The Ethics of Money

Dr. Derek Carlsen

When teaching on this topic, instructors usually delve straight into how believers ought to use their money without defining what money is and thereby they infer that “money” is a self-evident, morally neutral, incorruptible entity. What this approach reveals, however, is that they don’t understand what money is, which means that they (and their audience) are unable to discern and expose the corruption of money and therefore, they stumble at the outset when discussing the “ethics of money.” 

What is Money?

A definition that is common, though this author doesn’t know who said it first, is: “Money is the most marketable commodity in any society.” Labor is a valuable asset, but it can’t be stored up, however, it can be exchanged for money which can be stored up and used for future needs. People exchange goods and services for money so that they can obtain (with money) different goods and services in the future. Money makes this possible because people impute value to money and trust that it will retain its value until exchanged for something else.

Properties of Money

Any vibrant society needs its money to have certain properties, because such societies depend upon countless exchanges of goods and services through the medium of money. For this to happen, money must be durable, fungible (one unit has the exact same value as another unit), divisible (you can make ‘change’), portable (easy to carry and thus, use). Money must be able to satisfy any amounts of units, or fractions of units. That is, it must be divisible.

Imputed Value

Money’s value is not intrinsic, it is imputed and fundamental to imputed value is trust. A society’s continued use of a particular money requires them to continue to trust that money to be a storer of value. When they lose this trust, that money is doomed, and everyone who is preserving their wealth by means of that money is hurt.

Diluting Value

The Scriptures strongly condemn the diluting of value because that is theft: “Thou shalt not steal.” God condemns dross in silver and water in wine (Isaiah 1:22). God also condemns unjust scales and measures (Deut.25:13-15; Prov.19:36; 20:10). All of these are theft because they cheat people out of their stored wealth.

Creation and Control

In our days, the government has claimed the sole right to create and control money. Most people must exchange their limited goods and services to obtain money, however, the government is able to create money out of nothing, thus diluting everyone’s stored value that they have gained by means of exchanging their limited goods and services. An increased money supply dilutes its purchasing power, and so those who have stored up their wealth in that money can only buy less goods and services now because the prices of things have inflated.

Inflation

Many people think that inflation is a mysterious phenomenon that falls out of the sky without warning, and nobody knows why or how it happened. The wealth of a society is determined by its ability to provide goods and services, and the amount of available goods and services are determined by the combined effort of that society (all effort is limited). However, when effort remains constant, but money supply inflates, then the prices of all goods and services inflate, thereby reducing the wealth of those who have stored the value of their goods and services in that money. This means that the institution that has been granted the authority to create the money (Federal Reserve), and those closest to them, are robbing those who have exchanged their goods and services for money. This is well-known in economic circles as the ‘Cantillon Effect.’

Ethical Money

Money, as a storer of wealth, must retain its purchasing power over time, which means, for example, that an hour of labor now (stored as money) which can buy a pair of jeans, should be able to buy a pair of jeans in the future. When wages stay the same, but it requires three hours of labor in the future to buy the same pair of jeans, people are being robbed—the value of their past labor has been diluted by the new money that was created from nothing (people have limited resources and effort, whereas the Federal Reserve’s ability to create money with the click of a mouse, is infinite).

Fool’s Gold

Ethical money stores value into the distant future, however, when money fails to do this, it is proof that that money is a scam. True money grows only in proportion to the productivity and effort within a society, thus, when money grows contrary to this, it is fake and therefore conjured up by self-serving elitists, which means it’s not money, but fool’s gold.