PDF Version: AncientInjustice.pdf
Growing up, my Jewish education consisted of an after school program (‘cheider’ to the Yiddish inclined) while I attended public school by day. On my walk to Hebrew School I would often try to marry the two bodies of knowledge from the two respective school systems. A happy romance occurred around 1987 between the religious and secular bodies of knowledge. As many may recall 1987 was the year of the big crash on the stock market.[1] Debt and the economy were on the lips of many in those days.
In the secular world there was tremendous talk of personal and national debt, interest rates, unemployment and the like. All the while, the Torah I was reading in Hebrew school was definitely running on about the sabbatical forgiveness of debt and the precept that “there should be no poor among you”. (Deut 15:1-4) Now my mental image of the ancient Israelites was that of a pastoral, agrarian people. With hindsight I can say that this image was only slightly misguided. Despite the rumored grandeur of the Davidic kingdom, archaeologists hold that their society was more rural than urban.
But this left me with a theological problem: I saw debt as a product of banks which were on city streets. I failed to conjure an image of rolling agricultural fields dotted with banks and/or ATMs at the Temple gates. (Parenthetically, it turns out that if the Gospels have any historical veracity, there may have been just such an ancient equivalent of an ATM at the Temple gates. More to follow shortly.) Failing to imagine ancient banks, I was puzzled about what the ancient Israelites knew of debt and how then did this prescient warning against the accumulation of debt make it into the Torah? I questioned my Hebrew school teacher along these lines and I was given the answer that ‘the Torah contained the writ word of God and all His wisdom. It was written for all times and addressed all the problems that we would encounter until the end of days.’
Platitudes such as this are to young inquisitive men, such as I was, like drinking sea water when thirsty: quenching only at first and then leaving you more thirsty than ever. If my teacher’s answer was to hold water (pun intended) then there were conspicuous absences from the ‘writ word of God’. Where were the foundations for democracy? Where were the specific prohibitions against slavery (beyond the sabbatical release of Hebrew slaves)? Where was the discussion about protecting the environment beyond the scant ordinances for burying excrement beyond the outskirts of camp (Deut 23:14)? From those grandiose absences there were more mundane absences like: Where were the prohibitions against smoking and where were the prohibitions against high cholesterol foods? My attempts to marry the religious and secular belief systems were thwarted by the absence of these secular guidelines which I had determined to be legitimate and necessary. After a brief flirtation the attempted marriage failed in divorce with the judgment pronounced by my rationality decreeing that the Torah was not indeed the writ word of God.
Literalists may be tempted by the previous sentence to toss this work out of hand directly into the fire. Indeed this may provide needed warmth to those suffering the effects of debt. Just the same, with a bit of patience on both sides of the theist/atheist debate, I believe there is commonality to be found in the good intentions of the Torah. While we may debate its authorship I will not debate that it was written with the best of intentions. Further, I hold that it was written to describe an ideal rather than the actual practice of the day. There is a common modern Israeli expression: “The synagogue I don’t go to is Orthodox.” Similarly, I believe that the Torah describes an ideal set out for the people to follow which was likely, based on archaeological evidence, considerably different than religion actually practiced by the ancient Israelites. Specifically, archaeology reveals the rampant practice of polytheism and idolatry up to the Babylonian exile.[2] Biblical archaeology contends that the Torah was a compendium of tales written by a reformist movement railing against the practices of the day. Setting aside the issue of biblical authorship, I will continue the discussion in the context of the good intentions of the author presently.
