For years, critics of the Church have attacked the Nephite “coinage,” mentioned in Alma 11:3-19, claiming that this in itself makes the Book of Mormon fiction [See Allen Wyatt’s blog, “Coins in the Book of Mormon.”]. Really, I don’t see what the fuss is about.
Money can take on many forms. Of course, some things work better as money than others. For example, while both gold and cattle have historically been used as money, it is easier to divide a bar of gold into smaller parts while retaining its value than it is to split up old Betsy. 😉
Like most societies, the Nephites used precious metals which, of course, can be divided into smaller constituent parts of various weights, with their value varying with that weight. The names of various world currencies attest to this fact: The British currency is still called the pound, even though they abandoned the gold standard in 1931. And, of course, the Israeli currency is called the shekel, from the biblical weight–and money.
Thus, I think critics make a mountain out of a depression by attacking the Book of Mormon on the grounds that Nephite currency are not true coins. If those metals carry value according to weight and have inscriptions then, for all practical purposes, they are “coins.”
Money has three functions: 1. It is a medium of exchange, 2. It is a measure of value, and 3. It is a store of value, i.e., it has value per se. I would like to comment a bit on the second and third functions of money, as they are closely related.
If a currency cannot retain its value, it cannot serve as a measure of value. One cannot steal second base if it moves too much or too fast. And, if it cannot store or measure value, it cannot serve as money. For example, when the German Reichmark underwent hyperinflation during the 1920’s, people started using it as “kindling” for their furnaces, rather than as money. This caused a collapse of the German economy that led to the rise of Adolf Hitler.
Today, many people worry about the US dollar’s value. Although its inflation rate has held pretty steady at three or four percent over the last 25 years, the long-lived nature of small inflation can detract from money’s value as easily as shorter-lived “runaway” inflation. Today, the dollar has only 1/2 the purchasing power that it had in 1983, and four percent of its value a century ago. To prevent further decay, many people advocate a return to the gold standard. There is a problem with that, though.
While gold-backed money averages zero inflation over time, whenever a motherlode is discovered, a spike in inflation happens (The UK had 6% inflation after the California gold rush.), and, as gold is being exhausted, a nation suffers deflation and economic contractions caused by credit crunches (When the US “demonetized silver in 1873, it aggravated a steep deflation, which caused severe depressions during the 1870’s, 1880’s and 1890’s.).
The Nephite money, on the other hand, may show an antidote. Because it consists of a “basket” of metals (gold and silver), it mitigates both types of price spikes, as the metal not in motherlode or exhaustion mode acts as a brake on both inflation and deflation.” Nobel laureate Milton Friedman calculated in his book, Money Mischief, that, had the USA not “demonetized” silver, that both the deflation after 1873 and the inflation following the Klondike of 1896 would have been only half as severe.
The fact that Nephite money is both inflation- and deflation-proof makes it an ideal primer for economic policy, in my opinion.
How could Joseph Smith had known?