Introduction

This is a book about money, a subject that has defied analysis by professional economists for as long as there have been professional economists. At the same time, it is a topic for which the most ill-informed people think they have the answers. Very often the most ill-informed people are professional economists.

I will give you an example. In the fall of 1985, I suggested to a research assistant to a Congressman that he conduct a quick study of the Mexican peso. I thought that the sharp increase in cash—American money in circulation—might be explained by Mexican nationals substituting dollars for pesos in Mexico. At the time that he began his investigation, the peso was selling for about 250 per dollar. I suggested that he ask a staff economist at the Federal Reserve System, our nation’s central bank, if he thought that Mexicans were hoarding cash dollars. I suspected that Mexican citizens were using the U.S. dollar as a substitute for the collapsing peso.

He phoned back a few days later. Two staff economists, one of whom was a specialist in the Mexican economy, had told him that it was quite unlikely that Mexicans were hoarding dollars, because Mexicans could take cash dollars to their local bank, exchange their dollars for pesos, and the bank would pay them interest in pesos.

Within one week, the peso fell to 500 to the dollar. Thus, anyone who had followed the advice of the expert economists had lost half of his capital. On the other hand, those who had bought cash dollars with their pesos and never went near a bank had doubled their money (pesos). In short, a lot of illiterate Mexican peasants knew more about practical economics in an inflationary economy than Federal Reserve economists knew. Somehow, this discovery did not surprise me.

A few months later, a report on the apparent disappearance of American cash appeared in the newspapers. It said that Federal Reserve economists now think that people in foreign countries are using American bills instead of their depreciating national currencies. So much for the consistent views of economists. They just don’t agree on much of anything, except the need to keep economists on the payroll.

The Crisis We Face

There is a debt crisis in the making. It is international. Every industrial nation on earth faces a crisis that could dwarf the crisis of the 1930s. There are no pain-free solutions. There will be widespread defaults on a scale greater than those in the fall of 2008. The practical forecasting questions we need to get answered are these: How soon will the default come? What kind of default will it be?

This book asks a different question: What violations of the principles of the Bible did the West commit that led us into this mess? It also asks this question: What should we build on the ruins of the present system after the collapse?

There are Biblical alternatives. If we had adopted them 500 years ago, or 100 years ago, or even 50 years ago, we would not be facing the monetary crisis that we now face. But we didn’t adopt them, so we are facing it.