Inflation Produces Hard Work
Inflation promotes hard work. Contrary to what you may think, looking at my Protestant bona fides, that’s not a good thing. Inflation promotes hard work, but it promotes a vicious perversion of hard work.1
The chain of cause and effect starts with understanding what inflation actually is. In sum, it is the situation where the supply of money outpaces the supply of value.2 More money enters circulation than backing value. As a result, prices rise numerically, though the value of the money given remains technically the same (in our idealized world, where other factors don’t complicate the assessment). The amount of money grows, the amount of value doesn’t, and so the money, which represents value, now has less value-per-unit, as the same amount of value has to be spread across more units of money.
In the idealized world of pure numbers, this process happens the moment a new dollar is printed or denominated. In the actual world, the money printed out by the government goes to some purpose or other and works its way out through the economy. It makes somebody richer, as they have __ dollars extra, but initially nobody else feels the impact; the value supply has apparently increased, because everybody assumes the new dollars have the same value as all the rest (which, yes, they do- but the whole dollar has been devalued incrementally to make up their value). Then, as the money is spent and as people adjust for its presence in the economy, the mirage-value disappears; the new dollars still have the same value as the rest, but each dollar is worth less.
Regardless, even after the initial mirage of value dissipates (which it can do quite quickly, in part due to parts of the market adjusting not only to the actual dollars but to expectation of them), a wealth transfer has taken place. This is seen if we simplify the scenario to two people: A, with $1000, and B, with $1000. There are $2000 present for X amount of value, in total. Then A receives $500 of fresh currency, without any value being added to the pool. Now A has $1500 and B $1000. B never lost money, per se, but A has 60% of the wealth, not 50%, and B has 40%, not 50%. The value, after all, never changed.
Yet inflation without end is an obviously ruinous policy, and even Keynes wasn’t planning on diluting the money supply to nothing. The one factor which can support inflation for a time is a constant economic growth. If the economy can grow its actual value to match the money supply’s growth, inflation can be stalled. If the economy ever slows, without commensurate slowing of inflation (which, because inflation tends to be addictive to governments and societies, is unlikely), the disease progresses. Worse, because the currency manufacturers are significantly responsible for directing where new money goes, the new value produced ends up with those who have the new money, not with the new value producers, a disjointing which drives the economy towards dysfunction and stalling and breakage.
This whole structure gives the individual (provided he’s not the one receiving inflationary largesse from the money-supplier) two incentives to work continually, lest he fall behind. On the one hand, he must deal with the fact that what he has, in savings and capital, is being perpetually lessened by the inflationary process. Capital in the from of business or employment is more resistant, but the more value is wicked out of his and his customer’s pockets, the less value they can spend on goods or services. Moreover, the things the man wants to buy, necessities and pleasures and aids and more capital, all grow more expensive, in a situation where saving to buy makes money wither. You either grow your money to match inflation or you get factually poorer. This is the meaning of US bond rates, in a way: they represent a theoretically certain amount of growth, any less than which is actually shrinkage.
On the other hand, the individual has the societal pressure to grow because that is the only way to stave off the inflationary doom (and hyperinflation) is to produce more and more, to swell value. This pressure, more societal than individual, nevertheless weighs on the whole, as when the whole slips from this, everybody suffers (except, for a time, those receiving the new money).
So you must work, work, work. Inflation puts men on a treadmill, running to stay still. This treadmill teaches us to never truly rest, to never truly “seek first the Kingdom,” to “be anxious about tomorrow” (Matt. 6:33,34). Either that, or it incentivizes participation in the soporific of benefiting from inflation, becoming lazy rather than frantic, with the same hellish result.
The hard work inflation produces is a rat-race desperation, a state of anxiety discordant with Christian peace. A Christian economy does not inflate its currency. It does not do this governmentally, and it does not do it by private lending (much of the dollar’s inflation is driven by banks denominating debt (and lending) in dollars, effectively printing them out of nowhere). The Christian economy recognizes the sanctity of the property given to a man to steward. The result is a society in which men can safely rest, knowing that if they put down their tools for a day, they will be able to pick up a the same place tomorrow.
