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Money, so they say, is the root of all evil today.

– Pink Floyd

An email came to my inbox recently claiming that people who hold to the Scriptures think “money is the root of all evil.” The notion that the Bible teaches money is evil is quite common. Pink Floyd referenced this idea in their hit “Money,” and people often repeat this idea in everyday conversation.

goldBut as is the case with other popular ideas ascribed to the Bible – for example, most Americans mistakenly think “God helps those who help themselves” is a Bible verse; and how many times have you heard someone take Jesus’ words “Judge not” as a general prohibition against making necessary ethical distinctions? – this one is also wide of the mark. And it is wide of the mark in at least two ways. First, the quote itself is not accurate. And second, when the quote is presented accurately, the true meaning of this verse is seen to be quite different from what is in the popular mind.

The actual quote is found in 1 Timothy 6:18 and reads, “For the love of money is a root of all kinds of evil” (New King James). The language of the Authorized Version is “For the love of money is the root of all evil.” When comparing either of these two translations with the popular version of the quote, it becomes readily apparent that the big difference is that the Bible identifies, not money itself, but the love of money as the root of all sorts of evil.

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Ever since the spring of 2009 when The-Powers-That-Be (TPTB) were out there claiming to see “green shoots” everywhere, the public has been treated to a non-stop propaganda campaign pushing the narrative of economic recovery.

President Obama himself proclaimed his belief in the strength of the American economy, stating for all the world to hear in his 2016 State of the Union Address that anyone who doubted everything was awesome in the main street economy was, to use his words, “peddling fiction.”

And surely Obama couldn’t be wrong. After all, good doctor Ben Bernanke spent several years injecting the US economy with his concoction of Zero Interest Rate Policy (ZIRP) and three rounds of Quantitative Easing (QE). How could anyone doubt but that the wise heads at the Fed have cured what ails us? The stock market just set a new record!

But if you dig down beneath the surface, you’ll find that everything is not awesome. Corporate earnings are down for the fifth quarter in a row. According to the report on Factset, “The second quarter [2016] marks the first time the index has recorded five consecutive quarters of year-over-year declines in earnings since Q3 2008 through Q3 2009.” In other words, corporate earnings haven’t had a losing streak this long since the height of the last financial crisis.

Or take worker productivity, a measure of hourly output per worker, which has declined now for three straight quarters. As the Reuters article pointed out, “U.S. nonfarm productivity unexpectedly fell in the second quarter, pointing to sustained weakness that could raise concerns about corporate profits and companies’ ability to maintain their recent robust pace of hiring.” No kidding.

But why is worker productivity in the US declining? The Reuters article fails to provide a reason. So let me suggest one possibility: businesses are no longer investing in property, plant and equipment, the very things that drive productivity. As Forbes reports, “Corporate executives now shy away from capital spending. Companies are spending money to cut costs – labor cost especially, and also electricity – but few companies are increasing productive capacity.”

So what have executive been spending on if not new productive capacity? Stock buybacks that serve to boost earnings per share and increase bonuses. “Stock buybacks by big American companies are near a historical peak [as of May 2014], but the practice appears to do little to improve their underlying operations and robs them of money for research and future growth. USA Today’s John Waggoner calls stock buybacks a ‘sugar high’,” as John Morgan reports.

Morgan goes on to cite a 1999 quote from Warren Buffett, who said, “Repurchases are all the rage, but are all too often made for an unstated and, in our view, an ignoble reason: to pump or support the stock price.”

Let’s see then, we have stock markets at near record levels, while at the same time corporate earnings are on the decline as worker productivity erodes, which very likely is a consequence of businesses showing greater interest in engineering stock buy-backs rather than in capital spending. Sure sounds like a plan for long-term economic success to me.

I’ve mentioned only a few data points to illustrate that the economy, far from being robust, is in reality quite weak. But for more of the same, consider the following nine ugly charts. Obama’s term in office is highlighted in red.


Things that should be going up in a healthy economy – Labor Force Participation Rate, Median Family Income, Home Ownership – are all going dramatically down. Those items that one would expect to see going down if the economy really were as good as The-Powers-That-Be tell us – Food Stamps, Federal Debt, Money Printing, Healthcare Costs – are going straight up.

