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The Character of Inflation

Steven Samson

God sets the standard of justice and righteousness by which individuals and nations alike are measured. Justice and injustice are manifested, first, governmentally in the character of individuals and nations, then economically in the character of exchange. And whether in reference to the character of individuals, or nations, or economic practices, the Bible frequently uses metallic metaphors to describe the quality of character, and how it is tried and purified in the refiner's fire.

"Character," in the Greek means "engraving" or "image." Our character is a mark of our ownership, a sign of our kinship or citizenship. In Genesis 1:26, God said: "Let us make man in our image, after our likeness." But rebellious, unrighteous men have long tried to erase the image of God from their lives, preferring to worship graven images of their own invention. As the Apostle Paul observed, "their foolish heart was darkened. Professing themselves to be wise, they became fools, and changed the glory of the incorruptible God into an image made like corruptible man..." (Rom. 1:21-23). No man can serve two masters.

Elsewhere, man is likened to clay, and his heart to a clay tablet. Paul wrote to the Christians in Corinth that they were the epistle, or message, of Christ, written "not in tables of stone, but in fleshy tables of the heart" (II Cor. 3:3). Jeremiah 2:22 notes how the iniquity of Israel was similarly "marked" or engraved. For good and for evil, our character is stamped upon our hearts. Jeremiah 17:1 is even more explicit: "The sin of Judah is written with a pen of iron, and with the point of a diamond: it is graven on the table of the heart." These words might as easily describe the recording and playing of a phonograph disk.

Like an old Victrola, the life of a man articulates "his master's voice." The quality of the performance reflects the quality of the recording. Thus it is important for God's people to be cleansed of all unrighteousness. "Keep thy heart with all diligence; for out of it are the issues of life" (Prov. 4:23). Malachi likened the Lord to "a refiner's fire" and "fullers" soap (Mal. 3:2). Concerning the backslidden Judah, God said: "Behold, I will melt them, and try them" (Jer. 9:7). God in His holiness cannot abide impurity. The way God shapes our lives and "tests our mettle" is repeatedly illustrated by analogies to smelting of gold and silver.

The word "gold" in the Old Testament is often preceded by the word "pure." Gold is not found in a state of purity. Instead, it must be refined before it is fit, for example, to be fashioned as a "vessel unto honor" (II Tim. 2:20). The same is true of character. This may be seen in numerous Biblical accounts concerning a wide range of matters: Israel, the Church, natural events, as well as the lives of individuals. Isaiah 48:10 says that God chose Israel "in the furnace of affliction." In the New Testament, Peter warns of a fiery trial that faces the Church (I Pet. 4:12-17). This process of refinement extends even to the melting of the elements by fire under God's judgment (Ez. 22:18; II Pet. 3:12). But the focus is on individuals. "The fining pot is for silver, and the furnace for gold; but the LORD trieth the hearts" (Prov. 17:3).

As with the character of individuals and nations, so too with the character of economies. God blesses righteousness with prosperity. As Moses said to the people of Israel: "Keep therefore the words of this covenant, and do them, that ye may prosper in all that ye do" (Deut. 29:9). But economic injustice, like all sin, is a reproach to any people. It must be purged. "Take away the dross from the silver, and there shall come forth a vessel for the finer" (Prov. 25:4).

Fraud, in particular, strikes at the heart of society by destroying the common faith or trust that makes unity possible. Noah Webster defined fraud as "a stratagem intended to gain some undue advantage." [1] It debases the common currency of social exchange. Likewise inflation -- a type of fraud -- undermines faith in the economy by tampering with the medium of exchange. Inflationary practices depreciate money by removing its standard of value -- that is, its backing in gold or silver coin (specie) -- or by debasing the metals themselves.

Inflation, then, is a reflection of the character of exchange between men and nations. Like a phonograph disk, it accurately renders the true qualities of the recorded performance. It resonates from the depths of their hearts. Indeed, it is an epistle: a message concerning the character and loyalties of the people. For where our treasure is, there will our hearts be also. But a caution is in order. The same set of commandments that forbid coveting and stealing also forbid idolatry. Jesus makes the sequence of events clear: "He that is faithful in that which is least is faithful also in much: and he that is unjust in the least is unjust also in much" (Luke 16:10). The sinner ends by exalting his sin over God. Again, no man can serve two masters.

Inflation, like sin, begins with a desire "to gain some undue advantage." The sins of coveting and stealing may be recognized in such ancient practices as the clipping of coins and the abasing of metals. These early types of inflation have been succeeded by fiat money inflation.

