history, other than the moral perfection ofJesus Christ “If we say that we have no sin, we deceive our-selves, and the truth is not in us” (I John 1:8)

Nevertheless, “If we confess our sins, he is f~thful and just

4 Gary North, Is the WWld Running Down? Cr&is in the Chrktian Wmldview (Tyler,Texas Institute for Christian Economics, 1988)

to forgive us our sins, and to cleanse us from all ness” (I John 1:9) This is why there is legitimate hope for thefuture This is why there is economic growth But we have beenwarned not to enjoy the gifts of God - grace - and then fo~etthe Giver Beware, God warns, that “thou say in thine heart,

unrighteous-My power and the might of mine hand bath gotten me thiswealth But thou shalt remember the LORD thy God: for it is hethat giveth thee power to get wealth, that he may establish hiscovenant which he sware unto thy fathers, as it is this day”(Deuteronomy 8:17-18)

The Biblical Vmv of MoneyThe Bible offers considerable information about how moneyfi.mctions in a society, and also about how monetary policyshould be conducted The most famous statement in the Bibleabout money is Paul’s warning: “For the love of money is theroot of all evil: which while some coveted after, they have erredfrom the ftith, and pierced themselves through with manysorrows” (1 Timothy 6:10)

Why should the love of money be the root of all evil? Whynot the love of something else? Because money is the represen-tative example of all the earth’s goods Money is the representa-tive example because money is the most marketable commodity the

material good which money-loving people imagine can buy allthe other desirable things in this world It can legitimately beregarded as the economic incarnation of the world’s goods.Money is the incarnation of wealth

Gold and Silver

Gold and silver have functioned as money in history Sohave other commodities Economists usually identi~ the follow-ing features of those commodities that have historically func-tioned as money recognizability, divisibility, durability, trans-portability, and high value in relation to weight

48 SALVATION THROUGH INFLATION

Wealth is equated in the Bible with silver and gold: “AndAbram was very rich in cattle, in silver, and in gold” (Genesis13:2) Anyone who claims to believe in the Bible and who alsorefuses to acknowledge that money is a form of wealth has toconclude that gold and silver can never be money But theBible makes it clear that gold and silver have fimctioned asmoney, from the days of the &mine in Egypt through Christ’spayment of taxes: the coin inside the fish (Matthew 17:27).The Bible does not teach that money must always be gold orsilver The Bible does not specify any commodity that shouldalways be money That is, the Bible does not identifj “truemoney.” This means that whatever people decide they want touse as money is legitimate, so long as the biblical law againstcounterfeiting is obeyed

What the Bible does teach is that righteousness is analogous

to the precious metals: silver and gold For God’s people, teousness and wisdom should be more desirable than silver orgold, but silver and gold are thereby identified as among man-kind’s most desirable goods

righ-The words of the LORD are pure words: as silver tried in a nace of earth, purfied seven times (Psalm 12:6)

fur-The fear of the LORD is clean, enduring for ever: the judgments

of the LORD are true and righteous altogether More to be sired are they than gold, yea, than much fine gold: sweeter alsothan honey and the honeycomb (Psahn 19:9-10)

de-For thou, O God, hast proved us: thou hast tried us, as silver istried (Psalm 66: 10)

The law of thy mouth is better unto me than thousands of goldand silver (Psalm 119:72)

Therefore I love thy commandments above gold; yea, above finegold (Psalm 119: 127)

Riches and honour are with me; yea, durable riches and teousness My fruit is better than gold, yea, than fine gold; and

righ-my revenue than choice silver I lead in the way of ness, in the midst of the paths of judgmen~ That I may causethose that love me to inherit substance; and I will fill their trea-sures (Proverbs 8:18-2 1)

righteous-The tongue of the just is as choice silver: the heart of the wicked

is little worth (Proverbs 10:20)

How much better is it to get wisdom than gold! and to get derstanding rather to be chosen than silver! (Proverbs 16:16)

un-A word fitly spoken is like apples of gold in pictures of silver(Proverbs 25: 11)

Historically, individuals have chosen gold and silver as

mon-ey These metals are rare They are expensive to mine Theyare attractive physically Coins of pure or nearly pure gold orsilver cannot be mass produced This controls the money sup-ply One of the attributes of money is high value in relation toweight Gold and silver possess this attribute

FaZse Mixtures, False Weights

The Bible identifies debasement as an evil: “Thy silver isbecome dross, thy wine mixed with water” (Isaiah 1:22) Isaiahequated the mixing of dross (cheap) metals with silver and thencalling the finished product silver as a form of moral debase-ment He prophesied a coming judgment against Judah, and

he described it as a metallurgist’s fire:

