“Your silver has become dross, your choice wine is diluted with water” (Isaiah 1:22).
The prophet Isaiah brought a concrete economic case against the people of Israel. There are two sides to this case: currency debasement and loss of quality of top national product in the market. There is fraud and deception both in the medium of exchange and the products businessmen sell in the market.
The prophet was not simply dealing here with a “spiritual analogy.” He was clearly talking about currency debasement serving as concrete proof that the people of Israel had already departed from their God. Instead of serving as “salt” and “light” to the world, Israel misrepresented their God by their corrupt economic activity.
God presented his case against His people through His mouthpiece, the prophet Isaiah for the people of Israel to reform their economic practices. Refusing to listen to the warning of the prophet would mean certainty of judgment. It could be in the form of war, plague, and famine. God will not tolerate fraudulent economic practices indefinitely.
Gary North in chapter 3 of his book, Honest Money, clearly indicates that currency debasement is closely associated with the moral corruption of both the political leaders and the public (p. 42). He further identifies that the modern equivalent of currency debasement is now evident through the creation of paper money without a gold reserve. Following this logic, we could say that the creation of paper money is clear evidence that those in power are morally corrupt. People that support this practice are also corrupt. Isaiah’s case against Israel is also a case against modern-day society.
The continuous creation of paper money in our time without reserve would also mean continuity of this “invisible” and “indirect” stealing from public wealth. This would further result into tougher economic life for the majority. Denial of this fact springs from ignorance of monetary history and dismissal of the applicability of God’s economic commands.
Why currency debasement is difficult to stop? Aside from the fact that this is profitable for those in power, most people really do not know the implications of this fraudulent practice. People are not aware that ultimately they lose economically and those who win are those who have immediate access to the newly created paper money and spend it fast into the market. People lose for they get access to the newly created money late when prices of commodities have risen already. People depending on fixed salary are hurt the most.
In the existing monetary system, the minority wins at the expense of the majority. Not everybody will benefit from the present set up of modern economy. No new wealth is created through the creation of paper money.
Those who study the history of money claim that downfall of civilizations and wars are closely connected to the destruction of monetary system. If we will refuse to learn from history and fail to respond accordingly to the present-day monetary crisis, we will just witness in our time a repetition of our past.
Note: This article is a summary and reflection of Chapter 3 in the book, Honest Money.