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.
Today 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.
Lux Lucet 
Biblical Economics: The Siege of Samaria, Part 4
Posted in Economics, tagged Economics, Money and Banking, Scripture Commentary on June 26, 2016| 1 Comment »
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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