The now dubious authorship of the Torah made my original question even more pronounced. If the Torah was not written by God, then who wrote it and how were the ancient Israelites aware of debt and its effects? My research would lead me to the field of biblical archaeology. I studied the works of William Dever and Israel Finklestein amongst others with the following results. The ancient Israelites never conquered Canaan as told in the Torah canon. They were instead Canaanites themselves who survived and replaced a decaying social order with a more egalitarian one. For those interested in how I arrived at this conclusion there is a wonderful précis of biblical archaeology available on Public Broadcastings’ NOVA series: “The Bible’s Buried Secrets.”[3] There you’ll find a terrific summary of all the archaeological and scientific findings to date. I only wish this series had existed at the outset of my research for it would have saved me much trudging through many inaccessibly written academic works on the topic. Researching biblical archaeology was much like archaeology itself: sifting through piles of academic detritus to yield occasional relics and then putting the pieces together.
So, accepting for the moment that the Israelite race emerged from the nadir of the Canaanite civilization, Zephaniah 1:11 becomes ever more clear:
“The dwellers of Machtesh [, a quarter of Jerusalem,] howl;/ For all the tradesmen [nation of Canaan] have perished, All who weigh silver are wiped out.”
Two things are critical in this passage. First the time of Zephaniah, well past that of the Canaanite era, and second the reference to the weighing of silver. Zephaniah was not admonishing the Canaanites but rather the Jewish merchants of Jerusalem who were acting like Canaanites.[4] As to the reference to the weighing of silver, silver was then as it is now, a monetary metal. All throughout history, every society has been plagued by the manipulation of their currency leading to their ultimate downfall. Economists call the process seigniorage gain.
Seigniorage gain is the process by which the minter (usually the government) gains on the difference between the face value of the coin and the actual value of the metal used to make it. I often think it is the job of economists to construct palatable names for what in the end turns out to be sheer larceny. Those unfamiliar with the term may be more familiar with the contemporary synonyms such as ‘inflation’. Whatever you choose to call it, ‘a lemon by any other name would taste as sour’ and inflation, currency manipulation, or seigniorage gain is quintessentially a tax on the middle class leading to widespread debt, poverty and wealth inequality. It is a fundamental violation of the biblical injunction to have “fair weights and measures” (Deut 25:13-16).
It is my supposition that it was an economic collapse brought about by currency manipulation which spelled the end of the Canaanite civilization. I will support this supposition by reviewing the log roll of history vis a vis currency manipulation and the subsequent unfolding of the relevant civilization. Biblical archaeology tells us that the proto-Israelites literally fled for the hills in the face of the collapse of the Canaanites.[5] There they regrouped and sought to set themselves apart from the evils of their past. After the dust had settled they returned with a renewed spirit and purpose to set out a more equitable system. To that end they developed laws against the accumulation of debt and the slavery that results. Those laws were later canonized in the Pentateuch around the end of the Babylonian exile (4th to 6th centuries BCE).[6]
Some 600 years later we know that these laws were largely being ignored and that corruption again loomed large. We have the historical testimony of the gospels of Luke and John which recount Jesus’ banishing of the money changers from the temple gates. Around the time of the year 0 CE Roman currency was the common currency in the holy land. These coins typically bore the images of pagan gods and were unacceptable for use in temple worship. At the temple gates, benches of money changers would exchange these coins, at predatory exchange rates, to Levite coins for use in temple services. These same money changers would charge the Levites unreasonable rates to change these coins back into Roman coins such that the Levite priests could make purchases in the markets. Jesus found the entire process abominable and forcibly drove them from the temple.[7] Whether you believe the historical veracity of the gospels is beside the point here. What is known is that currency manipulation was clearly on the mind of the authors of the gospels and the gospels were known to be written around this time (admittedly within 400 years). As a pertinent aside, the word ‘Bank’ comes from the Latin for ‘bench’ precisely referring to this historical antecedent.[8] I believe it is social disarray caused by the financial ruin of Israel which led to its overthrow by the Romans. There is textual evidence for this in the bible itself: Jeremiah 7:11 reads “Is this house, whereupon My name is called, become a den of robbers in your eyes?” Amos 5:7 reads “Ah you who trample the heads of the poor into the dust of the ground, and make the humble walk a twisted course.”
