The Briefing, Albert Mohler

Wednesday, December 15, 2021

It’s Wednesday, December 15th, 2021.

I’m Albert Mohler, and this is The Briefing, a daily analysis of news and events from a Christian worldview.


Part I

‘A Dollar Does Not Buy What It Used To’: A Christian Worldview Analysis of Inflation and its Effects

We often refer to certain disciplines as the human sciences. That is to say, they are given the status of a science that is an area of knowledge, but they have to do with human behavior. One of the most important of the human sciences is economics.

And there are few disciplines of human knowledge that are so inherently theological without being called theology, but then again, theology helps to explain how the modern discipline, the modern science of economics came about, because it emerged from a conversation about the morality of commodities when it comes to their availability in society, which is to say, what is a just system of handling, distributing? What is a just understanding of money and of value?

A surprising percentage of the originators of the discipline of economics were actually pastors and theologians, including those who formed the modern academic guilds of economics. All that to say, when we’re talking about economics, we are talking about the center of the bullseye. When it comes to the Christian worldview, we’re talking about things that matter and things that matter to human beings every day.

Let’s just define an economy. What is an economy? It is a system of human interaction in which certain goods are traded for certain other goods. Now, that’s just a simplest explanation. Adam Smith, the most foundational thinker of modern economics, defined an economy as what happens when one human being comes to the conclusion that he cannot meet all of his own needs economically.

Now that may come down to this, I may need a hole dug on my property, but it’s actually beyond my ability or I don’t have the tools, so I hire someone to do it. That is to say, I prize that person’s labor in this job more than I do my time and my own labor, so I will pay him a premium in order to dig this hole. That’s the beginning of an economy. You have people who are better at baking bread, people who are better at artistry, people who will make transactions out of real estate. People value A more than B and the transaction is an economy.

Now, the goods that are defined in the trading of goods are not just material objects. They are also labor. They are ideas, intellectual content, artistry. All these things are exchanged. One person wants to hear an orchestra, another one wants to play. The person wanting to hear pays the person wanting to play. That’s basically how an economy works. And in reality, it’s a part of God’s plan because God’s plan was never that human beings be entirely self-sufficient.

We’re just not self-sufficient. It takes a community. It takes an economy. And this is a part of God’s intention in creating us in His image as male and female, ordering us to be fruitful and multiply and fill the earth, and then blessing the organization of human beings into different groupings that are basically defined politically, ethnically in some cases, but overwhelmingly economically. Where you find an economy, you find a community.

Well, you say, “All that’s very interesting, but why are we to talking about that today?” It is because these days, economic news makes the headlines almost every day with one word that hasn’t been heard in a long time, but is being heard constantly now. And that word is inflation. We have discussed inflation in the past, just in general terms, but today we’re going to be taking a closer Christian worldview look at some of the headlines and just try to understand what’s going on here.

When it comes to inflation, the bottom line is that prices are going up and thus, the value of currency is going down. You could put it just another way, a dollar doesn’t buy what it used to. Now, some level of inflation, usually known as the general rate of inflation, is just built into a model of economic growth, but that’s over a long period of time, a relatively low level of inflation.

You’re not panicked to find out that what cost $10 60 years ago cost $50 now, because the reality is that income has also risen commensurately or in most cases to a greater degree than the cost of those prices over that length of time. Just to put it another way, the standard of living has gone up remarkably, so you’re not panicked about that inflation. No, the inflation that really causes problems is the kind of inflation that spikes and then most dangerously spikes and keeps going and doesn’t go away.

Many listeners are old enough to remember the Great Inflation, as it was known, that stretched from the 1960s to the 1980s. And Gerard Baker, writing for The Wall Street Journal, reminds us that that Great Inflation “eventually proved transitory, but in its time, it eviscerated the value of savings and investments, contributed to the failure of at least three presidencies, produced unprecedented economic misery and stagnant growth and fed a widespread belief of an imminent failure of American capitalism.”

Those are not small problems. You are looking at a crisis that brought into question the entire economic system. Now, we’re not there yet. And even as in inflation has risen its head, and even as the inflation rate has reached levels that just about no one had predicted, and even though it’s not going away anytime soon, at least at this point, we’re not looking at anything like the stagflation and the Great Inflation of the 1960s to the 1980s.

