How to Get Rich Quick
“The love of money is the root of all evil,” says St. Paul (I Timothy vi, 10), but the understanding of money is neither evil nor dangerous. Indeed in the present state of society, it is surely of high importance for every prudent person. Hence in recounting a way of getting rich quickly it should be understood that the purpose of this article is not to enrich its readers with money but with a little knowledge about money. Here is one way of swiftly acquiring riches which has been known to work.
A stranger took up residence in a small, isolated community and announced himself as a cigar-trader called Isaac.
One evening a local resident, Fred, called on Isaac and asked if he could buy a Havana cigar from him. Isaac agreed to sell him a cigar for one silver dollar. Fred paid the dollar and Isaac handed over the cigar and the two men sat down to play cards.
After a while, as Fred was losing at the game and nervous at being short of cash, he asked Isaac if he could sell him back the cigar and Isaac agreed. Fred gave the cigar back to Isaac and Isaac gave Fred a signed note saying “IOU one dollar”.
A little later, luck at cards having turned to Fred’s side, Fred asked to buy the cigar back again and Isaac agreed to the sale. You will observe that Fred now had three choices of how to pay Isaac for the cigar. He could return or destroy Isaac’s IOU, he could offer Isaac a second dollar from his pocket, or he could write out an IOU himself. The two men agreed to the last option: Fred wrote “IOU one dollar”, signed it, and gave it to Isaac in return for the cigar.
As the evening wore on, you’ve guessed it, Isaac bought the cigar again and wrote out a new IOU, and the same exchange took place some twenty times in the course of the night.
Morning found Isaac back in possession of his cigar and the silver dollar and with nine of Fred’s IOUs for a dollar. Fred had ten of Isaac’s IOUs for a dollar, but no cigar and no dollar. No wealth has been created or destroyed: the one cigar remains unsmoked.
At that moment, two new visitors dropped by: Bert and Harry. Bert wanted to borrow a dollar from Isaac or Fred in order to buy a chicken from Harry. Harry did not want to accept an IOU from the notoriously impecunious Bert, but when Harry learnt that Isaac was a prosperous cigar-salesman, who had engaged in twenty cigar-transactions during the night and had proof that in addition to his personal wealth he was already creditor to the tune of ten dollars in the community, Harry was happy to accept one of Isaac’s IOUs. So Isaac agreed to write out an IOU for one dollar and lend his IOU to Bert for a modest rate of interest (81 /3% simple interest per month) and Bert handed Isaac’s IOU to Harry who gave him the chicken and pocketed the IOU signed by Isaac. To certify his indebtedness to Isaac for the loan, Bert wrote on a piece of paper “IOU one dollar + simple of interest of 81 /3% per month” and signed and dated it, handing it to Isaac who added it to his pile of IOUs.
Fred looked pensive when the visitors had departed. “There are two things I don’t understand, Isaac” he confided. “One is that you lent Bert an IOU, but an IOU is a certificate of debt. I can’t see the meaning of lending debt. Secondly, Bert also gave you an IOU, so each of you actually gave the other the same thing – a promise-to-pay – but you gain interest on your promise-to-pay whereas Bert loses on his. I can’t see the difference.”
But Isaac was not only a successful cigar-salesman; he was also an economist. He was able to explain to Fred that the difference between himself and Bert was one of creditworthiness, and that his own creditworthiness was well-established in the community (here he swept his hand nonchalantly towards his pile of IOUs and the dog-eared cigar on the table) and this was what entitled him to an extra payment in the form of interest. He had moreover voluntarily incurred the risk that Bert might never manage to repay him in which case he would have to write off the debt altogether and would be the loser, whereas Bert knew that Isaac’s IOU was proof against default and that was why it had been readily accepted as payment by Harry.
Fred hesitated to question the view of an economist, but he could not help objecting that if Bert never repaid the debt, Isaac would have lost nothing at all for all he had given was a signed chit of paper and the real loser if any would be Harry; but Isaac pointed out, with a sigh, that this was far from true. Harry would lose nothing if Bert defaulted, for he would soon pass on Isaac’s IOU to someone else in payment for something else whereas he, Isaac, would lose not just his right to one dollar from Bert but his right to one dollar per year (simple interest on one dollar at 81 /3% per month). Realising that he would never understand the complexities of economics, Fred abandoned the discussion.
Let us cut the story short. In less than a month, Isaac’s IOUs were the chief form of money in the community, changing hands on every side and accepted by all as valid currency having the value of a Havana cigar or a chicken. The chits were now printed and no longer bore the words “IOU one dollar”, but “Isaac promises to pay the bearer on demand the sum of one value-unit”. Isaac was no longer a cigar-trader, he was a banker.
There were a few difficulties with the authorities, but they were soon dealt with. A question was raised about Isaac’s true ability to pay all he owed, but the mere sight of his piled certificates of indebtedness from the community (stored in a lumber-room marked “assets”) sufficed to calm the doubt and a generous loan of value-units for the mayor’s electoral campaign ensured Isaac’s good standing.
In fact, very soon Isaac became the community’s only official banker and issuer of all money and credit. His interest rates for such services were very modest, as you may imagine. The new banknotes now affirmed “The community promises to pay the bearer one value-unit”. They were signed by Isaac in person and he piously added the motto “In God we trust.”
Truth to tell, Isaac soon opened a commodity exchange and financial market and the community began to take an interest in financial trading. For instance, Isaac paid outright for the noble building that housed his bank by transferring to the municipality (the vendor) a handful of IOUs from financially embarrassed citizens. On the top of the pile was the one he had received from Bert, who later committed suicide.
