PopeWatch: Silver and Gold

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An apocryphal story from the Middle Ages has Pope Innocent III showing Saint Francis the papal treasury, and saying, “Peter can no longer say silver and gold I have none.”  Saint Francis responded, “And neither can Peter any longer say, “Stand and walk!”

From the beginning, with Judas pilfering from the common purse, money and Christ have gotten along poorly.  Financial scandals at the Vatican are always the safest of predictions and two books being released underline that observation:

Yet two new books on the Vatican set for release on Thursday, advance copies of which were obtained by The Washington Post, point to a “black hole” in the St. Peter’s Pence fund and describe how only a small portion of the cash actually makes it to those who need it most. Rather, the books documenting lavish spending habits, mismanagement and a lack of accountability suggest the offerings are emblematic of larger problems within the ancient city-state in Italy. According to confidential files obtained by the Italian journalist Gianluigi Nuzzi, rather than going to aid the poor, most of the cash is used to pay salaries and plug deficits at the Holy See.

The Vatican’s broader lack of transparency and mismanagement of finances, Nuzzi writes, so enraged Pope Francis shortly after the start of his papacy that he offered these stern words to a gathering of top members of the Roman Curia, the powerful bureaucracy of senior clerics that runs Vatican City:

“Our books are not in order,” he said, according to an apparently secret recording of the meeting. “We have to clean them up.”

The two tomes coming out this week rehash a hodgepodge of older scandals while also offering allegations of mismanagement, excess and resistance to change. They already have put the Holy See on the defensive, restoring a public relations war footing not seen in the Vatican since Francis arrived. On Monday, the Vatican announced the arrest of two insiders on suspicion of leaking internal information to the authors.

The allegations in the books suggest that a mix of formidable forces confront Francis as he seeks to reform a Vatican bureaucracy long shrouded in secrecy and charged for years with being inefficient and woefully lacking in transparency. They come as the pontiff is facing deep divisions between conservatives and liberals about the direction of his more inclusive papacy.

Go here to read the rest.  Financial scandals are often seized upon opportunistically by the forces of heterodoxy as a club to belabor the Church.  However that does not mean that orthodox Catholics should be blasé about such scandals.  This is money stolen or wasted from the Faithful, often very poor members of the Faith contributing their Widow’s Mite.   For too long there has been scandalously little financial oversite throughout the Church, creating a very large playground for thieves disguised as shepherds. 

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16 Comments

  1. For a start, bring in a first-rate firm of external auditors and change them every three years. Otherwise, the organization and the auditors can be seen as “conjunct and confident persons.”
    They could use Price Waterhouse Cooper, Deloitte, Ernst & Young and KPMG in rotation and in any order.

  2. MP-S: You’re comment is applicable to public corporations in the US. After the Enron scandal and the “public execution” of Arthur Andersen, the US Congress passed a massive law (Sarbanes-Oxley) to try preclude such. While some reform of the external auditor contracting paradigm was enacted, I think it is insufficient. In the US, I suggest, that the SEC assign the “big firm” auditors to public companies, so that may end the “whatever the client wants” US CPA problem.
    .
    Re: gold and silver, gold is money. Silver is a commodity that also can be money. All commodities prices are depressed. In late August or early September the silver cash spot price was compelling (buy) at $14.06. The paper dollars in your wallet are debt instruments that are used in exchange for goods and services, and the state accepts them in payment f taxes. Otherwise, they ain’t worth the paper on which they’re printed.

  3. It would be nice if, in addition to all the destruction he’s wreaking on the pastoral front, Francis could leave a positive legacy of exterminating the infestation of corruption at the Vatican Bank/City governance.

  4. Peter’s pence, eh?

    Is there any Catholic organization whose books are well managed and is gicing money to holy needs, not funding the Church’s enemies?

    I can’t give money to our parish because the mismanagement is so bad it borders on nefarious.

    I can’t give money to Catholic Charities or a host of other orgs because they fund communists and abortionists.

    I’d like to give money to help Christians being murdered and exiled by ISIS. Any suggestions?

  5. Our local St. VdP is great.

    To help the folks targeted by ISIS, I’d look into the various former military folks who are going over there privately to fight, or funding those who are.

  6. T Shaw wrote, “Re: gold and silver, gold is money. Silver is a commodity that also can be money. All commodities prices are depressed. In late August or early September the silver cash spot price was compelling (buy) at $14.06”

    Which demonstrates that neither gold nor silver are money; money requires that the issuer is willing to take it back at par value, which, in turn, is an abstract “unit of account.” Of course, gold and silver coins may be money, if the issuer (usually the government) agrees to accept them back at a fixed value.

  7. Our Pope has spent a great deal of his flock’s goodwill, and his own political
    capital, on trying to obscure the Church’s teaching on the indissolubility of
    marriage. He’s probably alienated a number of prelates who’d otherwise
    have been on board with future projects and reforms. In short, his antics over
    the last two years, and especially with the synod, have likely hamstrung this
    Pope by alienating personnel that would otherwise have been useful.
    .
    It would be wonderful to be mistaken, but I don’t see useful, lasting curial or
    financial reform coming from this Pope.

  8. Foxfire has the only good thing I can think of, unless there are local missionaries you know. I wanted once to send money to the Phillipines because of some natural disaster. A Phillipina who lived in my town old me not to bother as any money I sent would be absconded with.

