The Free Market Money Report

In this report we will explore how private “free market money” emerges in a new or developing society, and again look at the life cycle of money by examining a historical example. We will see the importance of the maintaining integrity in the money from history, and demonstrate how free market money again re-emerges toward the end of this life cycle.

The Free Market Money Report

As one looks at history, through-out most of time there have been 2 distinctly different types of money.

1. Government Issued or Legal Tender Money. Working with bankers, this type of money is the result of government decree. It emerges from our governments or rulers – monopolizing, regulating and taxing our money supply.

As we look around the world in 1999, we can see the impoverishing and crippling effects of this highly regulated and taxed, debt issued legal tender money.

2. Privately owned and issued Free Market Money. This money is the result of the action of the free, unrestricted market place. It develops as the result of market demand for an unregulated medium of exchange.of integrity. Almost without exception this has always emerged to be gold and silver. Privately issued, free market money in the form of gold and silver is real wealth in the hands of the holder.

Again today we can see the resurgence of “free market demand” for unrestricted money, of integrity.

Around 65 AD, the itinerant preacher and evangelist Paul of Tarsus, when writing to his younger fellow missionary Timothy, said “the love of money is the root of all evil”.

At the time of Paul’s writing, much like people of today, those living in the then known world had personally experienced the damaging effects of Roman leadership controlling, monopolizing and manipulating money, and it’s issuance.

This now familiar pattern saw the progressive debasement and removal of value from the money of the then world. In his travels throughout the region, the Apostle Paul would have witnessed first hand the destructive effects of this practice.

To assay a piece of metal is to determine its weight and purity. In 275BC, at the very dawn of the Roman Era, the practice of “striking” or “minting” gold, silver and bronze was an accepted method to predetermine and fix the value of a piece of metal. Because of its predetermined and commonly accepted value, this coin could then be very conveniently used as a token of trade.

It was the Grecian Empire, several centuries earlier that had perfected coinage. For an extended period of time it had successfully resisted the debasement of its coinage. Throughout the Mediterranean and beyond, in its heyday, this great empire had tremendously multiplied its influence, controlled its markets and enhanced its trade. This was not so much due to the brilliance of its merchants, as it was the integrity and reputation of its coins; or money.

What is money, but a medium of exchange to facilitate the easy exchange of goods and services within the market place. In an open or free market, the market decides what money is acceptable based on it’s value, purity and integrity.

Throughout history the following pattern can be observed playing itself out, time and time again. In a new and developing economy or society, very quickly a market will emerge where people engage in the trading or exchanging of their goods and services. This barter market is as old as history itself; many thousands still exist in the world today.

In an open or free market, the market place will set the rules of trade, in other words if I enter the market with a overvalued and inferior product, I will not be able to sell the product, and before long my competitors will have driven me out of business.

Alternatively, if I enter the market with a good product, competitively valued, I will do well. The market has been able to access the value and worth of my product or service. Without excessive regulation or restraint of trade, and with favorable conditions and resources surrounding, this market place will develop very quickly in size and sophistication.

It won’t be long before a medium of exchange will begin to emerge and gain market acceptance. While this medium of exchange, or money, will aid the process of barter or exchange, it will only gain market acceptance if it is as good as, or better than the “competition money”. In this unrestricted free market, money is like any other commodity that is bought, sold and traded.

The open market place will test the money for it’s value, benefits and integrity and then set a market value. The better the money, the greater the market acceptance. The poorer the money, the greater the likely hood that it will lose market acceptance and, at some point, the market will replace it with better money.

This money we could call “free market money”. It develops naturally as the result of the action of the open, unrestricted market place. As I have pointed out many times, throughout time and millennium, the money that has always emerged from this free market process has, almost with out exception, been silver and gold.

As the market continues to grow, providers of this free market, silver and gold commodity money will enter the marketplace, all with varying degrees of market acceptance. As this market starts to trade with other regions, other “commodity money coinage” is found to be circulating. The moneychanger will enter the marketplace, facilitating the changing from one type of money or coinage to another. He may also be a provider of capital or a moneylender.

The development of this free market monetary system is the result of the market place and not by some law or government decree. As long as the integrity of this free market, silver and gold commodity money is preserved, the marketplace, and the economy and society it represents, will prosper and flourish.

No market remains free for very long. History has shown us that eventually governments or rulers become deeply involved in any economy. Before long they start to regulate the marketplace and control the money, and its supply. Naturally, we are told this is for “the common good”.

In the regions of Asia Minor and the Mediterranean in the early stages of the Roman Empire, a wide range of coinages in varying weights and denominations were in common use.

Initially at least, due largely to the “free market monetary process”, there was not a uniform monetary system in place throughout the Roman world. Jonathon William’s “Money, A History” observes the early part of the money cycle within the Empire.

