Fed chief Ben Bernanke defended pumping money into the economy by arguing that not only does it help “strengthen the US economic recovery, but by boosting US spending and growth it has the effect of helping support the global economy as well.” If adding fiat currency to the economy is a good idea, why not add water to milk to help the dairy industry.
The Fed creates “money” out of thin air. It doesn’t really exist. It’s a form of counterfeiting. The only reason we can’t call it countering is because our government approves of the printing of money. Congress sits back while the Fed feeds the beast, and it’s the beast that’s killing our economy.
Creating money used to be hard work. Gold and silver would have to be dug out of the ground, separated out from dirt and rocks, melted down to remove impurities, assayed, coined, and shipped. Now all the government has to do is purchase cotton denim scraps from blue jean manufacturers, mix it with 25 percent linen, add some synthetic fibers, include a security strip, print an image on dollars that roll off the presses, and voilà, we have more money! Try that in your basement, and you’ll go to jail for a long time.
It’s even simpler in the electronic age. All some government official have to do is add a few zeros to a ledger. Creating wealth couldn’t be easier.
But it’s not creating wealth.
Let’s be clear about what’s really going on. When the Fed opens the money flood gates, it is actually diluting the dollars that people already hold. When the money starts flowing through the banking pipeline, prices are at a static level. Those who get to spend the money first are not affected by the effects of inflation (the increase of the money supply). It’s only after the value of the dollar is diluted that devaluation of people’s money takes effect. Prices begin to rise for the poor slobs who are the last to get the newly printed money.
Inflation (increasing the money supply) is an invisible tax. You and I may have the same number of dollars in our accounts, but they’re worth less. They won’t buy as much stuff. It’s the same as if we work the same number of hours, but our take-home pay is less because of taxes.
The Fed printing money is no different from adding water to milk and calling it whole milk. It’s theft. What if a winery added water to its vintage collection of wines? This would be fraud, a violation of the standards of weights and measures.
The Bible has a great deal to say about this type of fiscal chicanery. It demands just weights and measures (Lev.19:35–36). The principle is repeated often:
- “You shall not have in your bag differing weights, a large and a small. You shall not have in your house differing measures, a large and a small. You shall have a full and just weight; you shall have a full and just measure, that your days may be prolonged in the land which the Lord your God gives you.” (Deut. 24:13–15).
- “A false balance is an abomination to the Lord, but a just weight is His delight.” (Prov. 11:1).
- “Differing weights are an abomination to the Lord, and a false scale is not good.” (Prov. 20:23).
- “You shall have just balances, a just ephah and a just bath” (Ezek. 45:10).
- “Can I justify wicked scales and a bag of deceptive weights?” (Mic. 6:11).
In the same way that it’s unlawful for a dairy farmer to dilute his milk and sell it as the real deal, in biblical terms, it’s immoral for governments to dilute the purchasing power of our money by pumping up the economy with worthless script.
Israel was judged by the way it failed to keep God’s commandments. This included economic laws that adversely affected widows and orphans and the general population:
“Your silver has become dross, your drink diluted with water. Your rulers are rebels and companions of thieves; everyone loves a bribe and chases after rewards. They do not defend the orphan, nor does the widow’s plea come before them” (Isa. 1:22–23).
This is our government in action. Bernanke and those who don’t oppose him are “companions of thieves.”