What is Money?

Jefferson

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What is Money?

This is the show from Monday December 27th, 2010.

SUMMARY: [see Bob's up-to-date and still-brief article at kgov.com/money]

Definition of Money: In the 1990s here at Bob Enyart Live, I wrongly believed that justice required a return to the gold standard, whereby currency was formerly backed by reserves of precious metals. So years ago, you could bring a $10 gold certificate into a bank and receive a certain amount of gold. After studying and thinking about money for years, reading economic texts and reflecting on the Bible, asking questions of internationally renowned economists, I now know that money is not gold or silver. [Update: For clarification, the definition of money is not gold or silver (although they can be used as money). But rather...] money is more like a transferable IOU. Most accurately, money is the accounting of transferable incomplete transactions. That is what money actually is.

Metal, Paper, Web: Back when technology did not exist to support a more effective and lower-cost accounting system, Bible cultures reasonably implemented metal-based money. [Updated sentence thanks to Granite:] Since no one can create gold, it was especially difficult to "counterfeit" money without it being detectable (like by biting a coin, weighing it, etc.) Later, the printing press enabled the convenience of paper currency, and initially, gold was used to back the paper bills that people used to transact business. Eventually, we kept the paper, but dropped the gold backing. Today, many people live without spending much paper currency at all, and they use digital bank accounts and online transactions over the Internet that provide tremendous convenience which helps to grow the economy. The extraordinary benefit to the lives of millions of people from these conveniences outweigh the risks of counterfeits and deception. And finally, there's the phenomenon of cyber cash on the web which is used similarly but not backed by the federal reserve or any national bank, and it's value changes daily based on real-world market pressures expressed in cyberspace.

Here's What Makes the Economy Function: God commands men to "serve one another" (Galatians 5:13). Men shipwrecked onto a deserted island would gradually build an economy as they served one another. And that economy would grow most quickly if these men were free, for the Bible says that, "liberty" provides the "opportunity... [to] serve one another." If they started to keep to themselves, and did not trade goods and services, their economy would sputter and die. So an economy thrives when men serve one another.

Money Is Properly Created By Fiat: If these shipwrecked men washed ashore on a deserted island that had no gold, still, they actually would create money, "by fiat," as they entered into agreements that created something like transferable IOUs. Thus in any nation, every time someone buys a car or a home, etc., on credit, they thereby commit themselves to years of hard work (or at least, to the obligation to pay off the loan), which commitment actually brings more money into existence.

Fractional Banking Is Justifiable: Understanding how money actually functions justifies the modern world's fractional banking system, whereby lenders bring money into existence when making loans, and expunge the principal as it is repaid. God regulated Israel's system of debt, showing that debt is not inherently immoral, but can be good or bad, like fire. As to the particulars of America's Federal Reserve System, the Fed should be audited (it never is), and other methods of implementing money may surpass the benefit of America's current system. The proper way to judge a monetary standard is to evaluate it's effectiveness (accountability) and efficiency (low cost).

Gold is Not the Gold Standard in Money: Requiring a gold standard inflates the value of gold by fiat. As a result there is an unnecessary redistribution of wealth by which various governments transfer wealth to other countries that happen to find gold on their land. This is how America ciphered manufactured goods from Europe in return for inflated gold, and then we demineralized our money, devaluing England's vaults.

Gold Does Not Have Intrinsic Value: Gold does not have intrinsic value but as with all valued items, its worth lies in the eye of the beholder. A wealthy nation dying of thirst would trade its gold for water.

Gold Is Not For Hiding: Basing a nation's currency on gold results in building Fort Knox-like fortresses, hidden from view, and filling them up with gold to back the certificates that are issued. But God did not create gold to be dug up and then forever buried again, stored away from sight in underground vaults, which is an inefficient and extremely expensive way of implementing an accounting system, robbing that gold from its practical uses for technology and beauty.

Today’s Resource: You can enjoy one or two of Bob Enyart’s entertaining and insightful videos each month, mailed to you automatically, simply by subscribing to the BEL Monthly Topical Videos service! Also, you can check out the other great BEL subscription services!
 
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elected4ever

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It is nice to know that if Bob is conservative than I can sprout wings and fly to the moon. Bob is a full blown Marxist of the progressive persuasion.

Be warned, Bob does not believe in constitutional government but a religious dictatorship. I really think that Bob does not believe in liberty or freedom unless it is own his terms.