“As they expanded their control across the Mediterranean, the Romans usually took a pragmatic view and permitted the existing coinages to continue. It was generally characteristic of the roman attitude to the administration of their multi-cultural empire, that existing systems would be left alone or simply incorporated wholesale into the Roman system rather than been subjected to the imposition of centralized uniformity. Functioning monetary systems and coins were allowed to continue and co-exist with Roman coins”.

Accordingly, at the time of Christ, coinage in use in the Middle East was both sophisticated and varied, originating from a broad expanse of surrounding regions. In the open market, whatever coinage was readily available, including Grecian, Roman, Syrian and a host of local coins, were used to pay for goods, services and labor. Of course Roman coinage, specifically gold was required for the payment of Roman taxes.

Regularly in Roman History, examples of the authorities profiting from the debasement and manipulation of coinage, throughout the Empire, can be observed. The destructive effects of this legislative meddling in the free market process becomes evident.

Inevitably in the 2nd and 1st centuries BC, the free market action of coinage in the provinces was eroded. By decree, private and regional mints were closed. Jonathon Williams History records “coinage itself expressed the new imperial orientation of money. No longer produced in the name of elected monetary magistrates, every coin bore the emperor’s portrait”.

In the New Testament Scriptures, Jesus is recorded asking “Bring me a coin and let me look at it; . . . whose likeness and is inscription is this?” and then, “Render unto Caesar those things that are Caesars, and to God those things that are Gods”. It can be assumed that, a coin containing the image of Caesar, ultimately belonged to Caesar.

With Roman rule now firmly in control of the money supply, in the 1st century BC, stages 3 and 4 in The Life Cycle of Money can be observed coming into effect; “The Life of Debasement” and “The Fathering of Debt and Inflation”.

The work horse coin of the empire was the silver denarius. Progressively greater amounts of these coins were issued with less and less silver content. Again the effects of these debased coins circulating within the empire could be observed by the resulting inflation.

While the empire’s legal tender money was relegated to this process of debasement, the importance of the integrity in coinage was still evident in Jewish custom. In Palestine, coined money, in the form of shekels, had been used for many years in the observance of Jewish religious rites.

For instance the “Redemption of the First Born” was a practice where the first born son of a man at the age of one month was redeemed, or bought back, with the sum of 5 shekels of silver. Also the annual tribute paid to the Jerusalem Temple, some times called the temple tax, could only be paid in a Holy Half Shekel of the Sanctuary.

David Hendin in his book “Guide to Biblical Coins” describes the Jewish shekel “The shekel is amongst the most fabled and significant of all ancient coins, even if not the most ornate or beautiful. That honor would have to go to the highly sophisticated coins of the Greeks issued hundreds of years before the modest silver shekel. But the Jewish Shekel is beautiful in its simplicity and its symbolism. The obverse shows a chalice and the ancient Hebrew inscription “Shekel of Israel” with the date in Hebrew letters above the chalice. The reverse shows a stem with three pomegranates and caries the inscription “Jerusalem the Holy”.

When the Jews came to Jerusalem to pay their temple tax, they could only pay it with the purest of silver coin. The Talmud is the Hebrew book of Instruction, which embodies Jewish civil and ceremonial law. It tells us that the temple tax had to be paid in high quality silver; Tyrian or equivalent. Tyre shekels were well known for their true weight and good silver content. As David Hendin put it “only Tyre coinage fitted the bill”. The Talmud states “Silver, whenever mentioned in the Pentateuch, is Tyrian silver. What is a Tyrian silver coin? It is a Jerusalemite”.

Tyre coins were pure 90-92 % silver. At 80% or less, Roman coins were simply not pure enough to meet the high standards of a religious gift or sacrifice. Historians have also noted that coins emblazoned with the image of pagan emperors were completely unacceptable for use as a Jewish religious token.

For example, one issue of the roman denarius from around 30 BC showed the image of Octavian and his adoptive father Julius Caesar. The accompanying inscription names Caesar as “the god Julius” and Octavain as “the son of god”. These kind of claims on pagan roman coinage were completely abhorrent to the mind of the religious faithful in the Holy Land, who had never fully accepted roman authority in their region.

Accordingly, the very nature of purity disallowed the Hebrew shekel to contain the image of a worldly ruler or emperor. Eventually it seems, later issues of Tyre shekels did appear under Herod, containing pagan motifs and images, while still retaining their integrity in terms of silver purity.

While it is interesting that the Holy Half Shekel was not legal tender in its day, in other words wasn’t issued by a government and couldn’t be used in the payment of tax, equally Roman or any other coinage was unacceptable in the payment of the temple tax. The Holy Half Shekel existed as a result of Jewish demand for a coin, or money, of integrity.

