Questions About Economics

Question: What is money?

Answer: “Money” is any article, substance or even an entry in a record-keeping system, that is used as a medium of exchange, means of payment, or measure of value. Money allows profits, assets, purchases, and virtually every single facet of a civilization to be transferred, and stored for future use. Barter allows for simple transactions, but money is necessary for more complicated transactions, and modern commerce is impossible without it. Human beings have used various things as money – animal skins, beads, tree bark, stones, seashells, paper and other things. The best kind of money is something that is scarce, valuable, widely acceptable, enduring, divisible into various sizes and compact. Since gold and silver have met these requirements better than anything else, for most of history, and for most of the civilized world, “money” was silver and gold. In fact, the Hebrew word for money is “kesef” – which means “silver.” If we go back early in man’s history, to the time of Abraham, we discover that when Sarah died, Abraham wanted to buy the cave of Machpelah in order to bury her. He bought the property in which the cave was situated for four hundred shekels of silver, which is around two hundred ounces.

During most of American history, gold and silver, or paper money that was backed by gold and silver, was our money. But more recently, the United States and most other modern governments have stopped backing their paper money with gold and silver. In 1933 our government confiscated our citizens’ gold bullion. In 1966 our silver coins were eliminated, and in 1971 we went off the gold standard altogether. The problem with paper money which is not backed by silver or gold is that governments that won’t live within their means will simply print more paper money, which dilutes the value of the money already in circulation. More money available to purchase the same amount of goods and services causes inflation, which is detrimental to a currency. Most paper monies have become worthless over time. The devaluation of the German Mark in the early 1920’s, and the problem that the Argentine Peso is having right now, illustrate this. Argentina is undergoing destruction – not by war or plagues, but by mismanagement of the economy – having taken on too much debt, having printed too much paper money without something of real value to back it.

Could currency destruction happen here? I believe it could, and that’s one reason why I advocate a return to the gold standard. Since gold is rare, and can’t be printed, it makes it impossible for greedy governments who can’t live within their means to create it out of nothing.

There is nothing wrong with having some money, but don’t set your heart on getting rich, since human economic systems are inherently unstable. Do not weary yourself to gain wealth, cease from your consideration of it. When you set your eyes on it, it is gone. For wealth certainly makes itself wings like an eagle that flies toward the heavens (Proverbs 23:4-5). In this fallen, unstable world, wealth is insubstantial and can disappear very quickly. You set your eyes on wealth and it is gone. It makes itself wings and flies away like an eagle – fast, high, and for a long time! This is true for individuals, corporations and nations. Most US corporations are less than 50 years old, because businesses frequently go out of business. One astute man observed that most democratic governments last less than 200 years, until the majority figure out that they can vote themselves the money from the treasury. Eventually the nation goes bankrupt, and ends in financial and political chaos, from which a tyrant emerges.

Fractional Reserve Banking, by its very nature, is inherently unstable: Banks take your money, and lend it out to others, but they are able to loan out more than they take in. They only keep a small percentage in reserve, so if there is a crisis, or people lose confidence in the system, and everyone wants their money back at the same time, it’s not possible. When that happens the banks become “bankrupt” – ruptured, so they can’t function. That’s what happened during the bank runs of the 1930’s in the United States, and is now happening in Argentina. Keep you eyes on the big Japanese banks. Japan’s major banks are “technically insolvent,” according to the Asia director of the Standard & Poor’s rating agency. If the problems worsen in that island nation, a financial tsunami could be created which will impact the whole world.

Taking on too much debt creates instability: A little debt may be OK, but too much debt brings financial ruin. In our economy, taking out a mortgage on a house may be the only way a family may ever be able to live in a house. Houses have traditionally been an investment – they usually, although not always, go up in value. Buying a home with a reasonable mortgage is generally better than renting. However, when it comes to most other things, you would be prudent to pay cash. If you can’t pay cash, then you probably shouldn’t buy it. You can use a credit card, if it is paid off at the end of each month. If it is not paid off right away, credit card debt can be a financial destroyer. In the United States, individual, corporate and governmental debt levels are very high, and bankruptcies are at record levels. Within twenty years we have gone from the biggest creditor to the biggest debtor nation. Many other nations are likewise deep in debt. In general, the best policy is to avoid debt – neither to borrow nor to lend, as Rabbi Paul taught the Messianic Believers in Rome: owe nothing to anyone except to love one another (Romans 13:8). The lender worries if he will be repaid, and the one who is in debt takes on additional financial pressure and other stresses that result.

