By Guy Brandon, 3 November 2016
The headlines are full of news about money. Donald Trump is polling higher after the FBI unexpectedly reopened the investigation into Hillary Clinton’s email use. As a result, global stock markets fell, the dollar weakened and gold rose as traders priced in the increased possibility of a Trump win. The strength of the Mexican Peso against the US dollar, for reasons that should be obvious, has become something of a barometer for sentiment about Donald Trump’s odds of winning the race for the White House.
On Monday, Mark Carney announced he would be staying on as governor of the Bank of England until 2019, to oversee the Brexit process. Sterling briefly rose in value against the dollar as a result. On Thursday, news that the High Court had ruled that Parliament must vote on whether the UK can trigger Article 50 and begin the process of leaving the EU prompted another jump in the value of the pound.
Whilst stories like these have become commonplace – or perhaps because they have become commonplace – we rarely raise an eyebrow at them any more. But we should.The fluctuations of currencies and markets affect real people, real jobs, real businesses, pensions and families. The fact that exchange rates can spike or crash on nothing more than a rumour or misunderstanding should concern us.
More broadly, our monetary system underpins a particular kind of economy, and it’s not possible to understand the one without the other. Trying to treat a dysfunctional economy without understanding the monetary system on which it rests is analogous to treating a respiratory complaint without consideration for the quality of the air the patient breathes.
The Bible was a world apart from our modern financial system with its global capital flows and 24-hour forex markets, but its principles are highly relevant to the way we ‘do’ money.
Decentralisation. It is a biblical principle that power should not be centralised unnecessarily – whether political, financial, technological or otherwise. God is the ultimate authority, and when humans are allowed to accumulate power they have a tendency to abuse it. In the Bible, money took multiple forms, including silver and grain. These were not issued centrally, as governments and central banks issue some of our money today. It was only with the development of coinage around the 6th century that governments took control of the money supply – generally profiting from seigniorage and often causing inflation, the de facto transfer of wealth from citizens to the state.
Debt and interest. Secondly, the Bible recognises that debt involves a relationship of power and holds that interest payments are a means of extracting value from the debtor to the creditor (Proverbs 22:7). The Israelites were not to charge interest to each other, since this had the effect of keeping debtors in poverty, rather than helping them to escape it. Our debt-based monetary system means that the process of creating money – which commercial banks do through making loans – requires the payment of interest and therefore a flow of value from the real economy to the financial sector.
Commonality. It is generally agreed that money is supposed to serve at least three separate purposes. It is a store of value, a medium of exchange and a unit of account. The result of a debt-based and centralised monetary system is that there is a lack of commonality between those who create and control money, and those who use it – it serves different purposes.
In the Bible, money serves as a kind of social glue. It is used in a way that strengthens and maintains relationships, rather than its accumulation being a goal in its own right, at the expense of family, community and society as a whole. Money was too important to be appropriated by the state or other powers.
Our event, Reforming Money Creation in the UK, to be held on 5 December, will explore these and other issues around our monetary system. Four expert panellists will respond to the Jubilee Centre’s new booklet, Crumbling Foundations: a biblical critique of modern money, from their professional perspectives. This will be followed by a time of open discussion.