When Jewish pilgrims came to Jerusalem, they would be carrying their Roman coinage, or maybe coinage from their local area. To pay their temple tax they were required to change their pagan, debased, legal tender money for the purer Holy Shekel of the Sanctuary. It is the conjecture of many that it was the practice of changing this money, undoubtedly at a very large premium, that led to Jesus anger at the moneychangers in the Temple court.

The Jewish demands for pure silver coinage ended with the sacking of Jerusalem in 71AD. From that time on Roman coinage throughout the empire suffered rapid debasement. The undeniable link between monetary integrity and social morality is again observed.

As the years dragged on, countless new issues of base coinage circulated, containing lower and lower amounts of silver. By the mid 260’s AD, the coin that had replaced the denarius, at double the face value, contained no more than 2-3% silver. Massive quantities of these coins circulated, accompanying the destructive and painful effects of inflation.

Failing to see it was the law of cause and effect in action, Roman leadership desperately tried to control this inflation. A good example is Diocletian’s edict of 301AD which simply decreed inflation illegal. Much like the monetary intervention by governments and central banks today, Dioletian’s attempts to control runaway inflation were in vain and ultimately failed.

As the sun was setting on the Roman world, emperors could no longer even rely on their divinity emblazoned over their coins to maintain the confidence of the people in their now worthless money. The inevitable currency crisis, moral decay, social disorder and chaos that followed was merely stage 5 in the life cycle of money being played out. “Economic Death and Disorder”, due to collapse and extinction of fiat, legal tender.

Ultimately, the Roman Empire fell. The universal pain and suffering through-out its vast region was immeasurable. The Roman experience stands as a poignant example and reminder of the tragic effects on a civilization, that allows its rulers and moneylenders to control, manipulate and debase its money.

Any student of monetary history will discover some clear and timeless lessons that can be applied to any age, but never more so than us today.

1) The religious faithful of the middle Roman era, as demonstrated by the Jewish Talmud and practice, demanded integrity and purity in their money. This was deeply entrenched in their custom and their mind set.

2) Money is ultimately a free market device. It develops as the result of the natural operation of the open, unrestricted market. Rulers or governments always become deeply involved in the marketplace, eventually controlling the money, and its issuance, for their own selfish gain. That money then enters a cycle that ultimately leads to its ruin. The pain of the debasement and collapse of the money is always born on the shoulders of the people.

3) Markets have very clear natural laws. For instance if you remove value from money you get inflation. If you extend an inflationary monetary system long enough, you will reap deflation (where we stand today). No amount of intervention, government or otherwise can over-ride those natural market laws.

4) In the Roman day, he who issued the money owned the money. This is as true today as it was in Rome; whether Caesar, the Federal Reserve, US Treasury or the Commonwealth of Australia. This principle of ownership is confirmed by the United States Coinage Act and the Australian Currency Act and is the same worldwide.

Today’s legal tender money is backed by nothing but debt. Every dollar in the bank, government note or coin I hold is someone else’s debt. Even if I hold government issued bullion coin, I am only ever the bearer, never the owner.

Why would I own Krugarands, Canadian Maple Leaves, American Eagles or Australian Koala bullion coins, if I know full well, I am only ever the bearer, never the owner. With no regard for the bearer, at any time governments can choice to confiscate, or remove from circulation, their coins or notes. After all they own it, it is their right. This has happened many times this century, including the United States.

5) No amount of circuses, increased social spending or power in government, including the decree of a so-called “divine ruler”, can rescue their valueless money from an ultimate confidence crisis and collapse.

6) As a result of the growing crisis in confidence, the final stage of the life cycle of money, again will see the re-emergence of “free market money”. Privately issued, this free market money satisfies new demand for money of value and integrity, caused by a crashing confidence in government decreed “legal tender money”. The value of this re-immerging “free market money” will be tested and win acceptance in the free market. Most likely gold and silver, it will facilitate trade as social collapse accelerates. One could reasonably expect the purchasing power of this money of “sure value” to increase dramatically, as social order and government monetary systems disintegrate.

Privately issued, free market money, in the form of (non government) gold and silver coin is real wealth in the hands of the owner/holder.

7) Lastly, it seems that those living in the final days of the Empire could not see the imminent collapse coming. This is particularly true of those in large population centers like the City of Rome itself, where the false prosperity from centuries of momentum and wealth, and the “business as usual” lifestyle shrouded the realities.

The day barbarians descended to loot and plunder Roman cities, it can be assumed that the unsuspecting masses were taken completely by surprise.

As one examines the final years of the falling empire, with all the associated trauma, the words of the Apostle Paul seem to take on new meaning “the love of money is (indeed), the root of all evil”.

by Philip Judge