Etymology of Money – US Edition

Money has been in the English language since the 13th century, courtesy of Old French carrying it to us from Latin. In Latin, it was originally a surname of the Roman goddess, Juno: Moneta. Coins were minted (also a similar etymology) outside the temple of Juno. Other forms of currency were included in the term in the early 1800’s.

In 1699, John Locke first applied the word currency to economics. As opposed to a barter system, where goods are directly traded for each other, the use of money allows for more liquidity. This increases the flow of trade, thus the root word, “current” as in a stream.

Tender is on the federal reserve notes in the United States. It means “to offer”, and by association with the idea of extending the hand, ultimately shares the same Latin root as the word tendon. The word gained formality when in English in the 1540’s, and became used for “money legally offered as payment” in 1740.

A “note” was originally more like an IOU, then a check. These were called promissory notes, a piece of paper on which was written a promise for a specified sum to be paid to a designated person. When a bank printed official slips promising amounts of money to be withdrawn from their treasury, they were called banknotes. The Federal Reserve, that prints our bills in the United States, is a bank – not a branch of the government – so technically, our paper money are banknotes.

When I think of the phrase “dollar bill,” I imagine a slip of paper, rectangular, of a certain size, and printed to look like money. The word bill is most often used as a piece of a transaction with delayed payment. The bill tells how much is owed, and when. It is a demand for payment. The dollar bill is also an order for payment: it is an order to the issuing bank to pay out the value of the bill to the holder, if turned in for exchange. I’m not sure this would actually work in our bank system today, but it is an interesting historical fact, perhaps more relevant to the development of our economy than we realize.

A dollar is the primary denomination of money in the United States. This was instituted by Thomas Jefferson and Gouverner Morris when the (pre-constitution) Continental Congress established the US currency in 1785. They selected the term because it was not British, but commonly known. Colonists used the word to refer to the Spanish pieces of eight (and our dollar sign, $, is derived from the symbol stamped on that coin) – though the word was originally German, an abbreviation of Joachimstal, a mine in northwest Bohemia opened in 1516. The staler began as the coin minted from silver acquired there.

Buck refers to a dollar because it was another term for money used in the American west. Native Americans sometimes traded buckskin (deer skin) with European-descended pioneers, and so over time the term became slang for official United States money also.

The stamp for making coins was wedge-shaped in the 1300’s, and the French word for wedge or corner was coing, from the Latincuneus. (Think about cuneiform writing – symbols made by pressing a wedge into soft clay). By extension, we use the word to refer to the thing stamped, a piece of metal minted as currency.

As you might expect, “dime” means a tenth, or a tithe. It also comes from the French (disme), and the Latin (decema). In 1786 Congress decided to call the ten-cent piece of our money a dime.

Nickel is one of the most fascinating words in our money-lingo. The root of the word is “devil.” Copper miners saw ore of the color they were seeking, and fell prey to the wiles of the false-copper. (In the early United States, all coin had to be made from gold, silver, or copper – metals considered more valuable – by law.) But a whitish metal could be derived from it, named “nickel” in 1754 by a Swedish mineralologist. In the history of United States money, it was first applied to one-cent pieces when nickel replaced the bulkier copper in minting those in 1857. In 1866 a second type of five-cent piece was made, also containing nickel (mixed with copper), and so the term “nickel” came to be applied to it as well. Eventually this new nickel replaced the tiny silver half-dime.

Penny is not an official congressionally-instituted name for a US coin. We insisted on using the more literal and non-British term, “cent” (one-hundredth of a dollar). But the habits of the people have prevailed. The smallest-value coin in England has long been the penny, set at one-twelfth the value of a a shilling there. Over the years their pennies were each made of silver, then copper, then bronze. Though we know the word is Germanic, since it appears all over the German languages, no one knows what it originally meant or where the word came from. In 1889 there is the first recorded use of the colloquial application of “penny” for our American one-cent piece. I have never called them anything but pennies, bright copper coins cluttering up wallets and jars and cash registers all over the country. (Incidentally, if I was referring to the British pieces collectively, the plural would be “pence” instead of “pennies”.)

Thanks to http://www.EtymOnline.com, http://www.Dictionary.Reference.com, and http://www.USMint.gov for their information.

To God be all glory,

Lisa of Longbourn

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Federal Reserve and the End of Capital

The Federal Reserve is a collection of banks that loan money to the Federal Government.  Don’t be confused by the use of federal in both terms.  One is private, and the latter is public, run and (at least hypothetically) regulated by the US Constitution as ratified by the states. 