Financial shenanigans create instability: Differing weights are an abomination to the Lord, and a false scale is not good (Proverbs 20:23). There are lots of ways to cheat people out of their money. In times past, those who wanted to cheat you would have differing weights. They would have a weight that weighed less for what they paid or a weight that weighed more for what they received; this was done to cheat, but it was done deceptively, disguised as proper business practice. Cheating in business happens all the time, and there are many modern equivalents. Consider Enron: corporations like Enron found it easy to “cook the books” with deceptive earnings reports, “off balance sheet” corporations and “Pro Forma” accounting standards – which can be misleading and hide the true state of the corporation which would be revealed by the more traditional accounting standards. Frankly, I’m concerned that the United States economy is another Enron…

For many, investing in our markets is more like gambling in a giant, legal casino: People may be making money with a flurry of buying and selling, options, puts, calls, leveraging and derivatives, but that doesn’t mean that true wealth is being generated. If a chain letter is sent around, some people may make money, but no true wealth is created. This gambling mentality can add financial instability to the system.

Injustice creates instability: Abundant food is in the fallow ground of the poor, but it is swept away by injustice (Proverbs 13:23). There is no need for poverty in this world – there are enough resources and food in the world around us, and plenty of opportunities. God has designed the Earth to yield enough if justice and decency prevail. It is injustice that takes away what labor produces and unfortunately, there is much injustice in the world. We need to pursue justice through our prayers, our votes and our actions.

We are now living in a one-world economic system, and that can create instability: Not too long ago nations’ economies were more independent of one another, so that if one nation was having problems, another nation might be doing better, and its stronger economy might be able to help the weaker economy. But we are now living in a high-tech one-world economy so that financial crises in one country can very quickly wreak havoc across the world. Currency crises in other nations, governments defaulting on debt, weakness in other nations’ banks, can rapidly spread here. Years ago when news traveled more slowly, there was time for the economic and political decision makers to work at solving the problems, but the time allotted them today is much shorter. This technologically interconnected, one-world economy can add financial instability.

Investors are human beings and tend to move in herds (All we like sheep have gone astray). This herd mentality can add instability: Every so often market economies will go into a mania, a period of excessive excitement or “irrational exuberance,” where people lose common sense and invest in companies or goods, driving them up to stratospheric levels. When the financial bubble bursts, the excessive valuations come back down to the starting level or below. One of the classic manias was the 17th century Dutch Tulip Bulb Mania. “Tulips were first imported into Europe from Turkey in the mid 1500’s. The flowers soon gained in popularity, and a demand sprang up for different varieties of the bulbs. The supply (and increasing popularity) of rare varieties of tulip bulbs couldn’t keep up with the demand, and prices soon began to rise sharply. Prices rose to such heights that by 1610 one rare bulb was considered an acceptable dowry for a bride! As prices soared, ordinary citizens soon began to view tulip bulb speculation as a sure fire way to get rich. Holland, the largest producer of the bulbs, became the epicenter of the mania. People mortgaged their homes and businesses to buy the bulbs. The prices for many rare bulb types reached several hundred dollars each. One bulb of a very rare variety even changed hands at over $20,000! By 1637 people began to see that prices had reached an outlandish level. The smart money began selling and a crash soon followed. Many Dutch families lost the homes and businesses they had mortgaged to take part in this ‘sure thing’ investment” (From “A Brief History of the 17th Century Dutch Tulip Bulb Mania” which can be found at www.tulipsandbears.com/tulip.htm). Some economists think that in the past several years, the valuations of many of US stocks, especially some of the highflying NASDAQ stocks, with their astronomical P/E (Price-To-Earning) ratios, and parts of our housing market, have been in a mania. If so, the end of the mania will add financial instability.

Living in a fallen, sinful world, a cosmos that is under a curse, means that unexpected, unpleasant events will happen which can create financial instability: Unusual floods will strike, hurricanes will hit major population centers, earthquakes will devastate cities. Horrible man-made events like wars, massacres, unexpected terrorists attacks, (including the possible use of biological, chemical or nuclear weapons), may take place. These “out-of-left-field” events can easily trigger financial instability.