  9. Somehow the Pope and his leadership need to enforce a strong “control environment” (see Committee of Sponsoring Organizations/COSO – Internal Controls over Financial Reporting) at the Vatican Bank. The board of directors (if there is one) and executive management at the top levels need to enforce ethics, excellence and accountability through all levels of the organization. Without that first concept implemented the rest of the control concepts fail.

    MPS wrote, “Which demonstrates that neither gold nor silver are money; money requires that the issuer is willing to take it back at par value, which, in turn, is an abstract ‘unit of account.’ Of course, gold and silver coins may be money, if the issuer (usually the government) agrees to accept them back at a fixed value.”
    .
    “The issuer accept them . . .” Ay, there’s the rub. When the state issues unbacked (“full faith and credit”) paper currency, the state may manipulate with the value of so-called money.
    .
    My 1960’s economics classes defined money as both a medium of exchange and a store of value. Until 1934, when FDR confiscated all monetary gold (coins), all US paper dollars (since 1913 Federal Reserve Notes) had on them inscribed. “Will Pay to the Bearer . . . ” the face amount of the Note. That would be in gold coin. I obtained a $20 bill with the inscription from an ATM. After 1934, the “Will Pay . . .” inscription was removed from US paper.
    ,
    The spot prices of gold are set in rather shallow markets and subject to manipulation and market participants’ expectations of various variables such as price levels, interest rates, etc. Silver’s recent spot price decline was much more pronounced than gold because it is mainly a commodity (economic growth slowing in China and developing economies): industrial uses.
    .
    For 5,000 or 8,000 years, specific weights of gold were coins/money: both medium of exchange and store value. The US Coinage Act of 1792 set the weights of gold and the related dollar denominations. These were legislated standards or measures. The value of the money is the gold. Unlike paper and ink, gold is of very limited supply, and less subject to the whims of the prince.
    .
    The state finances operations (until the welfare state that mainly was war) through taxes/revenue or credit/debt. When the state cannot tax enough to repay debt (US debt will be $20 trillion when Obama departs) the harshest tax of will be applied: inflation. With gold money that is more difficult; say, $20 gold coins could minted in be lesser amounts of physical gold. But, with unbacked paper currency it only requires 24/7 running the printing presses and helicopters.

  10. If you want to help Christians fleeing ISIS, I’ve heard nothing but good things about Aid to the Church in Need.

  11. The original Mr. X- I concur Aid to the Church In Need is the only Church charitable organisation I fully trust. Visit its website to see the wonderful work it does. It produces a balance sheet to its benefactors every year.

  12. Any bureaucracy, long established, can offer all but insuperable obstacles to reform.
    They have a monopoly of knowledge of the routine of administration in all its minutiae, they tend to develop a strong corporate sense and their powers of obstruction are formidable.

  13. The state finances operations (until the welfare state that mainly was war)

    No, in 1929, military expenditure made up just north of 10% of all public expenditure in this country.

    Until 1934, when FDR confiscated all monetary gold (coins), all US paper dollars (since 1913 Federal Reserve Notes) had on them inscribed.

    Removing gold certificates from circulation had been an ongoing project for several years before FDR took office. See Sir Alan Walters (Margaret Thatcher’s principal economic adviser) on advocates of the gold standard: “crackers”. The gold standard proved a disaster for the United States and any other country which insisted on adhering to it after 1929.

  14. Art Deco wrote, “See Sir Alan Walters (Margaret Thatcher’s principal economic adviser) on advocates of the gold standard: “crackers””
    According to Hume, “It was a shrewd observation of ANACHARSIS the SCYTHIAN, who had never seen money in his own country, that gold and silver seemed to him of no use to the GREEKS, but to assist them in numeration and arithmetic. It is indeed evident, that money is nothing but the representation of labour and commodities, and serves only as a method of rating or estimating them. Where coin is in greater plenty; as a greater quantity of it is required to represent the same quantity of goods; it can have no effect, either good or bad…”

  15. Obviously, the gold standard will never return. It is equally as dead as the Republic.
    .
    Guess the name of the “crackers” individual that invented the gold standard in 1704. Hint: he is credited with inventing Calculus.
    .
    You can have your 20th century Englishman’s quote and you have the historical record. But, you can’t have both.
    .
    Art, I was referring to olden times when princes waged wars on credit.

    That $20 bill is in my possession. It is not a gold certificate. It is a Federal Reserve Note. Before the Civil War and the need to print money to fund it, the only paper “money” in circulation in the US was bank notes issued by private banks redeemable in US coinage. Banks failed when they issued more in notes than they could redeem in coin. One result of then Jacksonian veto of the renewal of the Second Bank of the US was numbers of eildcat banks and many crises and failut=res where ther wa no cenmtral banlk to maintain monetary sanity.
    .
    In 1704, Isaac Newton was tasked to solve the world’s first banking crisis. He “invented” the gold standard. The Bank of England established 1698, had by quickly brought ruin by issuing too many bank notes and devaluing the currency.

    In 1973, the US completely went off the gold standard (had pegged the dollar to an amount of physical gold). The US gold standard is why the US couldn’t finance WWII; and Hitler’s and Tojo’s children run the World.

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