Would it surprise you, innocent reader, to learn that not long afterwards the community was engaged in a war and it was found that Isaac was lending money at interest to both of the opposing belligerents? Would it surprise you to learn that despite this, Isaac continued on friendly terms with the community’s politicians and practically dictated to them any measure he wanted to see signed into law? Would it surprise you to learn that Isaac had never in fact possessed more than the one cigar he had sold to Fred on his arrival and that he had only ever “paid” for that one with an IOU? Would it surprise you to learn that after a few years Isaac’s paper “assets” vastly exceeded all the wealth in existence? Would it surprise you to learn that prices had vastly increased with the ready lending into circulation of countless paper value-units signed by Isaac? Or that when the public finally began to lose faith in the value of these value-units, it was found that Isaac had emigrated abroad and that his representatives were handling the credit crisis by printing ever more of the cheating chits for ever greater denominations?
The story must stop there of course, because it is a rough allegory of our present banking and financial system and the present crisis which is worsening as I write this on the feast of St. Louis 2010. A short anecdote is sometimes more immediately useful than a long study, but the long studies are necessary too for anyone who wishes to get to the bottom of money, banking and the crisis.
Do you want to understand what money should be and what it in fact is? Do you want to understand the origins of the present financial crisis and form an intelligent idea about its likely development and dénouement? Would you like to understand the mind of the Catholic Church about money and economics? There is every reason for trying to understand these things and it is not as hard as one might suppose. Tradibooks has recently republished four books that can each in their differing ways help their readers to master the understanding of money and economics. Here they are:
1. Fr. Denis Fahey, Money Manipulation and the Social Order. (100 pages, $14.95) This is the work of a scholastic theologian and philosopher, passionately devoted to the reign of Christ the King, a saintly priest, who turned his powerful mind to mastering the subject of money as a practical instrument of social subversion used by the organized forces of evil to turn society aside from its rightful Divine ruler. Fahey applies the teaching of the popes and of St. Thomas Aquinas to the creation and circulation of money. He skilfully tackles the question of usury. He examines the action of the banks in its intrinsic immorality and in its corrupting concrete effects. There is no substitute for this book.
2. N. M. Gwynne, Banks and Money. (80 pages, $14.95) The author of this work, after Eton and Oxford, became a Fellow of the British Institute of Chartered Accountants and embarked on a successful career in the City of London and in the world of international business and finance. Then he set his lively mind to studying the various subjects concerning which truth is not what is popularly believed, notably in the realms of history and science as well as religion (he converted to Catholicism). When he turned the microscope of truth on his own field of finance, his discoveries were breathtaking. He is, I think, the only writer in any language to describe in exact and correct detail the book-keeping manipulation which brings money into being as an interest-bearing debt. Gwynne’s work is informative and enlightening on all aspects of the money controversies and includes a devastating rebuttal of those who think that a return to the gold standard is part of the solution to out ills. Persuasively argued throughout and the most recently written of these six books. Gwynne maintains that the deliberate fraud of the banking system is at the heart of the anti-Christian conspiracy working towards the New World Order. Unavailable elsewhere.
3. Hilaire Belloc, The Mercy of Allah. (181 pages, $15.95) Do not be deceived by the title of this book or by the fact that it is classified as a humorous novel. It is a great and amusing work of fictional literature, but it is also the easiest-to-understand book I know for anyone who wants to learn why modern banking is a swindle of which we are all victims. Writing in 1924 Belloc foresees the crisis that has come upon us when trillions of monetary chickens simultaneously come home to roost on the perch of reality.
4. Professor Frederick Soddy, The Rôle Of Money — What It Should Be, Contrasted With What It Has Become. (128 pages, $19.95) Professor Soddy was a Nobel prize-winning scientist who set his powerful intelligence to understanding the causes of the constant cycle of economic problems (depression, inflation, unemployment, poverty, taxation, etc.) and found their origin in a scientifically and ethically untenable monetary system. He analyses clearly what money really is and how its rôle has been totally falsified by politicians apparently misunderstanding its nature and function and by bankers abusing it for private interests. This is a scientific textbook about money, but it is not hard to read or understand.
We also recommend two other titles on the subject:
1. Jens Parsson, Dying of Money — Lessons of The Great German and American Inflations. (289 pages) A highly competent economist writing in the 1970s examines the history and the theory of inflation and hyperinflation especially in the United States and in Germany’s Weimar Republic. The reader will see why this book is indispensable for understanding the present crisis — he will see why many serious analysts consider that the next stage of the ongoing collapse of our fraudulent banking system will be hyperinflation as panicked leaders attempt to offset the decreasing value of money people no longer believe in by multiplying its quantity.
6. Adam Fergusson, When Money Dies — Nightmare of the Weimar Collapse. (195 pages) Suppose that hyperinflation does set in, what should we expect ? The 1922 Weimar precedent is fascinating and enlightening. This book is less about money than about the actual history of the worst financial crisis that has happened since banking was invented. It gives the incredible facts about life under hyperinflation, when the price of a coffee in a restaurant increased by 20% between the moment you ordered it and the moment you paid the bill after drinking it, when banknotes bearing 13 digit numbers were printed to pay for groceries but had already depreciated so much that many thousands of them were needed for the slightest purchase. It shows the kind of civil unrest that occurs in such circumstances. It shows which articles increase astronomically in price while emphasizing that real estate and other goods in fact drop in price as people strive to realise all they can to buy for immediate needs.
The first four of these books can be found for sale on-line at www.tradibooks.com.
But if you are still hoping yourself to “get rich quick” I should say that there is more wisdom yet to be learnt about the Christian attitude to money in the “Meditation on the Two Standards” in the Spiritual Exercises of St. Ignatius of Loyola.
© John S. Daly MMX (Originally published in The Four Marks, September 2010)