President Biden’s Build Back Better boondoggle is on life support in the Senate and should die, but it’s still worth considering one thing it reveals about its supporters - their love of money. Paul wrote this in I Timothy 6:9,10:
“Those who want to be rich, however, fall into temptation and become ensnared by many foolish and harmful desires that plunge them into ruin and destruction. For the love of money is the root of all kinds of evil. By craving it, some have wandered away from the faith and pierced themselves with many sorrows (NIV).”
It’s natural for people to want money for the things it can buy, such as food, clothing, politicians, etc. Honest people provide a service that others value in exchange for money. Evil ones commit a crime or immoral act to get it. Some people love money so much they are willing to counterfeit it. In Biblical days, only the government could counterfeit money. They did so by melting down gold and silver coins, adding copper and making new coins stamped with a false weight of the precious metal. I have written before that the practice is the sin of false measures mentioned in the Bible.
Debasing coins in that way didn’t fool merchants, who merely raised prices to account for the smaller amount of precious metal in the money. But the people blamed the merchants for rising prices and not the dishonesty of the government. Politicians responded by setting prices for most goods and punishing merchants who raised prices above the limit. That caused merchants to quit selling their goods at a loss and led to shortages of food and clothing.
Why would governments resort to such destructive behavior? Because they had taxed the people into poverty and could squeeze no more money out of them. But to stay in power, the governments needed to continue their reckless spending on the military and free food to the poor. So they destroyed their coins.
Eventually, debasing coins became ineffective, but then governments discovered the convenience of printing paper money as a substitute for gold and silver money. They were supposed to limit the amount of paper money in circulation to the value of the gold on deposit in banks, but as usual they succumbed to the love of money and printed far more paper money than the value of gold deposits to pay their armies. Again, prices soared.
Today, governments have sophisticated methods of counterfeiting that few people know about or can understand. Most economists refer to them as “printing” money because they have the same effect, price increases. Central banks, like the Federal Reserve, can increase the supply of money by reducing the interest rate they charge banks to borrow money. Banks borrow more and lend it at lower rates, thereby increasing the supply of money.
Central banks can also “buy” bonds from banks. Banks invest excess reserves in government bonds and can’t loan that money to customers. When the Fed buys those bonds, the banks have extra cash to lend and increase the supply of money. But the Fed has no money of its own to use to buy the bonds. It creates the money out of thin air.
What does money creation have to do with Biden’s boondoggle? The President knows that raising taxes to pay the $2 trillion cost will be unpopular, won’t bring in enough revenue, and will euthanize an already ailing economy. So he will rely on the Fed to “print” more money for him. The result will be the same as in Biblical days, rising prices, or at best, prices that remain the same when they should have fallen.
Politicians persist with the dishonesty of printing money because they know most people don’t understand what’s happening to them and gullible politicians like Elizabeth Warren will blame greedy businessmen.
No one is more guilty of the sin of loving money than governments.
Roger D. McKinney lives in Broken Arrow, OK with his wife, Jeanie. He has three children and six grandchildren. He earned an M.A. in economics from the University of Oklahoma and B.A.s from the University of Tulsa and Baptist Bible College. He has written two books, Financial Bull Riding and God is a Capitalist: Markets from Moses to Marx, and articles for the Affluent Christian Investor, the Foundation for Economic Education, The Mises Institute, the American Institute for Economic Research and Townhall Finance. Previous articles can be found at facebook.com/thechristiancapitalist. He is a conservative Baptist and promoter of the Austrian school of economics.