If the government wants capital, they call up the Federal Reserve, who prints out “federal reserve notes” that we call dollars.  They’re legally backed as usable on any transactions in the United States, but they have no other intrinsic value.  They are good towards commerce and payment of debts, but their value is not fixed, and the more that are printed, the less value each “note” has.  The Federal Reserve is not taking money from one place and loaning it to the government like you or I would have to do in order to loan money.  They are inventing it out of thin air. 

And here is the interesting thing.  The Federal Reserve charges interest on the money they print for the government.  A loan has been made, that could be called up.  To repay this loan, we would have to give back the dollars plus interest.  Do you see a problem here?  To repay a loan with interest, we have to give the Federal Reserve more dollars than we got from them, and they’re the only source of dollars.  Even if there were another source of dollars, those dollars would be a note on some other group, even the government, backed by nothing.  It’s all Monopoly money that people use to control each other.  Kind of strange.  This isn’t even a case of the power of the richest.  They own nothing of value, but wield all sorts of authority. 

I don’t like it.  A partial list of banks that make up the Federal Reserve (many of which are foreign) is available.  On that list is my bank, Chase Manhattan.  This leaves me conflicted.  On the one hand, I don’t want to help the criminals that propagate the Federal Reserve.  On the other hand, it is virtually impossible that my bank will go under.  When you can print your own money and are in on the biggest racket in history, you’re in pretty good shape.  This is worse than Batman, let me tell you.  The only way that my bank would be threatened is if other members of the Federal Reserve were to turn on them, and I believe that will not happen until there are no other banks.  For there to be no other banks, there would have to be no more capital. 

This is my best bet for boycotting the Federal Reserve: set myself up in a situation where I can be self-sufficient or barter whatever I need, living entirely without capital.  (Even this is impossible because the government charges property taxes payable only in the form of Federal Reserve Notes – the government is compounding their own problem.  Why?  As long as the game is still going, the government also wields power using the Monopoly money.  Just like the idea of debt in the first place, or economic stimulus packages, or bailouts, or bankrupting social security – the government does not think about long-term consequences.  Their value is not liberty and justice, but control.) 

But there is another way of eliminating capital.  We could go to a digital currency system.  Belonging to a bank (probably only one central bank) would be mandatory in a legal sense, and almost in a practical sense.  Accessing the account would require a password or a physical scan (fingerprint, iris) or a digital key (like they use in hotels, or in your remote access car key).  And anyone who has studied any kind of end times prophecies has heard of the “mark of the beast” on hands or foreheads used for buying or selling.  Can’t you imagine a world leader who decides to throw off the yoke of the banking industry and replace them? 

To God be all glory.

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Ideal Bank

Proverbs 22:7, “The rich ruleth over the poor, and the borrower is servant to the lender.”

 

The Bible is fairly clear that debt is a bad idea.  The Jews were allowed to loan money to each other, and even to take a deposit – but they could not charge interest.  Only outsiders were to be a source of profit to the Jews.  Proverbs teaches that giving to the poor is much better than lending to them; it is compared to lending to God, who will “repay” the generous man. 

 

Proverbs 19:17, “He that hath pity upon the poor lendeth unto the LORD; and that which he hath given will he pay him again.”

 

Luke 6:35, “But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.”

 

With this in mind, I have chosen to be neither slave nor master, borrowing nor lending.  I don’t have a credit card, bought my car with cash, and prepay my auto insurance every year.  The most money I owe is paying my share of our family cell phone plan each month, and I try to never get even a day behind.  As a result I have a no credit rating, but I defy an economy built on spending tomorrow’s dollar.  Isn’t it rather foolish of them to base trust on the fact that people are NOT responsible enough to save money ahead of time? 

 

I don’t want to lend money, either.  But living in modern America, to have any sort of normal life one must have a bank.  Banks are institutions that take my money and your money and loan it to others in order to profit from the interest.  The banking crisis of 2008 was precipitated by a ratio of loans to interest received that was too disproportionate to maintain a profit.  The expenses of banks were not being paid by the interest on loans because too many loans were “bad.”  Payments were not being made.  Banks can’t reinvest foreclosed property immediately.  Their funds became tied up, invested in non-liquid assets.  And this is not a bad thing except that they had been too greedy, and left insufficient cash in hand to meet the demands of their customers.  Some of their customers were the depositors, some the borrowers (small businesses were a big concern; apparently they function on future dollars almost exclusively), and many bank clients are paradoxically both.  That this is bad for the economy as a whole is becoming more and more evident. 

