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First, the KJV is most definitely not in Old English, a tongue that had not been spoken for centuries when the KJV translation was done. It is written in modern literary English. Modern English has...
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#2: Initial revision
First, the KJV is most definitely not in Old English, a tongue that had not been spoken for centuries when the KJV translation was done. It is written in modern literary English. Modern English has been with us for several centuries now, so there have been many shifts in vocabulary and diction since the translation was done. However, differences in vocabulary and diction do not constitute a different language. The English of the KJV is still very much understandable to modern audiences. The KJV is certainly the most literary of translations, the most beautiful in its language. For that reason it is the default choice for literary purposes. It will be familiar to English audiences because of its central role in the history of English literature, and to American audiences because of its widespread continued use in evangelical churches. There are two main reasons that the KJV is not used as a standard study or liturgical bible in many churches today. The first is that its translations were not always accurate. Knowledge of the original languages has improved since the time the translation was done, leading to more accurate translations. Second, there is a feeling in many church circles that the literary language of the KJV makes it inaccessible to most modern people. I think this is demonstrably false, and many of the attempts at making a "language of the people" translation have fallen by the wayside over the years because, frankly, they were just ugly and clumsy. The use of such versions in literature would only really be appropriate to place the story in a particular time or community where there were popular. More accurate alternatives to the KJV fall into two classes, new from scratch translations, and modernized corrected versions of the KJV, such as the RSV and the NRSV, both of which try to preserve the essential beauty (and familiar phrases) of the original while correcting translation errors and modernizing some of the language. If you are concerned about striking a balance between beauty and modern diction, or if you care about accuracy of translation, you should probably look at the RSV or the NRSV as your sources.