I think that God might even want to remove the wealth of our nation, since Proverbs 19:10 informs us “Luxury is not fitting for a fool.” Luxury is not proper for a fool – someone who ignores God and does not live according to His wise principles. The wealth and prosperity of a fool only deepens the delusions that will eventually destroy him. People frequently mistake wealth for success, supposing that all is well with them, and they don’t need to bow their knee before the King of kings. They fool themselves into thinking that they have succeeded in life, when in reality, they are headed toward destruction. It’s more fitting for fools to mourn and weep, not to laugh and live in luxury. And what is true of the foolish man is also true of a foolish nation. The nation that forgets God, and ceases to live according to God’s wise laws, may discover that since luxury is not fitting for a fool, God will remove that luxury.

Question: Is it wrong for a Christian to accumulate wealth, or must I give it all away? I really could use a little more.

Answer: Some people mistakenly believe that Christians and Messianic Jews must be poor in order to be spiritual, and to follow in the footstep of Yeshua, but poverty does not guarantee godliness, nor does wealth automatically disqualify one from pleasing God. Proverbs 13:22 tells us, “A good man leaves an inheritance to his children’s children.” A good man, through his good character, hard work, prudence, generosity, faithfulness to the Lord in giving, and by not spending all his wealth on himself, and by teaching his children to do the same, leaves an inheritance to his children’s children. There is nothing wrong with having enough money to leave something to your children and grandchildren, and the book of Proverbs tells us how:

Work hard: He who tills his land will have plenty of food, but he who follows empty pursuits will have poverty in plenty (Proverbs 28:19). Do you want abundance? Go to work! Be diligent and work hard, and if you do, you will generally have more than enough to meet your needs. Work hard and improve yourself so that you can do a better job, or get a better job. Hard, diligent work is the basic way to create wealth.

Work honestly: Wealth obtained by fraud dwindles, but the one who gathers by labor increases it (Proverbs 13:11). How you get your wealth is important. Wealth acquired by illegal or immoral methods usually diminishes. Don’t go for get-rich-quick schemes, even if they seem “spiritually” based. Don’t send in “seed money” to questionable ministries and expect a “hundred fold” return. Don’t gamble or play the lottery. Don’t cheat or steal. Wealth that is not the result of good hard honest work is seldom permanent. Have a plan: The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty (Proverbs 21:5). Those who diligently and patiently work hard, and have a good economic plan – who think ahead about how to improve their circumstances, will have an advantage over those who make hasty, thoughtless financial decisions.

Work ambitiously and creatively: Where no oxen are the manger is clean, but much increase comes by the strength of the ox (Proverbs 14:4). Some inconvenience, some extra work, is the price of growth and accomplishment. There is no milk without manure. Only as we work hard, and invest in better tools and technology, do we get a larger return. If you don’t expand your business you will save yourself some headaches, but you won’t get as much increase either.

Live within your means: He who loves pleasure will become a poor man; he who loves wine and oil will not become rich (Proverbs 21:17). Wine and oil represent the finer things of life, so this is an admonition against pursuing a life of fun, games, pleasure and luxury. By placing too much emphasis on pleasures, you may live beyond your means, and your responsibilities may be neglected, which may result in poverty. It is the frugal and the self-denying who, by living carefully in the present, pave the way to easier circumstances in the years to come.

Avoid people who love pleasure: Do not be with heavy drinkers of wine, or with gluttonous eaters of meat; for the heavy drinker and the glutton will come to poverty, and drowsiness will clothe one with rags (Proverbs 23:20-21).We need to choose our friends carefully, because we become more and more like them. If we aren’t careful, we will spend too much time and money on our appetites, and will wind up like our gluttonous, heavy drinking friends – living in poverty.

“Mind your own business”: Do not be among those who give pledges, among those who become guarantors for debts. If you have nothing with which to pay, why should he take your bed from under you? (Proverbs 22:26-27). Beware of co-signing a loan. It makes no sense to ruin your own finances on account of those who live beyond their means, or who mismanage their own affairs, or waste what they have. Thousands of stories could be told of those who either loaned money to a friend or family member, or co-signed a loan for them, which were not repaid, and wound up ruining their own finances. In spite of this sage advice, many US corporations have been guaranteeing other companies’ loans and debt obligations. And do you know who is the insurer of last resort for trillions of dollars of obligations? Good old Uncle Sam! The United States government, which is really you and me, has taken on responsibility for the nation’s banks, through the FDIC, and many other insurance programs, amounting to trillions of dollars of obligations. If things don’t work out right, this may wind up seriously harming our national economy.

