You’ll recall that Murphy was a guest of Acton a few weeks ago and delivered an address as part of the 2014 Acton Lecture Series. You can check out the video of his talk at that link, and listen to the Radio Free Acton podcast via the audio player below.
In his August 24, 2014 syndicated column Scott Burns tells of a study by Dunn and Norton who give five principles for having “Happy Money.”
- Buy experiences not things: go to Chicago rather than buy a new stuff.
- Make it a treat: don’t keep ice cream in the house, make it special by anticipating going out every Tuesday night for ice cream.
- Buy time: we are “time poor” people so slow down and avoid expenditures that devour time.
- Pre-pay your vacation so you don’t worry about spending “all that money.”
- Invest in others: give gifts or cash or support someone on a ministry trip or hand out $20 when you feel like it.
These ideas will help remove the tendency to endless question of “Is this worth it?” Burns does not mention it, but giving money to church, mission, health, poverty, orphan care or directly to people in need is “Happy Money” as well.
Note: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.
The Term: Money
What it Means: In economics, money is a broad term that refers to any financial instrument that can fulfill the functions of money (more on that in a moment).
There are three basic ways to exchange goods and services: gifting (e.g., I give you a banana, expecting nothing in return); barter (e.g., I give you a banana, in exchange you give me an apple); by using money (e.g., I give you a banana, in exchange you give me $1). Money was invented (and reinvented in every culture) because it makes exchanges easier than the barter system.
What Money Is: Money is a shared belief system used to simplify exchanges of goods and services. To be used as money people have to share a belief that the item —whether paper, gold, rocks, etc. — can perform three main functions: be a store of value, be used as a unit of account, and serve as a medium of exchange.
In the next section we’ll examine these functions. For now, here are two examples of how money serves as a shared belief system:
A few weeks ago the IRS killed off any chance that Bitcoin could become a mainstream currency. That’s probably for the best since it clears the way for it to become something much more important: the world’s first completely open financial network.
Timothy B. Lee has a superb article explaining why this could be transformative. Lee highlights one particularly helpful innovation:
One obvious application is international money transfers. Companies like Western Union and Moneygram can charge as much as 8 percent to transfer cash from one country to another, and transfers can take as long as 3 days to complete. In contrast, Bitcoin transactions only take about 30 minutes to clear, and Bitcoin transaction fees could be a lot less than 8 percent.
An “alternative to Western Union” doesn’t sound revolutionary, does it? Now look at this graphic produced by The Daily Mail which shows how much money is being sent by migrants to their families back home.
“If a society regards governmental manipulation of money as the antidote to economic challenges,” writes Acton research director Samuel Gregg at Public Discourse, “a type of poison will work its way through the body politic, undermining justice and the common good.”
Money: it’s on everyone’s mind sometimes. In recent years, however, many have suggested there are some fundamental problems with the way money presently functions in our economies.
No one is seriously denying money’s unique ability to serve simultaneously as a medium of exchange, a measure and store of value, and a means of calculation. Yet deep reservations about the current workings of the world’s monetary systems, both foreign and domestic, have been expressed by people ranging from Senator Rand Paul (who is fiercely critical of the Federal Reserve), to Pope Francis (who has denounced what he calls “the cult of money”) and France’s François Hollande (who once described “big finance” as his “greatest adversary”).
With those ten words, the IRS has made it more difficult — if not impossible — for bitcoin and other virtual currencies from gaining widespread, mainstream acceptance as a currency for commercial transactions. Because they are now treated as property, virtual currencies are considered, like stocks, bonds, and other investment property, as capital assets and will be subject to capital gains tax.
But why does this hinder bitcoins use a currency? The answer is fungibility: Bitcoins are no longer completely fungible.
When bank robber Willie Sutton was asked why he robbed banks, he is (mis)quoted as having said, “Because that’s where the money is.” Turns out that is also why there is more street crime in poorer neighborhoods: because that’s where the cash is. Or at least it’s where the case was.
It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods — where street offenses are concentrated — a significant source of circulating cash stemmed from public assistance or welfare payments. But starting in the 1990s that changed, as the Federal government gradually phased out paper welfare checks in favor of electronic debit cards (the Electronic Benefit Transfer [EBT] program).
A team of researchers studied the effects of this change in Missouri and found that it was directly responsible for a hefty 10 percent drop in the overall crime rate:
Last year I wrote a series of blog posts about what Christians should know about Bitcoin. In response, one astute reader pointed out an odd juxtaposition: my conclusion seemed to imply that Christians should avoid Bitcoin “at all cost” and yet the Acton Institute accepts donations in Bitcoin. “I really want to know the rationale behind this,” he said.
Well, the rationale is easy enough to explain: Not everyone at Acton agrees with me. Like other nerds who have an interest in the intersection of economics, liberty, and technology, many of us at Acton disagree about the merits of Bitcoin. (I’d offer to place a gentleman’s wager on the future of the crypto-currency, but they’d want to bet using Bitcoin. Either way – whether it increased in value or went defunct – I’d end up the loser.)
Opinions are still divided, but the evidence that Bitcoin is doomed to failure piles up almost every day. Over the 8 month span from October 2010 to June 2011, the market value of Bitcoins skyrocketed 9667-fold from a value of $0.06 to $29. Later, when I wrote my series last April, a single Bitcoin was worth less than $100. Today, it is worth $660, and that’s after falling from a high of $1,100 in November 2013. A currency that can fluctuate from $0.06 to $1,110 in a three-year period is not a currency – it’s a speculative bubble.
Of course, we Bitcoin doomsayers have been waiting for the bubble to pop for some time now. We also tend to think that every new drop is a sign of it’s impending doom. Fellow naysayer Jonathan Last is sure, this time, that the end of Bitcoin is near:
I certainly like where Dr. Calder ends up, but I’m not quite so sure about the argumentation he uses to get there. This short video is worth checking out: “Breaking the Power of Money” (HT: ESN blog).
Is it because students have unconsciously divinized money that they can’t bring themselves to tear a dollar bill in half? Or is there an implicit bias against the seemingly purposeless destruction of value? Perhaps they need some convincing that destroying dollar bills is an exercise in good stewardship.
Money is something powerful, that’s for sure. And the love of it is the source of all kinds of evil. So the challenge is to keep our loves for temporal goods, including money, ordinate. As Calder puts it, we do that not by destroying money, but by putting it to responsible use. Maybe that’s “profaning” money in the sense that we are taking away the purported and idolatrous divinity we ascribe to it. But maybe that’s also by “redeeming” money for godly use.
Over the course of 2013 we’ve enabled new methods of giving including Dwolla and PayPal. Additionally, recurring monthly donations are now possible via PayPal and credit card.
This week we’re introducing the ability to donate with Bitcoin, the popular digital currency. Learn more about Bitcoin at Bitcoins.com or by reading Joe Carter’s posts (part 1, part 2, and part 3) here at the PowerBlog. The option of donating anonymously with Bitcoin is also possible.