Few of us realize the kind of disruption, the social breakdown, the Sodom and Gomorrah-like conditions that can happen during periods of hyperinflation.
Many of you have heard or read about what happened to Germany in 1923. In order to meet reparations payments for World War I, the government literally cranked up its printing presses and flooded the country with worthless paper money.
It was perhaps the greatest inflation of all time and a harbinger of what may be in store for us just before the beginning of the Great Tribulation.
In Germany delirium reigned. Workers got paid every day at noon, and would then run to the nearest store with literally sackfuls of money in order to buy anything, at any price. Otto Friedrich, in his book Before the Deluge, described the chaos of the time:
“In their frenzy, people paid millions and even billions of marks for cuckoo clocks, shoes that didn’t fit, anything that could be traded for something else. The celebrated conductor, Bruno Walter, had to break up his rehearsals in mid-symphony for the regular midday rush, and after a typical scramble, he recalled, one of his musicians triumphantly displayed his reward for a day’s work – a bag of salt.”
And there were worse incidents. “The old were equally helpless. One elderly writer named Maximilian Bern withdrew all his savings, more than 100,000 marks, and spent them on one subway ticket. He took a ride around Berlin and then locked himself in his apartment and starved to death.”
The Bible foretells that inflation at least in the sense of oppressively rising prices will be a plague of the end times. Notice Haggai 1:6, “and he that earns wages earns wages to put into a bag with holes.” Every person who has seen their buying power eroded because of rising prices can well understand that that prophecy has already come to pass.
The Book of Revelation also foretells inflation: “A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine” (Rev. 6:6).
A measure of wheat for a penny sounds like a bargain these days. But consider, a measure of wheat, at the time John penned the book of Revelation, was two or three pints. A penny was the day’s wages of a laborer. In North America today, a factory worker’s pay is conservatively around $100 a day. So consider: three pints of wheat for $100!
That is inflation. Moreover, as we would expect from the time sequence, the prophecy bears a striking resemblance to our own pretribulation times: While food is scarce, it still has a market price.
The mention of oil and wine has several layers of meaning, one of which is an allusion to the practice in ancient Roman provinces of exporting oil and wine to Rome regardless of the scarcity of food at home. The main meaning, of course, is that oil and wine, having become scarce and expensive, must be spared for the highest priority uses.
Biblical description of money and prices bring out several important lessons about high prices:
Scarcity can make our money worthless. In Joseph’s time, when “famine (crop shortage) was over all the face of the earth” (Gen. 41:56), the fact was reflected in the price of food. Thus, when Jacob sent his sons to buy food in Egypt, he told them to take “double money” (Gen. 43:12).
Another example of scarcity-induced price increases was the siege in Samaria in the time of Elisha: “And there was a great famine in Samaria: and , behold, they (the Syrians) besieged it, until an ass’s head was sold for fourscore pieces of silver, and the fourth part of a cab of dove’s dung for five pieces of silver (II Kings 6:25).
Today, silver sells for around $17.68 an ounce. Imagine! Over $88 for a small quantity of bird waste!
And, of course, the law of supply and demand works the opposite way as well. When the Syrians prematurely abandoned their invasion and left their provisions behind (II Kings 7:6 and 8), the inhabitants of the city went out and gathered up those provisions. Supply increased. And prices came down.
Inflation increases the power of those who hold tangible goods. In the time of Joseph’s famine, people had money, but not food. The price of food went up, and they soon ran out of money.
Since money in the Bible was synonymous with a given weight of silver or gold (See Ezra 7:15-17; II Kings 2:10-11), the government could not just go and print up some more. Thus their “money failed” (Gen. 47:15), and they had to barter their livestock for food (Gen. 47:17).
After they had bartered away their livestock, they were forced to barter their land and their labor. If they hadn’t possessed some tangible goods to barter after their money ran out, they would have starved (Gen. 47:19).
And in the end, because the Egyptian government had correctly “anticipated market conditions,” it ended up owning everything. A closely related lesson from this account is that inflation favors those who hold or produce tangible necessities (as opposed to luxuries).
Inflation is the bad result of human government’s failure to restrain its own covetousness and ambition. There are two ways in which this happens:
Sometimes, in order to stimulate the economy, the government will cause more money to come into circulation. Credit becomes easier. Businesses expand and hire more people. Wages go up and people buy more. While there’s more money floating around, there aren’t as many things to buy with that money. Sellers find they have to (and they want to anyway, of course) raise their prices just to make sure they don’t run out of products.
