As news comes in that China is starting to teeter, allow me to take a moment to remind everybody that there are two kinds of money. Given that miscreants are often put in charge of economies, the boundary between the two kinds of money is frequently murky, but it is important to note the two kinds of money anyhow.
Wealth is made up of goods and services. One kind of money, the real kind, is a measuring stick for those goods and services. When men are being comparatively honest, paper money can work for a time, but the reason conservatives want paper currency to be backed by something the government can’t print or whistle up out of nowhere is that they know how difficult it is for men in power to remain comparatively honest for any length of time. They want some kind of firewall, which is what a backed currency is. But even when the anchor for a currency is removed, it is still possible for money to remain a reasonable measurement for goods and services . . . for a time.
Then there is the other kind of money, the kind that rests upon the word of some fool or miscreant, and that only. It has no other backing. This kind of money is disconnected from real wealth — which is goods and services, remember — and it maintains that connection only in the hearts of those fool enough to believe the miscreants. With me so far?
As an example of the latter kind of money, if two boys were playing in the backyard, and one of them bets a trillion dollars that his team is going to win the Super Bowl, only an idiot would then add that trillion dollars to the GDP. Nothing was created, no wealth came into being. The only thing that was added was fuel for the second boy’s daydreams. That’s it; that’s all.
Wealth can be destroyed, of course. This is something that hurricanes do, and wars, and floods. That is one kind of economic set-back. But there is another kind of economic set-back, which is what happens when the foolish boy who thought he had a trillion dollars discovers that he doesn’t, and moreover, that he never did.
When a lot of people discover this at the same time, there will be economic consequences — but they do not necessarily result in the destruction of wealth. More often they result in the rearranging of wealth — barring an asteroid landing on Manhattan, the wealth is all still here. If a lot of people believed the miscreants, then you can have massive reallocation of wealth, which is a different thing altogether. This is what happens when someone makes real commitments on the basis of false promises. If a lot of people have done this, the upheaval will be enormous.
So here is the final note. The “lost” money that we will all be lamenting sometime in the near future is money that we never had, that never existed. Unfunded pensions come to mind, as do unfunded entitlement programs. The news stories that cover them will describe them all as “lost trillions,” but it would be better to describe them as “newly-discovered as non-existant from the git-go” trillions. What has actual existence would be the politicians who made all the promises that were actually accepted and believed by the saps who elected them.
Only Christ holds the future. Only Christ governs compound interest. Only Christ can tell you to lay up treasures in Heaven, where moth and rust do not destroy, where thieves do not break in and steal, and where this kind of legalized plunder has no place. These economic bubbles that are bursting all around us are actually revelatory of a basic theological problem. When men believe the state is God, they come to believe that this state should have the prerogatives of Deity. They want to say of their god, and do say of it until they are let down in some grotesque fashion, that they know not what the future holds, but they know what holds the future. And then, wham.