He who controls the wealth or money controls the nation. If the central bank controls the gold then the central bank controls the nation not us and Bob seems to think that is a good idea.

The gold in this country belongs to the people of this nation and not to the government. FDR stole the gold and has devalued the dollar,which is the unit of measure used to define the dollar that we call money, to where the 1933 dollar is now worth about 2 cents of that same dollar. To Bob, this is a good thing.

I am calling you out Bob Enyart. You are no conservative and I always did know that you were no constitutionalist. You are a progressive and therefore a socialist.
 

Lighthouse

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It is nice to know that if Bob is conservative than I can sprout wings and fly to the moon. Bob is a full blown Marxist of the progressive persuasion.

Be warned, Bob does not believe in constitutional government but a religious dictatorship. I really think that Bob does not believe in liberty or freedom unless it is own his terms.

He who controls the wealth or money controls the nation. If the central bank controls the gold then the central bank controls the nation not us and Bob seems to think that is a good idea.

The gold in this country belongs to the people of this nation and not to the government. FDR stole the gold and has devalued the dollar,which is the unit of measure used to define the dollar that we call money, to where the 1933 dollar is now worth about 2 cents of that same dollar. To Bob, this is a good thing.

I am calling you out Bob Enyart. You are no conservative and I always did know that you were no constitutionalist. You are a progressive and therefore a socialist.
Did you even listen to the show?
 

drbrumley

Well-known member
It is nice to know that if Bob is conservative than I can sprout wings and fly to the moon. Bob is a full blown Marxist of the progressive persuasion.

Be warned, Bob does not believe in constitutional government but a religious dictatorship. I really think that Bob does not believe in liberty or freedom unless it is own his terms.

He who controls the wealth or money controls the nation. If the central bank controls the gold then the central bank controls the nation not us and Bob seems to think that is a good idea.

The gold in this country belongs to the people of this nation and not to the government. FDR stole the gold and has devalued the dollar,which is the unit of measure used to define the dollar that we call money, to where the 1933 dollar is now worth about 2 cents of that same dollar. To Bob, this is a good thing.

I am calling you out Bob Enyart. You are no conservative and I always did know that you were no constitutionalist. You are a progressive and therefore a socialist.

Arguing in favor of fractional-reserve banking would in fact be tantamount to saying that it is legal (or rightful or even lawful) that Mr. A does whatever he wishes with Mr. B's property – without requiring Mr. B's consent.

A position I didn't think Bob held.
 

elected4ever

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I think he does sense he is also willing to deprive people of other constitutional rights. For a right to exist does not mean that the existant right is condoned or approved of by me or any other party. There is no liberty without freedom.
 

elohiym

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Let's consider why Bob's claim that banks create money when they lend has to be false, aside from the fact the Federal Reserve Bank claims in their publication Banking Basics on page six that banks lend depositor's money (not create it from thin air).

In the Federal Rerserve Bank publication Modern Money Mechanics on page 7 we are provided the bookkeeping entries for a $9,000 loan. It shows that assets (loans) increase $9,000 and liabilities (borrower deposits) increase $9,000. Notice two things: the bank's liabilities increase when making a loan, and those liabilities are called "borrower deposits."

If one could really create money from thin air then one would not have a liability. Who would the bank owe legal tender to if they merely created it with a pen stroke? Yet the bookkeeping entries show the bank owes $9,000 of legal tender. And that liability is matched to an asset called "borrower deposits." See? The borrower is made a depositor, and the deposit is the promissory note, and that is the money.

If the promissory note was not money deposited, then there would be no bank liability owing the value of the note. What Bob, and the banks, want you to believe (if you are dumb enough) is that the asset ceases to be money and the bank liability is the money. However, banks record legal tender as a bank asset, and a bank liability is owing legal tender.

Let's see Bob prove that owing legal tender is legal tender! :chuckle:
 
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drbrumley

Well-known member
You are quite right, Doc, in the sense that deposit expansion is a blatant swindle and has the same economic effect as counterfeiting (it isn't technically counterfeiting).

I don't believe that Bob has all the facts based on what I read in the OP, else he could not have stated some of what he did. In fairness, some of what he said is true, and absent the rest of the story I can see why he has come to his conclusions.

Knowing how vocal Bob is about things he opposes, perhaps it's best that he remains a bit in the dark on this subject. If he were to learn the whole truth, he would have to speak out publicly against it and that would lead to trouble for him that he cannot imagine.