Stagflation was that Great Inflation that lasted for years and combined inflation, which meant that the value of the dollar went down at the very same time that unemployment rates went up, a very deadly combination. But as we think about this, we need to understand that economics began as a moral discipline. And it’s always inherently moral because the question is, how is it right that an economy should be ordered in order to encourage human flourishing to preserve human goods?

And that is to say, you have a family. It has a house. It has a savings account. And you have retirement accounts that are involved and all the rest. You have a certain level of financial investment and the anticipation of a certain level of financial security, but inflation takes all of that away. If you have $50,000 in a bank account, but it’s worth only something like say, $30,000 by the time you have to use it, then you have just lost $20,000. And that can really threaten any family’s economic security.

When you look at the value of a home or you look at any number of other issues, you are just looking at the fact that inflation is a great thief, and it’s a thief that destroys wealth. And this wealth doesn’t just mean people who you would define as wealthy. It means the everyday wealth that comes down to savings accounts and retirement accounts and the everyday budget, the every week budget of the American family having to buy stuff.

And this is where most Americans are now all of a sudden alerted to the fact that prices are going up because the stuff is more expensive, very interesting coverage of this. For instance, The New York Times ran two side by side articles, one of them on pizza. And the headline in this one, the article by Jeanna Smialek is this, “Pizza that weeks ago was 99 cents a slice is now $1.50. That has Washington worried.”

Now, you would think that the price of pizza in a single restaurant in Brooklyn wouldn’t be a threat to the American economy or to the Biden presidency, but it turns out that Americans really do care about prices. Even if they don’t understand how the economy works, they understand the difference between a dollar and $1.50 for a slice of pizza. And they are looking with worry at the American economy now.

The article that accompanied that one is by a team of reporters having to do with the fact that Generation Y and Generation Z are now “facing a steep rise in prices for the first time in memory.” So older Americans can remember the threat of the Great Inflation. And they can remember the time in which the economy simply didn’t appear to be growing very much at all, and when personal savings was devalued, and when a dollar just actually didn’t buy what a dollar used to buy, but many younger Americans remember no such time, because for a remarkable span of years, especially the opening years of the 21st century, inflation has been very low. Why?

Well, for one thing, government leaders in the 1980s understood that inflation was a threat to Western civilization and they decided to put an end to it. The Federal Reserve Bank under then fed president, Paul Volcker, constricted the money supply. And that meant he tried to choke inflation rather than to flush the economy with more cash that would devalue every individual dollar.

At the same time, you had the revving up of the economy in the 1980s, a revving up that continued well into the 21st century. And thus, you had a strong economy with very low inflation. You had low interest rates that goes with the low inflation, and you had the ability of many Americans simply to rely upon the fact that a piece of pizza that cost 99 cents this week is likely to cost 99 cents next week. And if it costs more next year, it’s probably going to be $1.05, not $1.50.

Now, those younger Americans identified here as Generation Y and Generation Z, they’ve just assumed that a dollar is worth a dollar. And it appears that a dollar just doesn’t buy what it used to, whether you’re talking about a slice of pizza in Brooklyn, or you’re talking about avocado toast in Berkeley.

Part II

How Did Money Come to Be? The Necessity of Trust in the Function of Currency

But that for fun then just takes us into a very different question. And this is really a question that Christians have struggled with and Christians have contributed to. What is money in the first place? How exactly does money emerge and what is it worth?

Well, you reach into your wallet, if you have a wallet, you pull out a dollar bill. If you have a dollar bill and you look at it and say, “How much is it worth?” It is worth one United States dollar. Well, how much is that worth? Well it’s worth whatever someone will tell you it’s worth, if you try to use it in a transaction.

Just a matter of days ago, the guy who owns that pizza parlor in Brooklyn recognized a dollar as being worth one of his slices of pizza, but he doesn’t believe that anymore. Now you got to give him $2 and he’ll give you back 50 cents. That’s a remarkable rise in prices. And that means that you now have to have 50 cents more than you did just a matter of days ago. But that’s not a stable way to understand the value of money.

A father doesn’t turn to his child and say, “Look at that dollar bill. That’s worth a slice of pizza.” No, he says, “It’s worth a dollar.” What does that mean? Well, it means something. It means something that others agree upon its meaning, or it doesn’t mean anything. In other words, when you’re looking at currency, when you’re looking at money, you have to explain how money ever came to be. And that’s an interesting tale.

