Journal: Grace Theological Journal
Volume: GTJ 03:1 (Spring 1982)
Article: The Ethics of Inflation: A Biblical Critique of the Causes and Consequences
Author: William J. Larkin, Jr.

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GTJ 3:1 (Spr 82) p. 89

The Ethics of Inflation:
A Biblical Critique
of the Causes and Consequences

William J. Larkin, Jr.

Inflation is the creation of excess purchasing media or credit beyond that which represents the wealth, the production of goods and services, of a country. It violates the biblical commands to have just weights and not steal. Its immoral consequences are the oppression of the poor, especially the elderly; the promotion of sloth and covetousness; and the destabilization of society.

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Introduction

Inflation has become a main feature of most national economies around the world. Aside from the notable exceptions of Switzerland (1.3%) and West Germany (4%), most inflation rates during the mid and late 1970s hovered near the double digit mark.1 For the past ten years the cumulative rate of inflation has been 112.9% in the U.S.A. In order to maintain the same after-tax disposable income, with the same buying power, a person who earned $7,500 in 1970 would have to receive $16,188 today. If inflation continues at the same rate for the next decade, that person would have to be earning $39,188 in 1990 to be as well off as he was with $7,500 in 1970.2 In fact, if the performance of personal income growth over the past decade is any indication, the U.S. wage earner will be able neither to maintain the size of his after-tax income nor its buying power after the effects of inflation. Tax Foundation research has discovered that for the typical family of four the median income has increased from

This paper was originally given at the 1980 annual meeting of the Evangelical Theological Society and reflects the economic conditions of that time.

GTJ 3:1 (Spr 82) p. 90

$9,750 in 1970 to $19,950 this year, i.e., 105%. Taxes rose at a faster pace, so that after-tax income only grew from $8,412 ten years ago to $16,999 today, i.e., 99%. When the present median after-tax income is adjusted for inflation and represented in 1970 dollars, it is $7,976. This means that, even though today the head of the household is earning 105% more dollars than in 1970, the typical family of four is actually less well off by $436 (1970 dollars).3 Most persons react to such facts and figures with the sentiment expressed by a housewife on a recent TV commercial, “I’m no longer trying to beat inflation. I’d settle for a tie.”

What causes inflation? Is it a combination of impersonal forces in the present national and world economic systems over which individuals have no control? Or, is inflation the result of the decisions of individuals in a po...

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