And I will turn my hand upon thee, and purely purge awaythy dross, and take away all thy tin: And I will restore thy judges

as at the first, and thy counselors as at the beginning: afterwardthou shalt be called, The city of righteousness, the ftithfi.d city.Zion shall be redeemed with judgment, and her converts with

50 SALVATION THROUGH INFLATION

righteousness And the destruction of the transgressors and ofthe sinners shall be together, and they that forsake the L ORD

shall be consumed (Isaiah 1 :25-28)

To debase a money metal is to counterfeit money feiting is a form of deliberate deception: fooling sellers of goodsand services into believing that the buyer has offered them ahigh quality coin The counterfeiter takes a quantity of high-value metal and then mixes in a low-value metal This increasesthe supply of molten metal He pours this mixture into coin oringot molds This increases the number of seemingly high-valuecoins or ingots in his possession He then goes out and spendsthese false coins This is judicially the same as tampering” withthe scales, a practice prohibited repeatedly by God

Counter-Just balances, just weights, a just ephah, and a just bin, shall yehave: I am the L ORD your God, which brought you out of theland of Egypt (Leviticus 19:36)

Thou shalt not have in thy bag divers weights, a great and asmall (Deuteronomy 25: 13)

A just weight and balance are the LORD’S: all the weights of thebag are his work (Proverbs 16:1 1)

Divers weights, and divers measures, both of them are alikeabomination to the LORD (Proverbs 20:10)

Divers weights are an abomination unto the LoRD; and a f~ebalance is not good (Proverbs 20:23)

Shall I count them pure with the wicked balances, and with thebag of deceitful weights? (Micah 6:11)

What the Bible requires is that those who produce gold orsilver coins and then spend them on other goods and servicesmust not debase their coinage They must not manufacture

coins that appear to be made of a specific percentage (fineness)

of gold or silver when in fact the shiny metal coins contain alower percentage than what has been promised or implied bytradition

What is true of a counterfeit coin, which is relatively easy forsomeone to test by color, weight, or hardness (in the case ofpure gold), is even more true of paper money and credit mon-

ey One piece of paper money looks like all the others of thesame denomination Thus, the paper money counterfeiter finds

it quite easy to produce extra pieces of paper - far easier thanthe counterfeiter of metal coins If the counterfeiter is the State,and has legal access to the specialized paper and ink that onlythe government is allowed to use (according to governmentlaw), then this is doubly evil It is a misuse of a God-givendelegation of sovereignty to the civil government It is a betray-

al of the nation’s trust It is theft

Price In.ation

When a counterfeiter spends a few debased coins into lation, he can buy today’s goods at yesterday’s prices But if thecounterfeiting continues, there will be more and more coins orpieces of paper being offered in the market This means thatmoney-denominated prices will be bid higher In the case ofcoins, the public will find ways to identifi the debased coins.Then a price differential will appear between the high-goldcontent coins and the fakes But in the case of paper money,this differentiation is impossible So, all pieces of paper moneyfall in value equally

circu-If the government passes a law that requires all coins of thesame denomination to trade at the same price, then the high-gold content coins will be hoarded or exported outside thegovernment’s jurisdiction This is Gresham’s Law in action:

“Bad coins drive good coins out of circulation.” This only pens when the State imposes a unique price control: equalvalue for coins of unequal value Thus, Gresham’s Law should

hap-52 SALVATION THROUGH lNFLATION

be stated as follows: “Coins that have been artificially ovmalued

by civil law will steadily drive out of circulation those coins that

have been art@iallj unden)almd by civil law.”

Monetary inflation produces price inflation That is, feiting drives up the price of goods and services; hence, thisprocess of money growth lowers the market value of the de-based currency units Those who hold onto money will see theirwealth depleted when prices of other items rise In the case of

counter-a government monopoly over money, those who trust the ernment when it inflates the money supply generally lose.Those who do not trust the government’s money spend themoney on goods whose value in money rises They profit at theexpense of those who trust the government If commercialbanks are licensed by the State to create credit money the sameprocess continues The same is true of a State-licensed centralbank

gov-Monetary inflation redistributes wealth to those who gainaccess early to the newly counterfeited money and spend it.Who pays? Those who do not spend it early or those who gainaccess to the money later in the process, after prices have risen.Those who trust the monetary unit lose; those who do not trust

it win This is an ethically perverse system This is why theBible prohibits monetary inflation, either by the State or privatecounterfeiters

Conclusion

hy economic theory that begins with nature rather thanGod’s sovereign creation of nature out of nothing cannot beChristian Any economic theory that begins with man ratherthan God cannot be Christian It may not directly attack Chris-tianity, but it is not Christian It may provide a great deal ofgood information about this or that, but it is not Christian.Any monetary system that allows the State to create addition-

al paper money or credit apart from an equal increase in ever metal the paper receipts promise to pay - gold, silver, or