It is an irony of history, if not a recurring leitmotif, that the very same financial snare which destroyed Israel also destroyed its captors. In Hebrew school we all learned of the famous (infamous) “Judea Capta” coin.[9] This coin depicts the pride of the Romans in defeating ancient Israel. It is in the silver or precious metal content of roman coinage with which we can track the decline of the Roman Empire. The backbone coin of the Roman economy was the Denarius which started out with a silver weight of approximately 4.5 grams. Have you ever noticed the ridges on the edge of a quarter? These same ridges were present on the Denarius and there intention is to make any shaving of the coin obvious. This made it harder for individuals to debase the currency but the government was free to mint coins with less and less silver content. By the year 274 CE under Aurelian’s reign the coins had almost no silver content at all.[10] The causes of the fall of Rome are admittedly complex, including the outsourcing of their military defense to barbarian mercenaries. Just the same, the economic decline of Rome is certainly one of the principle causes and is yet another exemplar of the debasement of currency leading to the debasement of the underlying civilization.
The collapse of the Roman Empire led the world into the dark ages. The Christian religion took hold championing the cause of the poor all through these long dark ages. Eventually a fair monetary system was developed called the tally stick system.[11] Very strict Christian based laws against usury (interest) prevented any monetary abuse. However, in the 1500’s Henry VIII, obviously unaware of the peril, deregulated the economy and allowed for certain forms of usury.[12] The economic maelstrom unleashed destroyed the English economy. In the wake of the upheaval and in the aftermath of the English revolution of 1642, the Bank of London was established. Oddly enough, the initial shares were bought with no other currency than talley sticks. The bank of England replaced this monetary system with their own manipulated (or ‘fiat’) currency. Currency manipulation was now institutionalized in the form of this ‘Central Bank’ put in place to ‘protect and regulate’ the money supply.
Just around this time, gold was being used as a currency. Carrying ones gold on their person could be cumbersome and moreover, dangerous. A robbery could erase ones savings. The goldsmiths of the day agreed to hold gold for consumers at a nominal fee and issued them a certificate which they could then use to redeem their deposits. These little slips of paper were much easier to work with and in a very short time, the slips of paper would be used in transactions instead of gold. The goldsmiths made an astute observation. Not all of their clients came to collect their gold at one instant. As such they could lend out some of the deposited gold at interest making money on money they did not really have. While this seems relatively harmless provided customers do not all come for their gold at once, it is in fact at the core of everything wrong in the world today. The fraud is subtle yet essential to understand. By using gold that say a farmer had deposited to make loans, you are using the hard labour of the farmer to make money with very little labour. In a nutshell, this practice siphons up the value of labour and puts it in the hands of the advantaged few who are in a position to leverage it. This is the practice of fractional reserve banking with is with us to this very day.[13] When a middle class family takes out a loan to get an SUV, the bank does not lend you their money. They lend you the savings of an auto worker who drives a compact sedan. The banker turns interest on money s/he never owned and drives a luxury sports car on the profits. Such is the food chain of fractional reserve banking. Bankers love the practice for obvious reasons. Politicians love it because they can finance their projects without reaching for tax dollars. Projects can now be financed with thusly conjured money with only a nodding concern for inflation and the ever growing national debt. The average person neither loves it nor hates it because they do not understand it. Hopefully, that is, until now.
The Bank of England was aware of the practice of the goldsmiths but instead of outlawing it, embraced it. As such they succeeded in protecting and regulating the money supply insofar as her citizens of wealth were concerned but all to the detriment of the English parliament and the general public. The bank so bankrupted England that England was forced to place a heavy tax burden on its colonies. The American colonies revolted to the cry against ‘taxation without representation’ in the war of independence of 1762. By the end of this revolution, with the effects of the Bank of England in mind the Americans set out to “form a more perfect union”. Into their new constitution section 10 forbids “…emit[ing] Bills of Credit; mak[ing] any Thing but gold and silver Coin a Tender in Payment of Debts…”.[14] It was pursuant to this section that the United States was on the Gold Standard for most of its existence up until 1933. The Gold Standard ensured that every bill was backed by gold. Bills printed prior to 1933 were marked “redeemable in gold”. After 1933 they were marked as only “legal tender”. The founding fathers knew of the threat of a manipulated currency but that memory and warning was, as we now see, historically fleeting.
