Americans just received an unwelcome crash course in the importance of sound money. Inflation surged in 2021, eventually reaching a 40-year high of nine percent in 2022. Small businesses saw costs rise faster than revenues, and workers saw prices rise faster than wages. We’ve learned the hard way why we must keep the dollar stable and predictable.
Sound money is a moral and theological issue. While the Bible doesn’t contain a worked-out macroeconomic theory, its teachings are absolutely relevant to monetary issues like inflation. We should take its prescriptions for sound money seriously.
Scripture’s Themes on Sound Money
In the world of the Old Testament, precious metals of particular weight and purity served as money. Greedy rulers and merchants profited by manipulating weights and measures. God through Moses condemned this practice: “You shall do no wrong in judgment, in measures of length or weight or quantity. You shall have just balances, just weights…” (Lev. 19:35-36). Justice in exchange is the bedrock of a fair society, which requires a consistent standard of value.
Injunctions against theft and dishonesty also apply to the monetary system. The Law commands, “You shall not steal; you shall not deal falsely; you shall not lie to one another.” (Lev. 19:11). Inflation is a kind of theft, because it is an illegitimate tax. Legitimate taxes are openly debated and democratically ratified, but inflation stealthily transfers wealth from citizens to the government. Likewise, undependable money is a form of dishonesty. We wouldn’t tolerate the government lying to us about sales or income taxes. We shouldn’t tolerate the government lying to us about the inflation tax, either.
These themes reappear throughout Scripture. The prophetic (e.g. Ezra 45:10) and wisdom literatures (e.g. Prov. 11:1) reiterate the Torah’s emphasis on just weights and measures. Jesus’ teaching that “the worker is worthy of his wages” (Luke 10:7) and James’ condemnation of “wages…kept back by fraud” (Jas. 5:4) have clear implications for the monetary system. Stable currency upholds workers’ economic rights. Easily manipulable currency enables unscrupulous politicians and bureaucrats to seize the fruits of others’ labor.
Reforming Monetary Policy is Possible
No monetary system in American history has reflected the Bible’s sound money principles. Before the creation of the Federal Reserve, the country went through several different commodity money systems and banking regimes. Financial turmoil was common because misguided state and national laws impaired sound money rather than promoted it.
The Fed was created in 1913 to escape the cycle of crises. But instead of bringing stability, the bizarre hybrid of gold and paper money created more problems than it solved. Politicians and bureaucrats couldn’t resist the temptation to tinker with “length or weight or quantity,” unleashing a long series of dollar depreciations that continues to this day.
It doesn’t have to be this way. Reforms of our monetary system that reflect biblical wisdom and macroeconomic best practices are possible. We don’t have to go back to gold. Nor do we need to embrace quirky new technologies like Bitcoin or stablecoins. Instead, we should change how the Fed works to ensure that monetary policy is predictable in terms of the dollar’s purchasing power and generally in terms of its distributional effects.
Dollar predictability is crucial. Inflation is a nuisance, but so long as the public knows it’s coming, it’s a fairly small one. What really hurts is unpredictable inflation, caused by faster-than-anticipated money printing. This is how central bankers undermine weights and measures and deprive workers of their wages. It’s also how the government maximizes the revenue from the inflation tax.
We should also consider the least among us (cf. Matt. 25:40) when implementing monetary policy. Wall Street likes it when the Fed prints money and spends it on securities. But Main Street bears the cost, because workers’ wages typically lag the resulting inflation. Generality in monetary policy means adhering as closely to distributional neutrality as possible. Whatever the government’s legitimate interest is in managing the monetary system, it’s monstrous to force small business owners and factory workers to pay for financial executives’ bonuses or the Fed’s exorbitant building renovations.
The Bible does not endorse a specific monetary system. But it does contain principles for sound money, applicable to all systems. Our own system falls woefully short. Americans of faith should demand reforms that respect biblical norms. Even non-believers can join in, for surely they are just as tired of the endless cycles of boom and bust. A stable and just economy benefits the believer and non-believer alike, but depends on the moral foundation of sound money.
Editor’s note: This article was first published in a special report by the Institute for Faith, Work & Economics and The Washington Times entitled, “Faith at Work: Economic Flourishing and Securing Our Future.” Reprinted with permission.
