Our long suffering readers will note that we have been on a haitus. It has been a busy time, full of classes, exams, and trees falling. Don’t worry (or worry if you must), The Mint will return soon. In the meantime, we wish to provide you with what we hope will be a valuable resource.
They are teaching notes from a class we gave recently to a group of interns at True Life Fellowship. If you are interested in Money or need to teach on Money and don’t know where to start, feel free to use this as a starting point. Faithful readers will recognize much of the material. We pray that it will be a blessing to you.
Enjoy and Stay Fresh!
PART I: IS MONEY EVIL?
READ DRAMATICALLY: “So you think that money is the root of all evil?”…”Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?
Francisco d’Anconia, character in the novel Atlas Shrugged, Copyright © 1957, by Ayn Rand:
DISCUSSION QUESTION: Is money evil?
Money is not evil, what, then, is evil?
Radix malorum est cupiditas – Latin for “The root of evil is greed” – Original Greek “Root for all the evil is the love of money.”
“For the love of money is the root of all evil”
–Paul 1:Timothy 6:10
Greed = Covetousness , “Thou shalt not covet…”
THIS DISTINCTION IS CRITICALLY IMPORTANT!
ICE BREAKER ACTIVITY: The baby is crying, the doorbell is rining, and the water in the bathtub is running over the top onto the bathroom floor, ALL AT THE SAME TIME. You are home alone, what do you do first?, second? last? PAIR UP and tell your partner what you would do first and why.
Symbolic internal priority
Baby = Family
Door = Friends
Bathtub = Money
There is no wrong answer, it is important to understand this about yourself.
DISCUSSION QUESTION: What type of relationship do you have with money?
PART II: WHAT IS MONEY?
What is Money? What is my relationship to money? What am I to do with the money I am entrusted myself? How much time should I spend worrying about money? To Grapple with these questions is to question many things that we take for granted. It can be an unsettling experience.
We will begin our session with a brief exploration of what is money is. This is important, and it may be the only time in your life that you are presented with this information.
We’ll begin with a few quotes:
“Money is the most important subject intellectual persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it is widely understood and its defects remedied very soon.”
–Robert H. Hemphill, former credit manager, Federal Reserve Bank of Atlanta
“All the perplexities, confusion and distresses in America arise not from defects in the Constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation.”
–John Adams, letter to Thomas Jefferson
“Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.”
— John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
DISCUSSION QUESTION: What are the attributes of money?
First, it should operate as a medium of exchange. Will other people accept this item in trade for something else? Second, it should operate as a unit of account. Can the item be easily divided without destroying its value? Third, it should be a reliable store of value. Will the item purchase the same amount of goods in ten, twenty, or three thousand years from now as it will today? And fourth, it should be anonymous. Can the item be freely transferred amongst parties?
Do Federal Reserve Notes fullfill this definition? Why not? BECAUSE THEY ARE DEBT, which by definition can NEVER BE MONEY. On a societel level, it is the equivalent of a person ingesting sugar instead of protiens. It may taste sweet and keep you running for awhile, but in the end, it will permanently damage your organism.
QUESTION: So what is money?
After reviewing the attributes above and reviewing all of known human history, we can conclude that, in an overwhelming majority of cases, precious metals, namely Gold and Silver, are best suited to serve mankind in the role of money. As a medium of exchange, they are universally recognized. As a unit of account, they are divisible with destroying their content. As a store of value, Gold and Silver are not easily pulled from the ground and coined for use (they cannot be “debauched”). And as for providing anonymity, they can be freely transferred.
PART IV: HOW SHOULD I MANAGE MY MONEY?
Budgeting – Healthy Habits
Questions to ponder:
Why do you need a budget?
Benefits of budgeting:
- You have a base of data from which to make decisions.
- You can isolate expenses and work to avoid unwanted increases and even reduce them.
- It is an important financial guardrail.
How many here have prepared a budget? How many use that budget?
Most of us know what a budget is and some of us may even know how we are doing relative to our budget. I would like to share with you some tips that you can use when creating your budget as well as some healthy habits, which will help you stick to it.
Tips for creating your budget:
Think Easy Maintenance – If you are using a computer spreadsheet, use one you are comfortable with.
