Archive for September, 2013

Follow the money

As a banker, I’ve handled piles of “money” that could buy life’s finest luxuries. They could also start a small campfire. What’s the difference? The reputation of the printer.

Uncle Sam says stacks of dollar bills are worth more than kindling. So far, we have believed him.

Russian-born novelist Ayn Rand wrote in her 1957 classic, Atlas Shrugged, that “when you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others… Those pieces of paper, which should have been gold, are a token of honor- your claim upon the energy of the men who produce.”

At its core, money is nothing more than a tool, a medium of exchange, a signal of value. There is nothing inherently good or inherently evil about it. Like fire, it can be used for good or evil. The difference lies in how we humans care for it.

First, on a personal level, you can tell alot about a person by how she cares for her money. Is she flippant with it or intentional? Does she make it last? Does it do some good? Or does it slip like water through her fingers?

God said your money flows in the direction of your priorities. His observation in Matthew 6 came on the heels of a command to store up treasures in heaven. How does one “store up treasures in heaven?” By using one’s resources, money included, to make eternal impacts on people’s lives.

Second, on a national level, you can tell alot about a country by how it cares for its money. Do politicians and central bankers protect their currency’s value? Do they let wealth grow organically, as the result of the hard work of their constituency? Or do they speak it into being in order to make financial hardships seem less harsh?

Do a nation’s leaders maintain a level playing field so that money flows according to the free decisions of free people? Or is the landscape skewed so that the governors help determine winners and losers?

America’s central bank, the Federal Reserve Bank, has “printed” trillions of dollars since 2008. The purpose has been two-fold: (1) to keep people buying houses (because interest rates are low) and (2) to keep Congress spending money (because the Federal Reserve keeps purchasing US Treasury bonds.) Scarily, inflation has been reduced to an afterthought.

In addition, from green energy initiatives to nationalized health care to talk of wealthy companies’ (e.g., oil & gas) and individuals’ “paying their fair share,” the dark clouds of government intrusion loom overhead like shadows at dusk.

“Sound money” advocates easily reject these “easy money” policies. Ms. Rand, for example. One of her protagonists in Atlas Shrugged was industrialist Francisco d’Anconia. His speech midway through the book delivers as good a defense of capitalism and limited government as ever was offered, including this prescient warning:

“Money is the barometer of a society’s virtue. …When you see that in order to produce, you need to obtain permission from men who produce nothing- when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and pull than by work… you may know that your society is doomed.”

As an outsider looking in, Mr. d’Anconia reminds his listeners, and us, of the United States’ unique contribution to economic history.

Americans, he says, “created the phrase ‘to make money.’ No other language or nation had ever used these words before. Men had always thought of wealth as a static quantity- to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created.”

Not merely printed.


Kevin Thompson is Senior Vice President at Boerne Market Manager for Centennial Bank. He can be reached at Kevin.Thompson@BankonCB.com.

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