However, if he is interested to learn the rest of the story, I am here to assist. I am somewhat of an "expert" on the subject.

Well, I hope Bob says this without all the facts then. I would hate to see him supporting this knowing :sigh:
 

elohiym

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Well, I hope Bob says this without all the facts then. I would hate to see him supporting this knowing :sigh:

There is no question in my mind that Bob does not truly understand how deposit expansion under a fractional reserve system actually works.
 

drbrumley

Well-known member
There is no question in my mind that Bob does not truly understand how deposit expansion under a fractional reserve system actually works.

I emailed him asking how he came to that conclusion on Fractional Reserve Banking. One point I did ask him is if he is agreeing with the policy of two sets of rules, one for banks and one for us common man, cause we sure are not allowed to do what bankers get away with.
 

Granite

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It is nice to know that if Bob is conservative than I can sprout wings and fly to the moon. Bob is a full blown Marxist of the progressive persuasion.

Be warned, Bob does not believe in constitutional government but a religious dictatorship. I really think that Bob does not believe in liberty or freedom unless it is own his terms.

He who controls the wealth or money controls the nation. If the central bank controls the gold then the central bank controls the nation not us and Bob seems to think that is a good idea.

The gold in this country belongs to the people of this nation and not to the government. FDR stole the gold and has devalued the dollar,which is the unit of measure used to define the dollar that we call money, to where the 1933 dollar is now worth about 2 cents of that same dollar. To Bob, this is a good thing.

I am calling you out Bob Enyart. You are no conservative and I always did know that you were no constitutionalist. You are a progressive and therefore a socialist.

How could you ever possibly call a monarchist a supporter of the US Constitution? Just sayin'.
 

Granite

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Bob I humbly ask you stick with theology cause your in over your head on this issue...

Agreed...

Believe it or not I've always found Gary North's remarks on economics to be completely sound and well-argued. When it comes to theology I have little interest in the man's work but his views on much of American history and finance are spot on.
 

Bob Enyart

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Ut oh, I've run into e4e again: 3 Strikes and your Out

Ut oh, I've run into e4e again: 3 Strikes and your Out

Ok, so e4e, I've been busy with personhood and haven't even been in my own forum lately, so what do I find when I come back, but a post by e4e. So, I thought I'd read until I got to three claims that were false even on their face (that is, without the need for argumentation to prove their wrong). So this is as far as I got (I haven't even read the rest of your post e4e):
Bob is a full blown Marxist of the progressive persuasion. Be warned, Bob does not believe in constitutional government but a religious dictatorship.
1. Bob is a Marxist: I've always aggressively opposed communism, Karl Marx, and even socialism.

2. Bob doesn't believe in constitutional government: I've published a proposed constitution.

3. Bob believes in a religious dictatorship: In the proposed constitution I've published, there is no requirement that the leader of the government be a Christian or even a religious person, since that merely sets up a "religious test" for office which historically has the goal of improving government but which in reality has the effect of harming Religion.​

Soe4e3so.

-Bob Enyart, KGOV.com

2020 Update: Skimming this thread I realize it took an interminably long time before I got around to answering some questions. I enjoyed The Graphite's posts, and those of a couple others. Here though are some of my replies to those disagreeing with the OP:
- Post 169 banks multiply money in mnking loans, quoting from the Fed and Robert Murphy at mises.org who teaches Anatomy of the Fed at the M.I.
- Post 136 explains why what the Fed & Murphy describe is fundamentally moral
- Post 152 replying to eloyiym's claim that fractional banking is evil, unstable, & economic slavery
- Post 170 rebutting drbrumley's claim that the gold standard had "backing" but today's notes are backed by "nothing"
- Post 28 drbrumbley who had told me to stick to theology writes, Bob, I misspoke. The [BEL Boortz economics] show you reference is one of my all time favorites
- Post 57, 84 & 154 opposing Elohiym's homage to constitution, that congress can regulate value, and backfiring use of 1 Pet 2:13
- Post 80 I call e4e on his constant conflation of economic with political systems and present the KGOV charts toward clarifying the difference.
- Post 124 reply to Newman that gold and silver not the most used nor successful money, etc.
- Post 133 calling e43 on claim his Fed Reserve Notes are worthless & denial the gold std by "fiat" inflates the value of gold.
 