Include the kitchen sink – Throw into your budget anything you are currently doing as well as those things you think you may want to do which involve shelling out cash. Finally add the things you hope you won’t have to do but, if you have to, you will have to shell out cash for them, too.
Be a Conservative – It is better to underestimate your income and overestimate your expenses and to be pleasantly surprised than to assume everything is going to go well and to get shocked when an emergency drains your accounts.
Don’t forget taxes – Whether they be of the sales, income, property, or use variety, taxes are unfortunately a large part of the average American’s budget. While somewhat difficult at first, you will have a clearer picture of your finances if you record your gross paycheck as income and then record the deductions before net pay as expenses or transfers. It is a bit painful, but it will greatly help you make some key decisions making in the future.
Or depreciation – Perhaps the most overlooked expense line in a family budget is that of depreciation, or what may be more easily understood as “the wear and tear expense.” Depreciation is simply recognition that anything, a car, house, etc. deteriorates over time and will likely need repair. Contemplating depreciation allows you to unconsciously develop a rainy day fund to deal with unexpected repairs or regular maintenance.
Large ticket purchasing tip: The difference between a good investment and a bad one is often determined at the time of purchase. Learn to buy large ticket items, cars, houses, etc. out of season (that would be the winter in most places) and be sure to negotiate a price reduction for any major repairs. This will make your depreciation expense (which is a function of the purchase price of an asset) more tolerable and help you sleep at night.
Note: Depreciation and asset valuation are part of what I call “balance Sheet budgeting, which we will get into more today.
A note on Health insurance – This is perhaps the fastest rising cost for most families. Consider focusing on a healthy lifestyle and reducing your health coverage to major medical or other type of high deductible plan. However, do not give up so much coverage that you risk forgoing necessary treatments in the case of an emergency, you do not want to be faced with a tough life or death decision and have it boil down to finances.
Assume inflation (CAN JUMP BACK TO “WHAT IS MONEY” IF THERE IS TIME AND INTEREST)– Ever since the Federal Reserve took over control of the nation’s money supply in 1913, the US Dollar has lost over 95% of its purchasing power. In 1971, then President Nixon officially took the US Dollar (and world’s monetary system) off of the gold standard, the decline accelerated. The value of the dollar continues to decline at a rate somewhere between 2% officially and 10% unofficially each year. It is important to recognize rising costs as a fact of life and consciously plan to increase your income accordingly.
Which brings us to income. How exactly does one increase their income at a 2-10% pace each year?
Economize and value your time!
Moonlighting or Self Employment – What can you do to help others when you are not at work? Would they pay you for it?
Acquire new skills at your present job and constantly seek advancement, which in most cases will increase your chances of getting a raise or promotion.
Passive income – For most, passive income is not an option until we collect social security or can draw on a 401K or other retirement plan. This is why you save, but it will not fill your income gaps while you are younger and working. However, the concept of passive income becomes very important when considering…
Investments – If you have some input as to how your retirement money is invested, it is best to choose investments that provide a growing stream of passive income. That is, investment in companies which make real things which people want and are willing to pay for. If there are no good alternatives, the next best thing to do is to purchase gold or silver coins and to take possession of them. Store them in a hidden safe on your property. Gold and silver will hold value against a depreciating currency and have the added advantage of incurring no maintenance costs or taxes while you hold them.
Jesus’ words on money –
Full text from NIV:
Paying the Imperial Tax to Caesar
15 Then the Pharisees went out and laid plans to trap him in his words. 16 They sent their disciples to him along with the Herodians. “Teacher,” they said, “we know that you are a man of integrity and that you teach the way of God in accordance with the truth. You aren’t swayed by others, because you pay no attention to who they are. 17 Tell us then, what is your opinion? Is it right to pay the imperial tax[a] to Caesar or not?”
18 But Jesus, knowing their evil intent, said, “You hypocrites, why are you trying to trap me? 19 Show me the coin used for paying the tax.” They brought him a denarius, 20 and he asked them, “Whose image is this? And whose inscription?”
21 “Caesar’s,” they replied.
Then he said to them, “So give back to Caesar what is Caesar’s, and to God what is God’s.”
22 When they heard this, they were amazed. So they left him and went away.
“Give to Caesar what is Caesar’s and to the Lord what is the Lord’s”
With this statement, Jesus recognizes that everything is God’s, and at the same time, that God recognizes private property in dealings between men. This is often a point of confusion.