What’s the best way to get wealth? Work hard, improve yourself, be frugal, save, invest wisely, be patient, and generally your wealth will increase. It’s OK to live comfortably, and to leave something for your family, but don’t make acquiring wealth your goal in life. Let your attitude be that recommend by Rabbi Paul to Timothy: Godliness is a means of great gain, when accompanied by contentment. For we have brought nothing into the world, so we cannot take anything out of it. And if we have food and covering, with these we will be content. But those who want to get rich fall into temptation and a snare and many foolish and harmful desires, which plunge men into ruin and destruction. For the love of money (not money itself, but the love of money) is the root of all sorts of evil, and some by longing for it have wandered away from the faith, and pierced themselves with many a pang (1 Timothy 6:6-10). If you are a child of God, making lots of money and wanting to get rich is not your priority. You are here to serve God and to accomplish His purposes for your life. Make godliness and service to the Lord your highest priority. Learn to be content in this life, and you will be a rich man or woman throughout eternity, where the true riches are found.

If God blesses you, and you are a wealthy Believer, you are to be extra generous: Those who are rich in this present world ought not to be conceited or fix their hope on the uncertainty of riches, but on God who richly supplies us with all things to enjoy. They are to do good, be rich in good works, be generous and ready to share, storing up for themselves the treasure of a good foundation for the future, so that they may take hold of that which is life indeed (1 Timothy 6:17-19). If you are a Messianic Jew or a true Christian and you are wealthy, remember that you are a steward – it’s really the Lord’s money, and He wants you to be generous with it to those who are in need. Do good things that will serve the Kingdom of God, and help others, so that your life is characterized by good works.

It’s important to have a godly perspective on money. Perhaps you’ve heard of “The Prayer of Jabez,” a popular book in some Christian circles, based on the prayer, “God, bless me indeed and enlarge my border.” But, have you considered the prayer of Agur, which is found in Proverbs 30:8-9? It presents us with a balanced view about our finances: Give me neither poverty nor riches; feed me with the food that is my portion, that I not be full and deny you and say, “Who is the Lord?” or that I not be in want and steal, and profane the name of my God. Agur prayed that when it came to money and wealth, God would keep him from the extremes. He did not want to be rich or poor. Agur knew that if he had too little, he might be tempted to steal, and by doing so, dishonor God. His prayer was, “Give me this day my daily bread. Send from Heaven my food that is sufficient for each day, as You sent the manna in the wilderness, which was enough for each day.”

We can easily understand someone not wanting to be poor, but it is unusual for someone to not want to be rich. But Agur was such a man. He knew that wealth tends to make people feel proud, independent and forgetful of God. They think to themselves, “Who is the Lord” that I should obey Him? I don’t need God, therefore I have no obligations to Him. What can the Almighty do for me? Therefore I will do nothing for Him.” Agur reasons that if he has too much, he might develop a proud attitude, and an arrogant spirit of independence. He doesn’t want to be rich and forget God and thereby sin and dishonor God, and he doesn’t want to be too poor, steal, and thereby sin and dishonor God. “Lord, give me moderation when it comes to wealth. Enough Lord, but not too much.”

In conclusion, it’s OK to have some money. It’s good to leave something to your children. If you want to increase your wealth, work hard at an honest job, improve yourself, have a financial goal, be careful with your spending, avoid luxuries, don’t take on too much debt, avoid co signing loans, save your money, invest wisely, don’t become greedy, or make wealth your life’s pursuit, be patient, and generally your wealth will increase. If it does, be generous with it. But even if you do everything right, there are no guarantees, since human economic systems are inherently unstable, and wealth certainly makes itself wings like an eagle that flies toward the heavens.

By | 2017-01-30T21:46:28+00:00 October 12th, 2012|Categories: Financial Management|Tags: |Comments Off on Questions About Economics

About the Author:

Rabbi Loren Jacobs is the senior rabbi and founder of “Congregation Shema Yisrael” (which means “Hear O Israel”). Congregation Shema Yisrael is a Messianic synagogue which was started in 1986 when Rabbi Loren and his wife Martha moved to Michigan to proclaim the Good News about the Messiah to the Jewish people living in the metro Detroit area. Rabbi Loren was raised in a Jewish home in the Chicago area, and became a Messianic Jew in 1975. He graduated from Moody Bible Institute’s Jewish Studies program in 1979 and received a Bachelor’s degree in Biblical Literature from Northeastern Bible College in New Jersey in 1986. His wife Martha is a fifth generation Messianic Jew, which is quite unusual. They have two adult children and two grandchildren.