These charts tell a very different story from what Obama’s putting out. Maybe he’s the one peddling fiction.

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Elisha Prophesies the End of Samaria's Siege

Elisha Prophesies the End of Samaria’s Siege by Nicolas Fontaine, 1625-1709.

 

When beginning the Siege of Samaria series on Biblical economics, I never intended it to go on for more than two or perhaps three posts. Due to an embarrassment of material and positive response from the readers of this blog, the series stretched into five posts.  In no small part the success of this series has been due to the generous support of Sean Gerety over at the God’s Hammer blog, who has been kind enough to republish my posts.

It’s certainly been an encouragement to me to see so many people interested in what the Bible has to teach us about economics. Most of the economic talk one hears in the mainstream media is misleading, and, I suspect, it’s designed to be that way. After all, if too many folks were to get wise to the economic evil troika of central banking, fiat currency and demand-side Keynesian economics, it would be a lot harder for the financial masters of the universe to loot the poor and middle class of the world for their benefit.

The lies of the statists enslave, but the truth of God’s Word makes men free. And it is to the end of furthering this truth that I have presented the series on Biblical economics.

And because Biblical economics is both a fascinating and worthwhile study, it seemed good to me to take this opportunity to share with others the intellectual ammunition I’ve found helpful in developing my understanding of the subject. Below is a list of resources along with my comments.

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Elisha Prophesies the End of Samaria's Siege

Elisha Prophesies the End of Samaria’s Siege by Nicolas Fontaine, 1625-1709.

 

Inflation – What it is and what it isn’t (continued)

In the last installment of this series, I mentioned that the big takeaway point was the definition of inflation. As you may recall, we defined inflation a bit differently than is commonly understood. Most people, when they talk about inflation, mean to say that prices – the amount we pay for items such as gas or bread or rent – have gone up.

The most common statistic used to report rising prices is the Consumer Price Index (CPI). The CPI measures the cost of a representative basket of goods and services, comparing the average price of these items in one period with their average price in the following period.

When the CPI shows average prices going up from one reporting period to the next, the rising prices are reported in the news as inflation. Occasionally, average prices fall. When this happens, we are told that deflation has occurred.

But the definition of inflation that was presented in Part 4 of this series did not rely on measuring the average cost of goods. Instead, inflation was defined as the increase in the supply of money. Conversely, deflation was not defined as decreasing prices, but rather the decrease in the supply of money.

But even though inflation and deflation are not the same thing as rising and falling prices, there is a relationship among them. When the money supply increases, assuming the amount of goods and services in the economy remain the same, prices go up. Conversely, when the money supply falls, prices go down. As Peter Schiff puts it, “The money supply expands and contracts. Prices go up and down. Inflation and price increases are not the same thing. One is cause. The other is effect” (Crash Proof, 69).

Now you may be asking yourself why I bother to define inflation as I do. Isn’t the common definition of inflation good enough as long as we all agree that inflation is rising prices? Why confuse things be bringing in the concept of money supply?

The best argument for defining inflation as the increase in the supply of money is that it clearly identifies the cause of rising prices: central banks creating too much money, usually in response to governments spending too much money.

If we are satisfied with the usual definition of inflation, government officials can easily fool us into thinking that prices are going up for reasons that have nothing to do with their own policies. Bad weather, profiteering by greedy speculators and lack of sufficient governmental regulations are common scapegoats for rising prices, even though prodigal politicians and the central bankers that fund their wasteful spending are the real culprits.

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Elisha Prophesies the End of Samaria's Siege

Elisha Prophesies the End of Samaria’s Siege by Nicolas Fontaine, 1625-1709.

In our last installment, we discussed opportunity cost using the example of the four lepers at the gate of Samaria (2 Kings 7:3-5).

 

The prospects facing of these gentlemen were all seemingly poor. They could remain where they were and die, they could enter the city of Samaria and die, or they could defect to the Syrians and maybe die or maybe live. Choosing any one of the three options meant forgoing the other two opportunities.