He also creates an eternal separation between a person’s soul and their money.
Additional Healthy Habits:
Debt elimination – Check your budget to ensure that you have a surplus with which to pay back the debts (via depreciation line or an operating surplus), if not, make adjustments (belt tightening, if you will) until you do have a cash surplus.
Start paying back the smallest debts first. Paying a debt off will help you build momentum and create habits in order to pay off bigger and bigger debts as you go along.
A great resource for this is Gary North’s “Deliverance for Debt” Debt reduction course. It is free and you can subscribe via email.
Stealth Saving – Pay an extra $5 to $10 on utility bills each month. After a few months, you will have a free month of utilities.
Open a separate savings account which you do not see online, etc. Fund this account first every month. Make it difficult to access, open it at a seperate bank from the one that you normally bank at. This will force you to think twice before using it.
Pay cash for items – There is something about cold hard cash that makes you think twice about spending and helps solidify the limit on how much you can spend. Cash disappears, plastic doesn’t!
Keep the change – Pay cash for items and accumulate the change throughout the day. At the end of the day, dump it in a 5 gallon water bottle. When it is full, take the money to the bank and go on vacation.
80 – 10 – 10 plan – This is mentioned by many and the general idea is that you live on 80% of your income, save 10% and tithe (give to your local church) 10% of your income. This seems logical but…
Why tithe? Apart from the numerous Biblical references, tithing is not one of the Ten Commandments. So why do it, especially when you are in debt?
Tithing, apart from helping keep the lights on at your local church, has the incredible habit forming benefit of forcing one to focus on their income. God knows that you can spend all day in a defensive position, cutting costs and desperately clinging to maintaining what you have. This is an expense focus. It has many benefits in the material world, but it is worthless in God’s Kingdom.
God wants you to have an income focus. “What can I do to serve others that is most highly valued by them?” should be the question on your mind. Remember, “The greatest amongst you shall be servant of all.”
Tithing forces you to focus on your income first, which will naturally get you focused on serving others rather than maintaining and increasing your own possessions. It may seem strange, but serving the greatest number of people has the unique benefit of increasing one’s blessing.
God has made his creation perfect, and the economic laws are eternal and He can be trusted. Seek first the Kingdom of God and His righteousness, and all of these things shall be added unto you.” (Look for versre)
The Bible: Daily study of God’s word will give wisdom in guidence in every area of your life, finances included.
Mint.com: A free expense tracking software which accesses your online bank account information once you give it permission
Turbotax.com: An online income tax calculation tool. There is a charge to file your taxes with the software. Tip: To avoid the charge and get the benefits of a free tax advisor, use turbotax to calculate your taxes, then copy the information to a paper form and mail it in. This is a great way to be aware of changes in the tax code without having to do hours of research.
Dailyreckoning.com: A great resource for alternative investments.
APMEX.com: An online precious metals dealer which sell gold and silver coins at reasonable prices.
deliverancefromdebt.com: Gary North’s debt elimination course mentioned above, free of charge.
PERSONAL STORY ON MONEY
I was first unsettled by this same question in a class on Monetary Policy at the Universitat de Barcelona in the Spring of 2004. The professor held up a small jar full of shredded green paper and asked us if we knew what it was? The answer, it turns out, is that the jar was full of $50,000 worth of US Dollars that had been removed from circulation and destroyed. Simple enough, right? Dollar bills wear out, you have to replace them. However, her (the professor’s) point was that what we use as money does not exist in a real, tangible sense. It is an invention created to meet the policy demands of the fiscal and monetary authorities. It is an invention that can be created and destroyed at whim.
I was taken aback, trying to catch my breath! She went on to explain that Corporations, businesses, etc. are simply “money machines” which strive to minimize money inputs and maximize money outputs. The difference between the inputs and outputs is what we call profit. This is obvious enough and it was logical that she would share this insight with our MBA class which was being trained to manage said Corporations.
Something in my mind short circuited in trying to reconcile the logic of a Corporations’ reason for existence being to create money and then seeing that same money end up shredded and destroyed in rather large quantities. The motor of my mind was so seized up that I managed to miss nearly every question that day on a pop quiz that tested our knowledge on “What is the proper reaction, in terms of monetary policy, to various economic data points? Should you move to increase or decrease the money supply?” The questions I did answer correctly were likely due to my misunderstanding the question (I was still learning Spanish and Catalan) rather than any grasp of accepted policy remedies.
