Part 1: What Dating a Macroeconomist Did to My Thinking on Inflation — Biblical Edition
About 6 months ago I got on a plane with this macroeconomist from Tinder (let’s call him O), who was in the midst of starting his own hedge fund. His speciality was in macroeconomics. Since then, I’ve had economics shoved down my face during every plane-ride, road-trip, after-sex pillow talk and dinner.
One night, of recently, we got to talking about Gold. Gold, being one of the oldest materials on Earth that was used as currency, became a constant subject of discourse. But tonight, the topic wasn’t just on how we could compare Gold to (x), it was a conversation about how O had gotten ahold of Gold data dating back to the 1200s. To which I said,
“Well, isn’t there anything older?”.
And so the thought came into my mind, “Well, what about theologists who are economists?”, so I started doing some biblical researching of my own (considering there was no Adam Smith standing around when Jesus was there).
Although, that’d be pretty great.
Anyways, let’s try to do this quickly, and I’m going to warn you it’s about to get super complicated, because there was a bunch of people telling different stories.
Precious metals (Gold, Silver, etc) were always considered really important. In fact, there is over 350 mentions/references to Gold in Strong’s Concordance (Essentially an Index to the Bible)
The number of references something has, is given a “Strong’s Number”, meaning the more it appears — the more important it is. In this way, Gold’s Strong Number is 350.
We can even see mentions of Gold dating back to Genesis, (Day 3 of God Creating Earth, or 6,000BCE for everyone else).
2:11The name of the first is the Pishon; it winds through the entire land of Havilah, where there is gold. The gold of that land is good; aromatic resin and onyx are also there.
Basically, God created Gold to be compared to the Earth’s rarest and most awesome commodity. Gold, thus, is then the most highly understood commodity in history. Both Silver and Gold functioned internationally as money — during the Seize of Israel (I Kings 20:3), The King of Syria sent messengers to Ahab announcing Syria’s sovereignty over Israel’s gold and silver. Payment was also made by the King of Syria to the King of Israel when he wanted the leprosy of Naaman, cured — meaning that these commodities were being traded for goods, services, and the conquering of city states.
But in order to better understand the trading of commodities, we need to try to figure out what weights were being traded for what, basically how buying/selling worked back then.
So it turns out, exact weight was not really important for any sort of dealings back then, because essentially “Scale and balance are emblems of the Lord’s own justice; no weight in the merchant’s wallet but is of divine fashioning” (Prov. 16:11), essentially saying that “Hey dude, we trust you, you’re Godly, you’ll give us the right amount”, which is the exact opposite of what most 18–25 year olds on Berkeley’s campus say.
And here’s where we get to currency debasement!
Essentially, when we did start weighing things out and creating a monetary system of trading these commodities (long before coins came about), you were given a weight in order to settle your debt. We can see this through the story of Abraham at Ephron, where he weighed out 400 shekels (fun fact, shekel is derived from the word sekel, which in Assyrian and Hebrew means the notion of counting and weighing) of silver to buy the field where his wife was buried.
This practice of weighing money rather than counting was basically still kicking everywhere (Palestine during Jesus’s days, as well as the Mediterranean).
This was mostly to determine, and here we go back to currency debasement, that the coins were true metal and they were not fake. Counterfeiting had to be punished, but yet, a lot of people were mixing cheap metals with silver/gold (especially during Isiah’s day). And long story short, basically everyone was warning everyone “Hey, don’t fraud other people, or else bad stuff is going to happen to you”, from Ezekiel to Isiah to the Book of Proverbs.
And so — what is currency debasement other than the oldest form of monetary inflation…which means that when Isiah, way back when, start talking about the debasement of silver and the debasement of wine, he really was talking about monetary inflation.
Which means, essentially, our first views of Inflation started around the time we were able to weigh and measure gold.
Monetary inflation is accompanied with a disastrous fall in the quality of goods, especially in the last stages of inflation.
So let’s create an example to show this:
So let’s say the economy has a supply of 10,000 Gold Ounces, and Counterfeiters pump in 2,000 “Ounces” more, which cannot be detected. What are the consequences?
Well essentially the counterfeiters get the biggest upside, they get to take in their new money and trade it for goods and services, and because local spending works step by step, as it spreads the bid prices up. This means that new money can only dilute the effectiveness of the dollar, however this dilution takes a lot of time. So, while the counterfeiters and their local ecosystems find that their income increases before any rises of prices, we find that people in remote areas who haven’t gotten the new money are finding their prices increasing before their incomes.
Retailers, in this end of the country, suffer losses because while the new money counterfeiters gain the most, they only gain at the expense of the receivers.
Essentially, this says that inflation is essentially a race to see who can get to the “newest” money the earliest. The latecomers, often the “fixed-income groups”, lag behind everyone else (the ones with the least amount of shekels).
With that being said, we can think back to inflation being directly tied to the price/weight of these commodities, or really just think about the thought example of how those who are in remote areas end up losing in areas of the economy in which they cannot fully participate.
So, I assume you’re wondering what the consequences then are to this monetary inflation created by our Biblical Counterfeiters, and how this Biblical example can example phenomena we’re seeing now… well, to give you a quick glance: The Answer is Debt.
Stay Tuned for Part 2: Biblical Bills (The Debt Owed to Jesus)