 

The practice of profiting from loans (associated with shady characters for centuries) to people in need is hurting individuals as well.  Obviously to give an interest-free loan, or even a “hand up” gift in hard times would be much preferable financially.  Traditionally this would be done relationally, by capable friends who would be able to assess the legitimacy of the need and the efficacy of the gift.  To those not in need loans ought to be less available.  Politically and economically the Levitical law on charging interest to foreigners corresponded to the idea of duties (benefiting the people directly, rather than the government).  To participate in the God -directed and –blessed economy of Israel, a Gentile could borrow money from a Jew, but the Jew was allowed to charge him for this privilege, taking the form of interest.  (This is as covered in the law; it is plausible that Jews could charge other things like duties or rent for market space.)  I suppose that business loans resemble this category, but it is not sound business to rely so heavily on borrowed cash. 

 

Here is where I would like to introduce the concept of investment.  What is commonly considered investment today is more accurately called “speculation.”  It is a risk, calculated or wild – a gamble.  Either a bank is taking a risk on a loan, betting that the interest yield will be profitable and that the debtor will not take off with the money; or an individual or institution is throwing money into stocks hoping the value of the stocks will go up, and that they can sell at a higher price in the future.  Investment is different.  Investment relies on dividends for profit.  Dividends are a share of the profits less than the total profits divided by all the “shares” of stockholders, so that some of the profits may be reinvested in the company for continuing productivity, like farmers not selling all of their produce, but saving some for seed and planting a portion of it the next season.  Sound investing is to give (as in not expecting or requiring the money to be returned) a sum to a company that one believes will be making profits long enough that dividends will meet or exceed the amount of the investment.  This happens over time. 

 

Another type of investment is in assets, which ought to appreciate through supply and demand.  This property ought to have inherent worth by reason of usefulness.  A few common kinds of investment are land, houses, and gold.  A person may also invest in a service, like education, which makes his skills greater and his labor more valuable.  Investing this way does not always require the sale of the investment to profit.  There can be “dividends” on this as well: rent money from rental property, use of a house or farmland, or application of the skills acquired through education. 

 

I understand how the sale of stock arose, and how useful it is.  I’m not opposed to that being an option.  It should not, however, be the common practice of banks, investment companies, or sound long-term investors.  There would be two reasons to sell stock: 1) You can no longer afford the investment.  Liquidity is more essential to you than long-term profit.  2) Your share in the company is losing value in a way that makes you think that no profit will ever proceed from it again.  In this instance, to sell is to take advantage of another investor, profiting from selling them an asset worth nothing.  Like loaning money or running a casino, it is preying on the risky ambitions of foolish men.  It ought to be legal in a free market, but it is not moral. 

 

All this to say that the ideal bank for me would be one that does not loan money, nor speculate in stocks.  Picture a community of people.  Many of them have money to spare, which they wish to store in a safe but accessible location.  They get together and store their money in a bank.  This bank is managed by a man who guards their cash and processes transactions: deposits, withdrawals, checks, debit cards, transfers.  To pay for his services, the depositors allow him to use a portion of the total money in the bank to invest.  At least a portion of the dividends, if not all of them, would pay for the building, the administrative fees, and the banker’s salary.  The investments ought to be diverse, and published to the depositors for review.  If there was sufficient concern that the investments were imprudent, the depositors could attempt to advise their banker or transfer their money to a more trusted banker.  Depositors would understand that not all of their money would necessarily be available for withdrawal or transfer at once, but at a contractual set period after such a request is made.  As always, more deposits are an insurance against a misjudged investment or a large withdrawal.  If the investments are consistently successful enough, a bank may offer its own dividends to all of its clients, or to those whose deposits are large enough (this is done today through “interest-bearing” checking accounts). 

 

This is slightly simplified.  A larger bank would obviously employ more than one investment manager, for example.  I don’t know all the laws involved.  Many banks, I believe, were begun by one wealthy man (or a few partners) who put up his own money to ensure both initial liquidity and sufficient funds to participate in the market at a profitable level.  In fact the whole idea is similar to a trust, in which multiple parties get together in order to make investments too large for their individual capital.  (If I wanted to invest in gold, I am pretty sure the smallest portions I can buy in a portfolio situation are ounces, so if I don’t have enough extra cash to buy one ounce, I cannot invest in gold.  But if my brother and I pool our investment money, we could afford the ounce and participate in that market.)  Trusts are strictly regulated by contracts defining shares, inheritance, selling out, and management. 

 

I don’t think owning stock in a company should be restricted to corporations or investment firms or banks, nor should it take an expert to understand the buying and selling of stocks.  There is a place for the investment firm that lets investors manage their own portfolios as well as for an investment bank such as the one I describe.  If a client is benefiting from the bank-like services of an investment firm, it is fair enough to let those employed by that company control the investments made, even if in the form of creating a list of acceptable investments or advising on investments (veto power), for the security of their business and thus the continued availability of the demanded services. 