In retrospect this day was the day that completely changed the way in which I viewed US Dollars, Euros, and all other paper currencies of the world. You see, I was answering all of the questions about monetary policy using the assumption that the monetary authorities wanted to maintain the value of the currency that they were managing. I was dead wrong. So if they are not trying to maintain the value of these currencies, what are they trying to do?
PART V: WHAT DID JESUS SAY ABOUT MONEY?
“Be not deceived.”
— Jesus and Paul in the New Testament
Jesus, during his ministry, talked about money more than any other subject EXCEPT for the Kingdom of God.
QUESTION: What does Jesus teach about money?
Give to Caesar what is Caesar’s
Jesus Christ speaks with authority. As such, his words often astounded and confused those, whom in the days when he physically walked the earth nearly 2000 years ago, had aligned both their activities and mindsets with the authority of this world. An authority which works to suppress the knowledge of the Living God.
The first passage that we will investigate is related in Matthew 22:15-22, Mark 12:14-17, and Luke 20:21-25. It is focused on what appears to have been a brief verbal exchange between Jesus and a group of spies sent to ask a question of him by the religious authorities. It appears to take place in courtyard of the Second Temple in Jerusalem around the time of the Jewish Passover, which today is celebrated at the time of year that is known as Easter in the Christian tradition.
Interestingly enough, it seems that people 2000 years ago were as eager to avoid paying taxes as they are today. In an attempt to catch Jesus advocating for tax avoidance, the religious leaders, who wanted to get rid of Jesus, send spies to trap him in his words.
In response, Jesus not only foils their attempt at trapping him, He provides the world with a simple monetary concept with wide ranging consequences. He challenges the spies not on whether or not it is right to pay taxes, but rather on what they are using as money.
When asked whether or not it was right to pay the Roman Imperial tax, Jesus stated the obvious, “give to Caesar what is Caesar’s.” Given that the coin used to pay the tax belonged to Caesar (the Roman Emperor) to begin with, it should be no problem to simply give it back to him when he asks for it.
The obvious yet staggering implication is that money and coinage given by an Emperor may at some point be demanded back by that Emperor, therefore it is foolish to accumulate money and coinage issued by an Emperor as a store of one’s wealth.
Jesus’ response cut to the heart of monetary theory by questioning not what they were doing with their money, but what they were using as money. The people’s choice to use the Emperor’s money had enslaved them to the Emperor in a way that no army or jail master could, and they were eager for a way out.
In those days, Emperors had made a habit of declaring themselves gods and demanding allegiance. The Jews were peculiar in that they refused to recognize these imposters and instead steadfastly worshiped the Living God. However, the Jews also had become accustomed to conceding certain aspects of their allegiance to the Emperor in an effort to survive as a people.
Jesus, with a simple statement, challenged them to get off the fence, for the fence would one day be burned down and they would have to make a clear choice between ultimate allegiance to the Emperors of this world or to the One True Living God, who alone is worthy of glory and honor and praise forever and ever.
Today, circa 2012, it is customary for most people exchange their labor for paper or digital currency issued by the Emperor. For most, it appears to be a matter of survival. Yet some 2000 years ago, Jesus sternly warned us against this.
Why would Jesus have opinions on what we use as money? Jesus knew that a person’s heart would be where their treasure was. One day, God’s people would be presented with yet another ultimatum which would require them to assent forever throwing their lot in with either the world’s system or The Living God.
When and how would this ultimatum present itself? What form would it take and what would be the price for holding steadfastly to The Living God? The answer to these questions had already been partially revealed to Daniel some 600 years before, and was going to be completely revealed to John on the Isle of Patmos some 70 years later.
BIBLE PLAY: PARABLE OF THE Parable of the Unforgiving servant Matthew 18-21-35
But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be sons of the Most High, because he is kind to the ungrateful and wicked.
— Luke 6:35
READ BIBLE TEXT – CHOOSE CHARACTERS, ACT, REFLECT
When JESUS came to declare the year of the Lord’s favor, the Jubilee, He not only declared FORGIVENESS OF SINS, but also the FORGIVENESS OF DEBTS.
FORGIVENESS: AMISH STORY?
Thank you for your time.