The Americans had the first and second Banks of America which again started to manipulate the currency. Andrew Jackson famously put a temporary stop to the banking cartels saying: “You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”[16] For a short while he succeeded. From 1836 to 1913 the United States was free of a central bank and the currency manipulation they bring with them.
During this hiatus in central banking while financial crises persisted, inflation was flat. That is to say that one dollar was worth one dollar for this interim period.[17] This allowed for the accumulations of savings which is the true practice of capitalism. Indeed by the early 1900’s bankers were concerned with the prevalence of self-financing of business development. So concerned were the bankers that they sought to reassert themselves and in 1913, taking advantage of a recent (some say engineered) financial crisis, the Federal Reserve was born and central banking was reborn in America.[18] Again too, the promise of the Federal Reserve was to regulate the money supply and again, so it did, to the advantage of the wealthy few. As it has always been throughout history, currency manipulation manufactures debt and poverty. Since the inception of the Federal Reserve, the purchasing power of the dollar has decreased by 95%. Inflation has increased by 1929% (that’s 19 hundred and twenty nine percent!).[19] The effect of this is that wealth inequality is now staggering. As of 2001, in the U.S., the top 20% held 84% of all the wealth.[20] For those who have trouble dealing with math, what this means is that if you are in the class of the remaining 80% (most of us are) then in a more fairly distributed economy – which would necessarily feature a fair currency – you would have approximately 5 times your current assets.
As common as monetary manipulation is throughout history, so too are the attempted fixes when the system gets out of whack. A fiat currency (recall a ‘fiat’ currency is an ‘on faith’ currency) is a sort of monetary Golem: this time made of minted coins instead of clay. Generally it functions impeccably as designed, siphoning wealth upwards but occasionally and often dramatically, it causes large financial upset. When this Golem takes a swat at its banker creators the solution is to placate it with, yes, ever more printed or minted money. This maneuver results in one of two results: 1) a temporary stabilization of the monster or 2) a hyperinflationary death when the monster collapses under its own weight. Note that in either outcome, the best that can be accomplished is a temporary shoring up of the system. Inevitably, the Golem collapses back into the imaginary ore it came from, only after raping the value of the land and passing it into the hands of the elite few. Revisiting the economic death of Rome, Nero and other Emperors debased the currency via inflation fiddling and minting as it were while Rome burned.
However, one need not look as far afield to find a terrific example of the hyperinflationary death of an empire. Just recently, the Weimar republic died just such a death.[21] In the 1920’s Germany forced under the WWI reparations act to make payments to the victor nations. The victor nations, most notably France and England who were in their own financial distress due to – you may have guessed by now – their own currency manipulation, pressured the Germans to make good on their obligations. The German coffers were largely empty and as a result they decided to print money to meet their obligations. The German citizens were wary of the stability of their currency and began to hoard cash fearing a crisis. Simultaneously the German creditors began to fear default on their loans and closed the taps of credit. The German economy stalled and went into a brief bout of deflation. The Germans did what every other economy has tried all throughout history to solve the problem: they threw more money into the market to try and jumpstart it. The German citizens feared for their nest eggs which caused them to attempt to convert any cash they had on hand to real assets. This unleashed a torrent of cash on the market which immediately lead to hyperinflation.[22] Hyperinflation is runaway inflation fueled by panic and distrust of the underlying currency. A corollary to the loss of trust in currency is an inevitable loss of trust in the government that promotes it. It was thus that the Weimar republic fell leaving a political vacuum in its wake which would soon be filled by the Nazis. Malcolm Muggeridge once wrote that: “It has been said that when human beings stop believing in God they believe in nothing. The truth is much worse: they believe in anything.”[23] History will record that this is equally applicable to the cessation of belief in government.
