Thursday, March 28, 2013


Money, what is it? In America the word is thought of as dollar bills, or of credit cards. However, money is really an idea, a part of the supply and demand rule. Anything can be used as money, from lead, (once used in the country of Burma) to shells. It only has value if you attach it to it, and value it more or less than other things. If there is demand for your money because it is scarce or valuable, then it will have more purchasing power. If there are a lot of couches around and they are not selling, then we will begin to lower their price. Couches are a market unit, and have a relative value, and money, whatever you use for it, is also a market unit, and also has relative value. For instance, five dollars being five units are worth one unit of a bucket, thus they have a relative value. However, money has advantages that other market units do not have.

·        Divisibility,
·         Portability,
·        Durability,
·        Recognizability,
·        Scarcity (after Sproul, 2012.)

If we were on a barter system and I have sheep and want to buy a cow and my friend wanted to sell his cows, but he did not want sheep, we could not trade. However, if I have four hundred dollars, I could buy a cow, and he could use that money, which stores its relative market value, to go and buy wheat, which is what he really wants.
However, the money must be relatively scarce, or it will lose purchasing power. Again, if I have a lot of couches, and I want to sell them, but I have thousands of them, and there is only a limited supply of money, then I will have to lower prices if I want to catch some of that limited supply.
However, this also works the other way as well, if I print the units of money, and I print thousands and thousands of them, (or trillions and trillions) but the other economic units, the couches, the cars, and the houses remain relatively stable, then I will have to give more of these money units to catch some of those other units.
Our understanding and use of money, as individuals and whole societies, have a profound effect on the quality of our stewardship. A faulty money system can cause people to misjudge the value of their money and, hence, their ability to afford and services…. In short, a faulty monetary system can cause us to waste resources—resources over which God has made us stewards and for the use of which He will hold us accountable.
—E. Calvin Beisner, Prosperity and Poverty

Through His Strength We Will Conquer,
Andrew C. Abbott

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