Quite rationally, the lepers elected to forgo the opportunity of dying in Samaria, either outside its gates or within the city itself, for the outside chance that they might survive among the Syrians. The two options of dying in Samaria, we concluded, represented the opportunity cost to the lepers of their decision to go over to the Syrians.

The Samaritan Consumer Price Index

At the same time the lepers were reasoning among themselves about their opportunity cost, inside the city walls of Samaria another discussion was taking place.

By this point, King Jehoram of Israel had had quite enough of the whole siege business and was ready to take it out on someone. The most obvious scapegoat in his mind was the prophet Elisha. Such was the king’s anger with Elisha that he had dispatched one of his high ranking officers to take off the prophet’s head.

This came as no surprise to the prophet, who, apparently forewarned by God that a plot had been hatched against him, told those with whom he was sitting, “Do you see this son of a murderer has sent someone to take away my head? Look, when the messenger comes, shut the door, and hold him fast at the door. Is not the sound of his master’s feet behind him?” (2 Kings 6:32).

When the king’s messenger arrived, Elisha had a message for him. Said Elisha, “Hear the word of the LORD. Thus says the LORD: ‘Tomorrow about this time a seah of fine flour shall be sold for a shekel, and two seahs of barley for a shekel, at the gate of Samaria’ ” (7:1).

Incredulous, the officer responded, “Look, if the LORD would make windows in heaven, could this thing be?” To which Elisha answered, “In fact, you shall see it with your eyes, but you shall not eat of it” (7:2).

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Elisha Prophesies the End of Samaria's Siege

Elisha Prophesies the End of Samaria’s Siege by Nicolas Fontaine, 1625-1709.

My goal in this series is to demonstrate that many of key concepts of economics are either explicitly or implicitly taught in Bible’s account of the siege of Samaria as found in 2 Kings 6:24-7:20.

 

In Part One, we looked at 2 Kings 6:25 and what we could learn from the exorbitant prices people were paying for undesirable food under siege conditions. In Part 2, we looked at the relationship between two economics and politics. Especially, we considered how economic hardship is frequently brought on by the ill-conceived policies of politicians, who, being loath to take the blame themselves, often will attempt to find a scapegoat to divert public dissatisfaction away from themselves.

Today, I would like us to look at another important economic concept demonstrated in 2 Kings: opportunity cost. But before diving into that, perhaps it would be advisable to offer a definition of economics.

Economics, What is it?

In his lecture series on economics, John Robbins offered the following definition of economics: it is the study of the logic of choice.

That may sound a bit surprising to many people. It is common to think of economics as news about what the stock market did today, but that is history. Some may think of economics as mathematics. Still others, when they consider the subject at all, hold very negative views about economics. For example, 19th century Scottish thinker Thomas Carlyle famously dubbed economics “the dismal science.”

But starting with the axiom of Scripture, the idea that the Bible has a monopoly on truth, Robbins makes a strong case for his definition. He starts with four principle statements about man taken from Scripture:

  • Men are rational creatures made in the image of God.
  • Men always act purposefully.
  • Men always act in their perceived self-interest.
  • Only individuals choose/make plans/act.

From these concepts, Robbins provides us with the following chain of reasoning: To be human is to be rational > To be rational is to have purposes > To have purposes is to plan > To plan is to arrange ends and means (in other words, to choose). And economics, as Robbins defines it, is the study of the logic behind the choices we make.

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meltdown-620Today we may apply the Apostle’s words first to those (rulers) who without cogent cause inflict exorbitant taxes upon the people, or by changing and devaluating the currency, rob them, while at the same time they accuse their subjects of being greedy and avaricious.

    – Martin Luther, Commentary on Romans 2:2, 3

Now, if the laws of buying and selling are corrupted, human society is in a manner dissolved; so that he who cheats by false weights and measures, differs little from him who utters false coin.

    – John Calvin, Commentary on Leviticus 19:35

But if life is an equal value to all, there is something strange, when war comes and large military expenditures are necessary, in requiring the person who has saved for a life insurance policy to lose half its buying power by inflation, while the spendthrift loses nothing and enjoys high wages to boot.

    – Gordon H. Clark, A Christian View of Men and Things, pp. 101-102

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