Setting Interest Rates

The responsibility of governments to set interest rates is just taken for granted. All modern countries have a central bank that sets the base rate of interest. What most people do not realise is that this is a very modern practice. For most of history, central banks did not exist, so do we need them now? (During medieval times, the church tried to control interest rates by prohibiting usury, but that was a disaster).

The more important question (normative economics) is whether it is morally right for the government to set interest rates. The answer to this question is obvious, if we think about other things we own. If the government tried to make me sell my house for $70,000, I would be very upset. If they set the price at which I could sell my car at $1000, I would be sure that was wrong.

Most people would prefer to put their house or car on the market and see what they could get. By forcing me to sell at a set price, the government is robbing me of the difference between that price and what I could get on the market. By setting the price higher than I could get on the market, it is robbing the purchaser of the difference between the set price and what I would be prepared to sell it for.

The ability to set prices, allows the government to rob one person for the benefit of another. Setting prices is a form of theft.

By setting the price of money, the government is stealing from some people, for the benefit of others. By setting the price of the future, the government is robbing some people of part of their future to benefit others. Those who benefit are the bankers and financiers who get access to cheap money. Those who suffer are the people on fixed incomes who cannot adjust for the resulting inflation. Government controlled interest rates are just another form of theft.

The modern practice of authorising a central bank to set interests is morally wrong, so it should be opposed by Christians.

Don't cry Ben, but you are overseeing a sysstem of theft.

Ten Commandments (15) - Theft

Stealing something that belongs to someone else is a sin that should be deal with by civil authorities. The Bible gives a number of examples that assist with the definition of theft.

1. Stealing another person’s property is theft. (Ex 22:1).
2. Distorting the records of property ownership is a form of theft. (Deut 25:1).
3. Assault is a form of theft as it robs a person of their freedom and ability to earn.
4. Breach of contract that has been freely agreed is also theft. (Ex 22:7,8).

Do we Need the Government? (5) - Justice from Thieves

Most people who have something stolen expect two things to happen. They expect the stolen goods to be returned and they expect the thief to suffer sufficient penalty to discourage them from stealing again. Civil government cannot be counted on to do either of these things. The fines collected by the justice system go to the government.

The victim only rarely receives financial compensation for their troubles. The amazing this is that this is now accepted as normal.

Do we Need the Government? (4) - Protection from Thieves

A variety of options are available to those who are worried about their property being stolen.

• Giving possessions away to the poor.
• Placing all valuables in a band for security.
• Employing a personal body guard.
• Purchasing insurance against theft.
• Putting locks on all doors and gates
• Living in a community of people who are honest.

The civil government does not protect our property, because the police will only act after a theft has occurred. If they catch the thief, he will be fined, but the stolen goods will not necessarily be returned. More often the crime will be too small to justify police resources, or there will be insufficient for an arrest and prosecution.

Role of Civil Government (7)

Justice is limited to theft and violence. The punishment of theft is limited to restitution. The penalty for violence is generally limited to restitution. The death penalty is allowed, but only for really horrendous crimes that have been witnessed by two or more independent witnesses.

Political Theft

The auditor general Kevin Brady has released his report on spending by political parties during the last election. He found over a million dollars of illegal expenditure.

The total value of the breaches I identified for the 2004-05 financial year was $443,462 (including GST), and the total value of the breaches I identified for 2005-06 financial year was $730,136 (including GST). Overall, $1,173,598 of unlawful expenditure was incurred.

Well done, Kevin! You are a brave and honest man.

Meanwhile, the politicians have reluctantly agreed to pay the money back. However, they are not repentant, but claim they have a different interpretation of the law.

Why do we trust people who are so cavalier with other people's money?

I wonder if the new excuse for thieves will be: I have a different interpretation of what stealing means, or No one complained the previous time.