Fiat money is unbacked paper currency. Because it lacks a fixed standard of value in gold or silver, it can easily be inflated -- that is, depreciated or diminished in value -- by the issuing agency. In the United States, this agency is the Federal Reserve Board, working in conjunction with the Treasury Department. Noah Webster pointed out that "the issue of a super-abundance of notes depreciates them, or depreciates their value.... A paper currency will depreciate, unless it is convertible into specie." [2] Such notes were once issued by private banks. Today it is the civil government, backed by the power of the sword, that enjoys a monopoly on the issuing of paper currency. Exchange has thus become deceptive and coercive, rather than voluntary, in nature. Furthermore, by requiring that paper money be accepted for payment of debts, legal tender laws provide the essential element of coercion that upholds current inflationary policies.

But there is nothing new about inflation in our country's history. Concerning colonial American inflation, Simon L. Adler observed that paper issued by Virginia in 1775 "soon began to depreciate and it was found before long that a piece of eight worth about five shillings, ten pence by proclamation would buy as much as six shillings in paper. But the paper was the legal money of the colony and the Legislature ordered that a piece of eight should pass legally at six shillings."[3] Colonial policy was guided by a desire to keep gold and silver coins of all kinds in the country because of their intrinsic value. The object was to stay as economically independent of Britain as possible. But the inflationary practices of the states during the War for Independence virtually bankrupted the new country.

The word "inflation" is misleading unless it is understood that inflation simply "puffs up" money, stretching it just as hot air stretches the surface of a balloon. It simply redistributes wealth without adding to it. Unfortunately, the wealth is generally lifted from the pocket of the taxpayer and slipped into the pocket of government. Inflation may be regarded as a hidden tax as well as a wealth transfer scheme. It fits hand and glove with the "buy now, pay later" philosophy that pervades our nation. Our economy is built on compulsive debt.

One type of inflation -- the substitution of alloys and mixtures -- is expressly condemned in Scripture. Isaiah 1:22 records the following about Judah: "Thy silver is become dross, thy wine mixed with water." The debasing or depreciating of a commodity, such as money, is the very opposite of the refining fire through which God tempers the character. Sometimes the corruption is irreversible: "The bellows are burned, the lead is consumed by the fire; the founder melteth in vain: for the wicked are not plucked away. Reprobate silver shall men call them, because the LORD hath rejected them" (Jer. 6:29-30). And for what cause did God judge his chosen people? Jeremiah 6:6-7 mentions oppression, violence, and spoilage. The root problem, however, was covetousness (Jer. 6:13).

Ezekiel 22:13-31 contains reference to virtually all the problems and principles that have been examined up to this point. Jerusalem is described as being smitten for making dishonest gain (v. 13). The house of Israel had become dross: fit only to be melted in the fire of God's wrath (vv. 18, 21). The prophets, priests, and princes are each singled out by God (vv. 25-28). Finally, so are all the people: "The people of the land have used oppression, and exercised robbery, and have vexed the poor and needy: yea, they have oppressed the stranger wrongfully. And I sought for a man among them, that should make up the hedge, and stand in the gap before me for the land, that I should not destroy it: but I found none" (Ez. 22:29-30).

Those who seek dishonest gain through inflationary practices must likewise pay the inescapable consequences. One major effect of inflation is the stifling of investment. Inflation and other forms of economic injustice are decapitalizing our economy. Like Esau, we are despising our birthright, and selling it for pottage. Our industries are becoming less and less capable of competing on the world market because they are squeezed between unrealistically high and inflexible wages, stringent regulations, high interest rates, a scarcity of money for loans, and a general psychology of uneasiness, or malaise, that fosters a strong desire for security at the expense of an unwillingness to assume financial risks without a tax-subsidized safety net at hand. Inflation is one element -- an important one -- of a paternalistic mentality that concentrates power in the central government as it erodes the foundations that support the system. The result is a deliberate elevation -- by citizens, politicians, and technical experts -- of short-run gain above godly wisdom and justice. As Solomon observed, "the prosperity of fools shall destroy them" (Prov. 1:32).

Our works are a reflection of our character and the quality of our faith. Lawful gain is good. Prosperity is a blessing. But we must keep our priorities straight. "The judgments of the LORD are true and righteous altogether. More to be desired are they than gold, yea, than much fine gold" (Ps. 19:9-10). We must build on the true foundation with high-quality material that can withstand the refiner's fire. "Every man's work shall be made manifest: for the day shall declare it, because it shall be revealed by the fire; and the fire shall try every man's work what sort it is" (I Cor. 3:13).

The works of inflation will not be counted among our treasures in heaven.


Notes

[1] Noah Webster, An American Dictionary of the English Language, reprint ed., (San Francisco: Foundation for American Christian Education, 19067 [1828]), Vol. I, p. 87.

[2] Webster, Dictionary reprint, Vol. I. p. 58.

[3] Simon Adler, Money and Money Units in the American Colonies. The Rochester Historical Society Publication Fund Series, 1929, Vol. VIII cited in Verna Hall, The Christian History of the American Revolution,


Steven Samson, Ph.D. (Political Science; University of Oregon) is Assistant Professor of Political Science at Hope College and has written for Modern Age, Lincoln Review, Eternity, Universitas, and Teaching Home.
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