The Moneyball Method - Excerpt 1A

Time and Property Status

For most of human history, the attributes and role of money have been poorly understood or actively misunderstood and distorted. As a result, the status of money was low and the status of bankers was even lower. This reputation hindered the creation of financial products, limited the flow of capital and paralyzed human potential.

To get a sense of the Enlightenment’s radical achievements, we must know what preceded it. As 12th century English theologian Thomas of Chobbham wrote, “The usurer sells nothing to the borrower that belongs to him. He sells only time, which belongs to God. He can therefore not make a profit from selling someone else’s property.” To the medieval religionist – and commonly displayed on church marquees today, a life of repentance is time well spent.

To illustrate romantically, Victor Hugo remembers the Middle Ages as collectivist conformity to castles and cathedrals.

“Great edifices, like great mountains, are the work of centuries. The man, the artist, the individual, is effaced in these great masses, which lack the name of their author; human intelligence is there summed up and totalized. Time is the architect; the nation is the builder.”

To the medieval mind, the individual was irrelevant. It took the genius of Hugo, an Enlightenment novelist and playwright, to help revive and refresh the humanity of Western culture. But those attitudes go back to the 4th century BC, as described by finance professor Yaron Brook:

“Aristotle believed that charging interest was immoral because money is not productive. Money, Aristotle thought, is merely a medium of exchange. Aristotle either rejected or failed to consider the idea that loaned money loses value to the lender over time as his use of it is postponed.”

Even today’s father of economic science, the 18th century’s Adam Smith, believed that the government should dictate interest rates. If not, unregulated banking would set rates that authorities considered too high for the public good. Somehow, the power of Smith’s “invisible hand” to allocate goods and services did not apply to money. In fact, any residual “benevolence of the butcher, brewer, or the baker” was not attributed to the banker. After all, many of them were Jewish, but that’s another story.

The idea that became America changed everything. Yet, the first Declaration of Independence was signed and executed by the Dutch during an armed revolt against their own despotic monarch.

Like America’s Declaration nearly 200 years later, the document listed numerous transgressions by the King of Spain against the natural rights of his citizens, their collateral oppression and the King’s de facto forfeiture of sovereignty over their land. As historian Russell Shorto relates:

“The Netherlands had been fighting for independence from their Spanish overlords for nearly four decades and the long war toughened them, focused them made them militarily and economically stronger. Before, they had been scattered, each province tending to go its own way. The Catholic tyranny of Spain — complete with the blood Inquisition tactics to force Protestants to return to the fold, united them.”

While the member provinces were to exercise self-government under an Articles of Confederation, that failed after a few years and a federal-style republic was formed under a new Constitution. To the Netherlands, the Protestants were eventually joined by Jews trying to escape religious persecution. This political freedom forged a new understanding of civilization’s most important idea — money and particularly the time value of money. Eventually, Holland became the nerve center for commerce and banking, the wealthiest state in Europe and the light of the world.

Their spirit of independence and industry eventually created a vibrant middle class of shopkeepers, lawyers, doctors, ministers and bureaucrats. Combined with an advantageous geographic location for international trade, the Netherlands became the wealthiest and scientifically advanced society in the world. Luxuries once exclusive to religious leaders and aristocrats, time for leisure became common, lower-class laborers enjoyed a relatively high standard of living and the arts flourished.

At the same time, the Netherland’s cultural sanction for interest on loans grew. Here, economist Eugen von Bohm-Bawerk reveals, “Among the ever-increasing adherents of the new theory, stands out prominently the renowned and influential lawyer Gerhard Noodt, who in his three books discusses the whole interest question very thoroughly.” But surrounded by church-dominated English and French cultures and its own Calvinism, the Dutch economic empire eventually collapsed. These social pressures and the cost of taxes to fund wars were just too much. Decades later, economist Robert Jacques Turgot argued, as explained by Brook:

“A creditor has the right to dispose of his money in any way he wishes at whatever rate the market will bear, because it is his property... He saw the difference between the present value and the future value of money... Turgot even repudiated the medieval notion that time belonged to God.”

All of this leads to the creation of the greatest city, money center capital and society the world has ever known. That was and is a certain island once known as the Dutch colony of New Netherland, later Manhattan and New York, but only because of Dutch tolerance and free trade principles. As Shorto describes it,

“Over time, human nature being what it is, these men would create a kind of merchant nobility. Upward mobility was part of the Dutch character: if you worked hard and were smart, you rose in stature. Today that is a byword of a healthy society; in the 17th century, it was weird.”

What does all this mean today? Because money and interest were given property right status in the 18th century, human life as chattel property was eradicated in the West in the 19th century. It cannot be overstated that reason was the cause for individual rights to be conceived and capitalism the effect for slavery to be abolished.

The Moneyball Method: A Middle-Class Manifesto for Objective Investing: Shupe, Mark: 9781696009119: Amazon.com: Books