 

My idea here is not brand new.  Think of what banks are called.  You can still find some today called such and such “bank and trust,” or “investment bank.”  I want a bank that does not loan money, and one that does not speculate in stocks.  Do you know of any? 

 

To God be all glory,

Lisa of Longbourn

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Economics, Socialism, and the Demise of Constitutional America

Obviously there is an economic crisis.  The world is unable to borrow money.  As a result countries have stopped trading money.  People have stopped spending money.  Within weeks businesses will stop paying money to employees.  Unless something changes. 

 

The government of the United States has already acted.  They passed a $700 billion bill that, along with unnecessary tax cuts to special interests, relieves stupid and irresponsible bankers and investment agencies of their risk.  Initially confidence was back up, and the stock market regained some of its points.  I don’t know what else to call it, because there isn’t inherent value in the stock market, or money. 

 

Now the economy has regained its sense.  The people of the United States, those whose money fuels the investments and liquidity, told the government not to pass this imaginary money bill (a huge loan taken out by the US Congress in the name of the US people).  Now they are still not confident, still right that the bailout bill was the wrong thing to do.  The Congress went ahead and stole our free market.  So the stock market crashed more than it ever has before. 

 

The world is in turmoil, because most of the world owns stock in our financial stupidity.  Of course looking out your window no one seems to be in turmoil. 

 

I have been in tears.  Yesterday morning, watching news of voter fraud and financial collapse, an eerie thought crossed my mind.  Much like the compulsion to watch the news all day on September 11, 2001 and remember every event and emotion, I thought I should remember these days and their news, as though recording the last days of an era, an ideology, or a country. 

 

I’m generously predicting complete socialism in America in 3 months.  My dad says it could be sooner.  So, as a matter of fact, does President Bush.  The government has acted and will continue to act, he says with regards to the economy and the failing markets.  Our country may soon be socialist. 

 

That is, if country still means anything. 

Today the G7 world leaders are meeting to compose a unified plan for a unified global solution to the economic crisis affecting people internationally.  “In an interconnected world, no nation will gain by driving down the fortunes of another. We are in this together. We will come through it together,” Bush said. “There have been moments of crisis in the past when powerful nations turned their energies against each other or sought to wall themselves off from the world. This time is different.”

My friends don’t know who to vote for in the presidential election.  They’re discouraged with the options offered by major political parties.  We all know that neither candidate will accomplish much of anything toward fixing the massive problems in our government and economy (financial markets and health care), nor will they actually do much of anything for the social interests of people (education, immigration, abortion, and marriage).  The best answer I have is that it won’t matter what we vote.  Our government is rapidly running away from republican principles, the Constitution, and even its national existence. 

Have a good day. 

(My personal philosophy is that whatever is out of my control is in God’s.  He has the future thoroughly planned, and has revealed the end of the world in His word in several places.  What’s more, my personal welfare and provision is securely in his good hands, not ultimately in the government’s.  Whatever happens, however discouraged I may be by world events, I can trust His sovereignty, goodness, and grace.) 

To God be all glory,

Lisa of Longbourn

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Economics, Investment, Inflation, and Debt

My brother and I were talking the other night and I had an insight (being only informally trained in economics – I could have been taught it if I’d just taken a class).  But I don’t know if there’s a name for it.  So I’m asking. 
 
I heard an ad for investing in gold.  The price per ounce has gone up a lot in the past couple years, and is understandably predicted to continue to rise.  Right now I think the commercial said the going price is $700 an ounce.  But while I might have $700 free cash to invest waiting for the gold to increase in value, I’m not allowed to buy gold one ounce at a time.  So there is a minumum amount of money I have to have before I can participate in investment.  Buying a home is very similar.  Debt makes money more available in larger amounts (paid back in smaller increments), thus raising the minimum line. 
 
Bartering went out of fashion because having one cow didn’t work as a trade for one spear, since the cow was really worth say, 300 spears.  So we have capital, money, to be the fluid in between and prevent us needing a minimum number of available cows to trade in order to participate.  Capitalism, therefore, should have fixed the minimum line problem. 
 
But then we add inflation (caused by debt on a national level), which depriciates the money someone below the minimum line has, so that they are, rather than gaining worth by saving money, actually losing ground.  They must continue going to work (as an employee, most often) just to get enough money to survive – if that.  And there’s no way out.  This is the modern equivalent to serfs, or the slave class. 

Marx saw this, I assume (never read Marx myself), but his solution doesn’t solve anything.  It emphasizes inflation and simultaneously erases any home of overcoming it through investment.  Marxism is like bailing water from a still-sinking boat. 
 
So what’s it called, the minimum line to participate in investment that would protect your income? 

And what should we do?  
 
To God be all glory,

Lisa of Longbourn

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