Failure to follow God’s economic laws results in disaster for individuals, families, corporations, and nations. Those who make daily economic decisions in running a business and keeping track of household expenses understand this. If a family fails to pay its bills or writes bad checks to postpone bill collection, it suffers the consequences of having creditors call demanding payment. What is true of the individual is also true of the nation. The effects of poor money management are not readily seen on the national level, however. While a “reminder” notice may be sent in thirty days to a family because of an overdue account, it may take decades before a national government gets its overdue notice in the form of inflation and/or depression.
If families or nations fail to honor the word of God as the standard for economics, they must evaluate their economic decisions based on practical results. Economic policy becomes pragmatic: Let’s try this policy to see if it will work. The problem with developing an economic theory based on pragmatism is that the consequences are often known too late. The gamble can be very costly. For example, the great German inflation was effective in the short run. During the Weimar Republic, German farmers benefitted by being able to pay off their debts with the lower valued marks. The industrialists who borrowed to expand or replace their plant equipment paid off their debts with ease.
prices spiraled upward into “the wild blue yonder” as small change bank notes of 100,000 marks (25 cents) in July were succeeded by 1,000,000 mark notes in August (likewise 25 cents) to be followed in time by 1,000,000,000 mark notes in late September and finally 1,000,000,000,000 (one trillion) mark notes in early November. It was taking the efforts of 30 paper mills and 200 printing presses working continuously to produce the money fast enough.
Pragmatism can never match the absolute mandates of Scripture; therefore, entire nations can be crippled when biblical economic laws are ignored. History offers ample proof that “God is not mocked; for whatever a man sows, this he will also reap” (Gal. 6:7). The German inflation of 1914–1923 was the worst inflationary period the modern world has seen. It was the attempt of rebellious man, through the agency of civil government, to create something out of nothing—a power only God possesses (cf. Gen. 1:1; Heb. 11:3). When finite man attempts to play God, we can expect less than perfect results.
Our nation is not immune to poor economic policies. The United States suffered a runaway inflationary period, considered the world’s worst at the time until surpassed by Germany. Several of the early colonies in the late 1600s issued paper money to pay debts incurred by individual states. In time, the paper would be redeemed for a “hard” currency. As long as the colonists believed the paper would be bought back or redeemed, it was accepted. If doubts arose, the paper “notes” were rejected. The results were obvious to all who understood basic biblical economic principles:
The “invention” of paper money in the colony of Massachusetts in 1690—the government issued promissory notes acceptable for taxes and thus for virtually any transaction–made it easier for governments to borrow and hence increase the money supply at a more rapid pace than before. In some of the American colonies in the eighteenth century, the price level rose twenty‑ or even thirty-fold. The worst inflation of that era was that of the paper dollars issued by the Continental Congress to help finance the American Revolution. By 1781 it took 1000 “continental” to buy what one had bought six years before, a situation that led to the expression, “not worth a continental.”
Inflation manifests covetousness and greed. Man wants something for nothing, or for as little as he can get away with. He desires wealth for himself without following the commandments of God. John Calvin, in his commentary on Matthew 6:19–21, writes of the dangerous effects of covetousness: “This deadly plague reigns everywhere throughout the world. Men are grown mad with an insatiable desire of gain. Christ charges them with folly, in collecting wealth with great care, and then giving up their happiness to moths and to rust, or exposing it as a prey to thieve.”
The insatiable desire for wealth can be destructive to an individual, especially those who hold unlimited political power. He can be so intent on securing for himself the “treasures” he deems most important that the real treasures of life pass him by. The covetous man believes that having enough of what the world values will solve his problems, no matter what they might cost him. If political power is desired, then votes can be “bought” by promising voters that certain programs will be instituted that can only be fulfilled through a disregard of biblical law and constitutional principles and the levying of higher taxes and the hidden tax of inflation.
The people have insatiable desires. Only a steady stream of promises backed up by fiat currency will fulfill those desires. If there is not enough money to meet these demands, civil governments create it. If gold and silver are too difficult to dig out of the ground, then paper money officially declared by the state to be “legal tender” will do just as well. Civil governments cannot be trusted to maintain a sound monetary policy without restraints. History shows us that the gold standard was the stabilizing force behind a sound monetary policy.
Covetousness that leads to currency debasement (inflation) is just one of the enemies of biblical economics. The freedom to make a profit and the right to own property are also under attack. An attack on these two essential aspects of economics will destroy the foundation of a truly free society. Many see private ownership and the ability to make a profit as somehow contrary to biblical principles. The Bible does not condemn men and women for being wealthy or owning property. Abraham struck a deal to purchase property so he would have a burial place for his family (Gen. 23); the Eighth and Tenth commandments prohibit theft and the desire to have what belongs to someone else (Ex. 20:15, 17); privately-owned fields were opened up to the poor only after the harvest was completed (Ruth 2); property rights were even acknowledged by kings (1 Kings 21); the debasement or the “watering down” of commodities is a reason for judgment (Isa. 1:21–22); businessmen, as well as those dealing with the insurance of currency values (civil governments), must not have “differing weights and differing measures” (Prov. 20:10); and God expects His stewards to return a profit for Him (Matt. 25:14–30). In each of these examples, ownership of property is the norm.
The free exchange of goods by property owners and the risk-taking of entrepreneurs in a free society brings about growth in capital and goods whereby all can benefit. When the freedom of the market is destroyed due to governmental policies like “windfall profits” taxes, inflation, price controls, tariffs, unnecessary regulations, and other freedom‑inhibitors, a nation can be expected to decline in its productivity. The harder an individual works, the less he realizes profits for reinvestment and hiring of additional personnel. Why be productive if the profits are subject to excessive taxation? The incentive to make a profit is part of Gods plan for His people:
The universal spark of economic progress comes from man’s hope of adding to his wealth through economic production. God made man in such a way that he responds favorably to the hope for profit, so we must recognize that man’s universal drive to accumulate wealth is a wholesome motivating force. And in a free market where competition reigns, the producers of goods and services will strive to accumulate wealth by serving consumer needs.
Either billions of individuals making billions of independent economic decisions will decide economic matters or a single controlling agency will do it. There is no possible way that profit-making will be eliminated. The individual will have the freedom to exercise his talents under God for God’s glory, or the State will confiscate the “excesses” of production to further the ideals of the State.