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Bob Enyart

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Bob I humbly ask you stick with theology cause your in over your head on this issue...
drb, I do appreciate your humility in your request. All I found out in your posts though is that you disagree with my defense of fractional banking, but it would be helpful if you could try to rebut that defense. Then I'd have something to go on. As it stands now, all I would do is just repeat my defense, and that wouldn't get us anywhere. Any thoughts on that dbr?

-Bob Enyart, KGOV.com

p.s. drb, do you think it would have been better for me to stick with theology because I was in over my head on this economics show also: Bob Debates Neal Boortz on a Nat'l Sales Tax ? Neal is one of the national spokesmen for the Fair Tax movement, and I'm just a fundamentalist pastor. Any thoughts on this?
 

elohiym

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Bob Enyart said:
Definition of Money: In the 1990s here at Bob Enyart Live, I wrongly believed that justice required a return to the gold standard, whereby currency was formerly backed by reserves of precious metals. So years ago, you could bring a $10 gold certificate into a bank and receive a certain amount of gold. After studying and thinking about money for years, reading economic texts and reflecting on the Bible, asking questions of internationally renowned economists, I now know that money is not gold or silver, but money is more like a transferable IOU. Most accurately, money is the accounting of a transferable incomplete transaction. That is what money actually is.

Money is simply a medium of exchange. It need not be legal tender to qualify as money. For example, rum has been used as money, as have other things.

Gold and silver coins are certainly money, so I'm not quite sure how Bob concludes that money is not gold and silver. Perhaps he meant that gold and silver that has not been minted is not money, but that wouldn't make sense because it is not the form of silver that gives it value as money but the substance. That the metals have no intrinsic value is irrelevant; Federal Reserve Notes per se have no intrinsic value either.

Money can be a transferable IOU. That is correct. But is Bob willing to concede that when he gives the bank a promissory note that he is giving the bank money? :idunno: And is Bob aware that when a bank makes a "loan" it is only creating a bank liability (IOU) based on the promissory note's value (asset) it received at no cost and illegally from the alleged "borrower?" That is the rest of the story I think Bob is unaware of.

Using a $100K "loan" as an example: the "borrower" thinks he is receiving $100K of the bank's money (from existing depositors) in exchange for his promise to pay (an IOU having actual cash value--cash equivalent). In order to legally own the "borrowers" promissory note, the bank would first have to actually loan money it has (decrease assets) to acquire the note; however, what the bank does is deposit the "borrowers" note without owning it legally (assets increase), and this new deposit of money (the "borrowers" IOU) increases the bank's liabilities. In other words, the banks IOU has no value other than the real value of the "borrowers" IOU--it's a bookkeeping scam on the bank's part.

In essence, the bank "loans" the "borrower" his own money by monetizing the promissory note, allowing the bank to get the principle for free (illegally tax free as well) to "loan" back to the "borrower" and charge him interest. None of that is disclosed to the "borrower" who believes he is being loaned $100K of other depositor's money, unaware that he was actually made a depositor without his knowledge or permission, and that the bank's books actually reflect that the bank received a loan from the "borrower" and merely returned the proceeds of that loan fraudulently calling it a "loan" from the bank to the "borrower."

That is immoral and illegal on so many levels it should make your head spin. Unfortunately, most people, the vast majority, have no idea that is what is happening so the fraud continues. And as a result...well, you see the result in our economy presently.
 

Bob Enyart

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Question for elohiym...

Question for elohiym...

There is no question in my mind that Bob does not truly understand how deposit expansion under a fractional reserve system actually works.
Hello elohiym! In the show, I roughly followed the outline of the OP, and so it might be easy for you to find the section in which I gave a simple overview of how fractional banking works. I expanded on this statement, that in the, "fractional banking system... lenders bring money into existence when making loans, and expunge the principal as it is repaid." Please feel free to tell me if you can identify anything I said about how fractional banking "actually works" that might be incorrect. I'd correct any error if I can be shown and convinced of it.

Thanks!
-Bob Enyart, KGOV.com
 

elohiym

New member
A TOL good discussion about the fractional banking system.

and here's another good discussion as well (elo vs JustinFoldsFive).

Justin never answers the question: Can a bank increase a transaction account balance without first depositing money?

It's a very important question to answer if one is claiming that banks can legally create money out of thin air. Oh, I know the Federal Reserve Banks claims they can do that, and economists will tell you that they do create money out of thin air, but the truthful answer to my question above proves that they cannot, and that deposit expansion is a complete scam. Only God can create something from nothing.
 
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