Moses was a monetary reform advocate
On fractional reserve banking and its results: exponential inflation and eternal debt.
Interest may only be (and even then, see Torah ethics below) a reasonable compensation for the risk of the lender when the lender actually hands over the money to the borrower (so that the lender then does not have that money). In the current, ubiquitous fractional reserve banking system, this is not the case. Money is created as debt, not as value, and banks need to have only a tiny fraction of actual reserves for the loans they create. It’s not their depositors’ money that they lend.
“The prophet Moses”, in Syriac and Greek
Moses, the great Lawmaker of the Israelite, and later Jewish and Christian traditions, was, in a way, a “monetary reform advocate” too.
“You shall not deduct interest from loans to your countrymen, whether in money or food or anything else …”
(Deuteronomy 23,20)
There is a very sound principle behind that: for the economy to function properly, money must circulate, not stand still. If one has money one doesn’t need, either spend it, so somebody else can benefit from the economic activity thus created, or lend it to someone who will pledge to pay it back and engage in value-producing economic activity in the meantime.
There is no interest needed if there’s no inflation (which is created by the interest in our fractional reserve banking system in the first place). If the money comes back, nothing has been lost. The fundamental idea behind this biblical paradigm is that it’s wrong to make money purely with money.
I think this month of great financial meltdown, long foreseen by those who cared to look, has seen more people coming to that conclusion.
Now one might say this isn’t realistic. Yet how many people have ever really analyzed what money really is? I think rereading these words in Deuteronomy can be inspiring. Do we read them as “oh they were so naive back then”? Or as “they had a very primitive society where such things were possible”? Or had we better read them as “what are the fundamentals moral principles behind such a judgment? Is that judgment perhaps still valid?”
Money ought to be purely a facilitator of the exchange of produced value in a society (services or goods). Not so much a storage of wealth or a goal in itself.
Two American presidents who tried to bring about monetary reform were assassinated. A third was shot but survived. I think that says enough. As Benjamin Franklin said in his autobiography, the American War of Independence was also largely about independence from the Bank of England. America then had an excellent interest-free money, Colonial Scrip. A purely fiat system, which worked well since the money supply was kept relatively stable to avoid any unnecessary inflation.