Historians and economists alike may be quick to point out that there would appear to be a historic precedent for economic spending or stimulus as an escape to recession. They undoubtedly would point to the Roosevelt era and the “New Deal”. So hope filled were the citizens of the day that the New Deal was rhapsodized into the Great Depression era musical: ‘Annie’. Daddy Warbucks swooned “I know the depression is depressing… But we’ll get a new deal for Christmas this year.”[24] The character Daddy Warbucks was modeled after Paul Warburg.[25] It was common knowledge at the time that this was so. Warburg was one of the chief architects of the Federal Reserve which is the United States arm of the Bank of England. The bitter irony here is that it was the Federal Reserve System which caused and exacerbated the Great Depression. They were anything but the cure. The famed economist Milton Friedman spent a lifetime promoting this interpretation of events. On the occasion of his 90th birthday Ben Bernanke, the current chairman of the Fed said: “I would like to say to Milton… Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”[26] While I believe that Roosevelt was well intentioned, he was fatally naïve. His New Deal served only to confiscate all public monetary gold and transfer yet more power to the Federal Reserve to manipulate currency. The hidden tragedy of the musical Annie is that while she shares a stage with the theatric Roosevelt and Warbucks (Warburg) singing their accolades as her saviour, she is actually praising the instrument of her orphan plight. (Annie was orphaned due to the financial insolvency of her parents.)
While unwittingly kissing the hand that starves you may be tragic when it occurs on stage, it is far more tragic when it occurs in the real world. It is still a mainstream notion that Roosevelt’s New Deal was what rescued the Americans from the Great Depression.[27] Even though all through history, government salvation through spending has led to financial ruin at every attempt some still espouse the idea that it is possible to spend our way out of the damage wrought by currency manipulation. Currency manipulation is good for bankers and bankers fund business schools which produce bankers. It is no wonder then that currency manipulation which goes hand in hand with government spending ‘has’ to be a good thing. If you want to be at the top of this pyramid scheme you have to support the bricks that build it. In this light, when the financial meltdown of 2008 hit, how did the pyramid builders propose to deal with the ‘Gre08er Depression’? You guessed it, with more government spending.
Journalists are already pointing out the similarities in circumstances between Barack Obama and Roosevelt.[28] I believe the comparisons are justified and that Obama is, like Roosevelt, well intentioned but critically misguided. Mind you, not only is Obama misguided but most people are ill aware of monetary policy and its implications. Obama promises trillion dollar deficits running for the next many years.[29] It is his hope that this massive spending will shock the economy back to life. The only shock it can reasonably hope to achieve though is shocking the Frankenstein of currency manipulation to life to turn on its creator. The only reason Roosevelt’s New Deal appeared to work was that by the end of WWII, the US had developed tremendous manufacturing capabilities and the US was a burgeoning economy; the US emerged from the Great Depression despite Roosevelt’s New Deal, not because of it. The situation in this Gre08er Depression is different. There is no new manufacturing potential, indeed it is declining. The US is not a burgeoning nation but is instead a declining one. Thus the only shock government spending is capable of producing on the US economy is an electrocution.
Growing up I had trouble relating to the ancient Israelites I was reading about. I could relate only to their enslavement in Egypt which I read as an allegory for my forced attendance at school. Beyond that, they were a people very far from me both spatially and temporally. My time was dominated by discussions and anxious anticipation of new technologies and new scientific discoveries. While I could ‘upconvert’ an ordinance to help a neighbour right a fallen cattle to a more modern equivalent of assisting ones neighbour with a crashed computer in general the setting for torah morality written in terms of cattle, oxen and sheep failed to connect with me. I was always amazed then as to how these seemingly simple people understood concepts such as debt. Most debt in modern times comes from securing shelter. In ancient Israel this could be accomplished by erecting four poles and securing canvas. So where did these biblical injunctions come from, what wrong were they trying to right?
