I read your article on money a couple of weeks ago while rummaging around your website. It's been on my mind off and on ever since because I can't recall having ever read anything of yours with which I so thoroughly disagree.
This never happens! Even when it has seemed liked I disagreed with you on some issue in the past, it generally takes about ten to fifteen minutes of looking into it further for me to discover that I had misunderstood you or that I was otherwise mistaken. As a result I've become conditioned to trust your judgment and find it very discomforting when any disagreement I have with you lasts more than a day, never mind several weeks.
All that to say that I half expect to be convinced that either I'm wrong or that I've misunderstood your position. But only half.
Here are my thoughts in reaction to your article, you tell me how I'm wrong. (I should point out that I've neither watched the show nor read more than just the first several posts on this thread.)
My first problem with your thesis on money is your attempt to redefine what money is. There is no need to do such a thing. Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country. It is NOT any sort of incomplete transaction UNLESS the medium of exchange has very little or no REAL value. That is to say that so long as the money is actually MADE before it is exchanged, any transaction made with it is complete unless otherwise agreed to by all the parties involved. The reason this is so is because real money (i.e. as apposed to fiat currency) represents work. It does NOT represent work to be done but work ALREADY completed. Real money must be earned and exchanged between parties by mutual consent for mutual gain. Anything else is theft in one form or another.
It is only in a fiat currency economy where your definition would have any application whatsoever and I submit that such economies are in fact based on theft. It is theft because any party which can arbitrarily inflate the currency supply gets to use that currency at today's rate of exchange while the very act of using that currency is what decreases the value of everybody's currency. So now, after the currency makers have spent their fiat cash, the currency I was paid for work I performed or for services I rendered is cheapened. Its as if I was paid for 9.9 hours of work when 10 hours of work was actually done. The money makers stole 6 minutes of my work, of my life! And that's assuming a mere 1% inflation rate, the reality is, of course, far worse and is THE reason why the average person's standard of living remains basically the same even when his salary is regularly increased. His employer pays him each year with cheaper and cheaper dollars for work that is increasingly more valuable due to the employee's increased experience level. Inflation is the super rich and powerful stealing the life work from the common man.
Any economic activity that arbitrarily increases the currency supply performs this same theft, including fractional banking. No bank, no entity of any sort, should be permitted to loan out money that they do not have. And they most certainly should not be permitted to charge interest on money that didn't even exist before the "loan" was signed!
Now, as for gold, silver and other commodity based money being fiat money. The only way I can understand your having come to this conclusion is by having misunderstood the use of the word 'fiat' in the context of money. A fiat currency is one where the government or a bank or some other entity can arbitrarily increase or decrease the supply of that currency. It isn't referring merely to the fact that someone somewhere decided to use something as a medium of exchange as your comments seem to suggest.
Gold is money by definition (i.e. it is not currency). Not only is it money it is almost certainly the best possible money that there could ever be. Why? Well because those who have it earned it (i.e. not counting criminals, of course) and as such aren't generally willing to part with it without getting something of equal value in exchange. Gold cannot be printed, nor can you get away with simply pretending it exists in order to loan it out and collect interest on the pretend gold. (Gold also has the advantage of having a relatively low industrial demand where the commodity is used up in a manner which renders it unrecoverable as in the case of copper or silver.) Thus its value is based on REAL supply and demand. With fiat currencies the government attempts to alter both the supply and the demand for their currency by altering the actual supply of the currency or by altering interest rates that their banks charge for borrowing the money that didn't exist before you borrowed it. Both activities are theft and both are impossible when gold is used as money.
The only way to control the money supply under a true gold standard would be for the government to hoard gold and then dispense it out at varying rates to "control" the supply. But think through what would happen if a government attempted to do such a thing. If the government started buying up a bunch of gold in order to hoard it, that would simultaneously decrease the supply of gold and increase its demand (i.e. governmental demand counts as real demand in the physical gold market) sending the value of gold through the roof. This would be deflationary in the economy, the only fix for which is for the government to sell its store of gold thus increasing the money supply and decreasing demand thereby dramatically lowering the value of gold. In other words, if there is a real gold standard in place, the government only stymies its own goals by attempting to hoard gold. The more they hoard, the more its worth and the bigger the desire to spend it becomes and the smaller the reason to hoard it becomes.
Gold regulates its own value!
This is so because the only real way to alter the gold supply is to dig more of it out of the ground, which is really hard to do and isn't going to be done for free and is usually done at great expense and risk of loss. In other words, those who dig it out of the ground EARN it.
And that is really the key issue, the issue of having earned what you own and getting justly compensated for that which you produce. Loaning out money is a vital activity for any economy. It is in fact what grows an economy. But one should not be permitted to charge interest for money that didn't exist before the loan was signed. Interest is called "interest" for a reason. A banker in a just economy takes an interest in what you intend to do with the borrowed money because he is taking a risk of loss by lending it to you. The money you pay in excess of the principle is his compensation for having accepted that risk. It is his interest (i.e. his potential gain) in the transaction. Otherwise, he would very rarely, if ever have any reason to make a loan to anyone. But there is no risk involved, or at least the risk is very nearly eliminated where one is loaning out money that didn't exist prior to the borrower signing the paper work. What then is the lender being compensated for, filling out the paper work and accepting your monthly payments? And if the lender only has to have 10 cents in deposits for ever dollar he loans, his charging of 5% interest yields him a bonanza in profits on the money that was actually at risk. If someone mortgages a house for $100,000 and pay $900/month for 30 years, the banks put $224,000 in its pocket over the life of the loan while having only put $10,000 of it own money at risk! Talk about usury!
Further, just to nail down the point that fractional banking is inflationary, the factions in fractional banking never stop. Bank A has $1,000,000 in deposits and can therefore loan out $10,000,000 to its customers. Bank A's customers deposit the money they borrowed from Bank A into Banks B, C, D, E, F and G. All of whom can now loan out a combined total of $100,000,000. So in a fractional banking system where banks are permitted to loan out 10 times their actual deposits of fiat currency, the currency supply is increased by 100 fold in only two complete iterations. Its a Ponzi scheme! Now, of course, the larger the currency supply, the longer each iteration would take to complete and as each loan it paid off the money supply does shrink but notice that it could never shrink all the way back to where it was before that first fractional loan was made. The interest paid on that made up money doesn't vanish from the currency supply like the journal entry for the principle does. It's permanently part of the economy and contributes its part in the devaluation of your work and mine.
Resting in Him,
P.S. I know a rambled on a bit with this post and I sort of repeated myself a bit here and there but I just sort of spit out onto the screen the things that have been rumbling around in my head for the last few weeks. It is my hope that whichever of us is right will be able to convince the other. God bless you!