And, almost always at the same time, the government itself spends more money than it takes in. Its workers get pay raises, more people are put on the government payroll, and more programs are started. Tax revenues don’t cover it all. The government has to either a) raise taxes, b) cut back or c) in effect, print the money to cover its deficit.
Human nature being what it is, (c) is the most painless alternative in the short run and so the government chooses it. The extra money circulates through the country, but again, there aren’t as many extra things to buy with that money. So prices go up.
Viewed this way, inflation is a kind of hidden tax that the government imposes on its citizens. The famous British economist, John Maynard Keynes, a man who, ironically, promoted the kind of government policies that led to our present inflationary troubles, admitted:
“By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. The process engages all the hidden forces of economic law on the side of destruction.”
Thus in a sense, inflation is the result of the breaking of a divine law. First, “Thou shalt not steal” and “Thou shalt not covet.” This applies to governments as well as to private citizens. More explicitly, since inflation is the result of government’s manipulation of the value of its money for its own ends, the plain command of Deut. 25:14-15 is violated:
“Thou shalt not have in thine house divers (differing) measures, a great and a small. But thou shalt have a perfect and just weight (in Bible times prior to the Babylonian captivity, the value of money was determined by weight), a perfect and a just measure shalt thou have.”
Another command prohibits the government of Israel from unjustly enriching itself at the expense of its own citizens: “neither shall he (the king or sovereign) greatly multiply to himself silver and gold” (Deut. 17:17).
We should also remember that it was the evil kings of Israel and Judah, Meahem (II Kings 15:18) and Jehoiakim (II Kings 23:37) who imposed special taxations on the people. (While they did not do so by inflation, the principle still applies.)
Finally, perhaps the boldest condemnation of inflationary sin is found in Amos:
“Hear this, O ye that swallow up the needy, even to make the poor of the land to fail, saying, when will the new moon be gone, that we may sell corn? And the Sabbath, that we may set forth wheat, making the ephah (quantity) small, and the shekel (money required to buy something) great, and falsifying the balances by deceit” (Amos 8:4-5).
When we consider that poor people, especially those on fixed incomes are particularly unable to cope with inflation, this scripture takes on added power.
Knowing that inflation favors those who possess the tangible necessities of life, and also knowing that famine is prophesied, your first thought may be to begin to store large quantities of food. However, that would make you vulnerable to attack in times of famine if word got out that you were storing food.
On the other hand, without getting fanatical or anxious about material things (Matt. 6:31) there are some things we can do to stave off the ravages of inflation. The principle is, “A prudent man for sees the evil, and hides himself; but the simple pass on, and are punished” (Prov. 22:3).
Despite what you may have heard, gold and silver may not be all that good as inflation hedges. In times of economic turmoil, governments often confiscate their citizen’s gold. While it is not the province of this Church to give specific investment advice, gold and silver are two investments that are mentioned in Bible prophecy. The forecast however is not bullish.
“They shall cast their silver in the streets, and their gold shall be removed: their silver and their gold shall not be able to deliver them in the day of the wrath of the Lord: they shall not satisfy their souls, neither fill their bowels: because it is a stumblingblock of their iniquity” (Ezek 7:19).
You can’t eat gold. You must buy it retail and sell it back wholesale. You may have to pay assay charges, You can’t buy it in quantities of less than an once, and so, in times of social breakdown, how would you pay for a loaf of bread? By clipping off a piece of your Krugerrand?
Use your spare cash as a down payment to buy your own home, acquire marketable skills and keep your house and car insurance up to date. These ideas follow from the great principle laid down by Solomon in the Bible:
“Be thou diligent to know the state of thy flocks, and look well to thy herds” (Prov. 27:23).
Substitute your own labor for expensive purchased labor whenever possible by doing your own repair work. This depends on how you value your own time and whether you try to do your own repair work.
Avoid get-rich-quick schemes that cost you money. The Bible principle is plain here: “He that makes haste to be rich shall not be unpunished” (Prov. 28:20).
Be righteous. God has the supernatural power to insure that His people do not suffer privation. God always has the power to hedge you from the ravages of inflation (See Job 1:10). King David made this principle plain: “The Lord knows the days of the upright: and their inheritance shall be forever. They shall not be ashamed in the evil time: and in the days of famine they shall be satisfied. I have been young, and now am old; yet have I not seen the righteous forsaken, nor his seed begging bread” (Ps. 37:18-19, 25).
Even though we do have a responsibility to provide for our children and grandchildren through all the know-how and skills, we can muster, in the end it is God in whom we must place all our trust, never wavering. That is the most sound investment anyone can make.