In trying to answer that question I would have to journey through studies of biblical archaeology and general history. After so doing, I have found a new connection with the ancient Israelites. They were trying to solve a very old and fundamental problem: how to govern a large group of people equitably while preventing corruption. Currency is one of the fundamental cornerstones of any civilization. It is fundamental to most of our interactions and if it is corrupt, so too will inevitably be anything built on top of it. Disappointment then comes in reading the scroll of history with each entry echoing the previous: “Empire rises with high ideals. The high ideals erode under complacency. Corruption then leads to inequality and fiscal malaise. Empire manipulates the currency to buy time. Empire runs out of time.”
The tenet of monotheism according to the bible started with Abraham. What the Torah describes as a moment of epiphany is revealed by biblical archaeologists to in fact be a long arduous process which took several hundreds of years. Key here is that a stated ideal can become a practiced ideal with exertion of effort over time. It is thus to the commandment that we “should have no poor among [us]” that we must redirect our time and efforts. I have recently come to a conclusion that the reformed Canaanite predecessors of the world’s ‘big 3’ monotheistic religions likely came to long ago; poverty is not the result of a lack of wealth but instead a lack of justice.
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[1] http://en.wikipedia.org/wiki/Black_Monday_(1987)
[2] William G. Dever: “Did God Have a Wife?”
[3] http://www.pbs.org/wgbh/nova/bible/program.html
[4] http://books.google.ca/books?id=sIWn6lYS-MQC&pg=PA171
[5] Smith, Mark “The Early History of God: Yahweh and Other Deities of Ancient Israel” (pp 6-7)
[6] McDonald & Sanders, editors of The Canon Debate, 2002, The Notion and Definition of Canon by Eugene Ulrich, pg 4
[7] http://en.wikipedia.org/wiki/Jesus_and_the_money_changers
[8] http://www.etymonline.com/index.php?term=bank
[9] http://en.wikipedia.org/wiki/Judaea_Capta_coinage
[10] http://en.wikipedia.org/wiki/Decline_of_the_Roman_Empire#Michael_Rostovtzeff.2C_Ludwig_von_Mises.2C_and_Bruce_Bartlett [11] http://en.wikipedia.org/wiki/Talley_stick
[12] http://books.google.ca/books?id=pnszAAAAIAAJ&pg=PA8
[13] http://en.wikipedia.org/wiki/Fractional-reserve_banking#History
[14] http://www.usconstitution.net/xconst_A1Sec10.html
[15] http://en.wikipedia.org/wiki/Gold_standard
[16] http://quotes.liberty-tree.ca/quotes_by/andrew+jackson
[17] http://www.economics-charts.com/cpi/cpi-1800-2005.ht ml
[18] http://en.wikipedia.org/wiki/Federal_Reserve
[19] http://postworthy.com/Worthy/ex/US_Dollar_Purchasing_Power_Decline/205.aspx[20] http://mwiner.files.wordpress.com/2008/10/wealthdistribution.gif
[21] http://en.wikipedia.org/wiki/1920s_German_inflation
[22] http://en.wikipedia.org/wiki/Hyperinflation
[23] http://www.brainyquote.com/quotes/authors/m/malcolm_muggeridge.html[24] http://www.youtube.com/watch?v=c2vGeaqM33g
[25] http://en.wikipedia.org/wiki/Paul_Warburg#Legacy
[26] http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm[27] http://en.wikipedia.org/wiki/New_Deal
[28] http://www.time.com/time/covers/0,16641,20081124,00.html
[29] http://www.usatoday.com/news/washington/2009-01-06-obama-economy_N.htm