Adam Smith was right, an economy begins when one human being needs something from another. Some transaction takes place, but you don’t need money for that. You can trade off a goat. You can trade off a sweater. You can trade off time. You can promise to do something in the future. So long as there are just two people involved, you don’t need money. Money emerges with the arrival of a third party.

Money emerges in human civilization when I need something you have, I pay you money for that because you’re going to turn around and use it to buy something from a third party. That third party is not going to count on my promise of four hours of labor at some point in the future. No, that third party wants something he can put in his hands, something he can put in the bank. And that develops over time as money. So just to keep the story of human civilization straight, so long as you have two people, you don’t need money, but when the third person shows up in an independent transaction, you need money. But how much is that money worth?

Well, you might say that you will make money out of precious metals. And many people just think this settles the issue. We will make money out of precious metals. We will take coins, we will smelt those coins, we will mint those coins and we will put a value on it. And throughout human history, going back to ancient civilizations, you can find coins. Even before coins, you can find something like stone tokens that were supposed to be used as currency, but you can understand why people like holding gold in their hands, or silver, even copper. When it comes classically to the American penny, you look at that and say, “Well, there’s some inherent value there.” But wait just a minute, there’s only inherent value if people think there’s value in it.

That’s to ask another question. Why is gold considered a precious metal? Why is it precious? Well, it’s because the supply is low and the demand is great, but why? It’s because people like to look at it. They like to wear it. But there’s actually no inherent value in gold. It’s a social value. We all agree that we would like to have more of it and that it’s attractive to wear, and it looks good on gold plating. Gold, we like. It’s a communal like, unless there’s value in it, but you can’t keep yourself warm by it. You can’t live in it and you can’t eat it. It’s value is social.

So that is to say, as much as you might say an economy based in gold is based in an objective value, gold is also a commodity that is marketed and its value turns out also to be social, which comes down to another point, a point made brilliantly years ago by University of Florida law professor, Neil H. Buchanan, as he argues, monetary value is entirely a matter of trust.

So how much is a dollar worth, a United States dollar? It is worth a dollar. Says who? Says the United States of America with the faith and credit of the United States behind the value of that dollar. But the dollar is not the only currency. There are other currencies. There is the British pound. In Europe, you have the Euro. You’ve got all kinds of currencies all over the world. And those currencies go up and down relatively on the basis of the strength of the currency and the strength of the general economy. And that’s why you look at exchange rates.

Just to use an example, you look at the difference in the value of the American dollar in the Canadian dollar. What’s the difference in that value? It changes day by day. You better check the exchange rate before you make that purchase in person or online.

Professor Buchanan, writing back in 2013, tells us, “A monetary system simply cannot work if people do not collectively take a leap of faith. We accept currency or precious metals, which have no inherent use value for everyday purposes, because we think that other people will accept them in turn. This group delusion,” he says, “allows us to say that money is money. If the delusion starts to fall apart, then there are very real, very negative effects.”

Now, just to give you an example, I have, I own, I have in my own library in a locked case, a bill that represents one million German marks, one million German marks. I am a German mark millionaire, if you go back to the currency of the 1930s issued by the German Weimar Republic and if you look at that currency. Basically meaning, that by the time that one million marks bill was printed, it might not buy a loaf of bread on the streets of Berlin.

And by the way, that shows you one of the dangers of what is called hyperinflation, an inflation in which the currency becomes so devalued that it’s basically worth nothing. People can’t buy anything. They can’t feed their children. They can’t maintain their property. All that becomes a matter of social panic. And much of that was the historic background that brought the Nazis to power. It gave the opportunity for the Nazis and their fascist plan to take control of Germany simply because of the power vacuum that had emerged from the loss of credibility by the government in the face of that hyperinflation.

Now don’t worry, that’s not the great danger here in the United States, certainly not at this point. We’re looking at inflation from which we can recover, but the question is when will we recover? But that takes us back to the issue of money itself. And that takes us to other new dimensions in which there are new alternatives to the American dollar, to American currency.

Professor Buchanan was absolutely right, money is a matter of trust. It only works if people trust that it’s going to be worth tomorrow what it’s worth today, or at least relevant relatively so. And you have to have that kind of confidence. But he says, “That’s also a mass delusion.” By the way, that delusion is magnified now by the fact that most money that is in currency these days really has virtually no inherent value. Even old gold coins had some kind of inherent value, because after all, they’re made out of gold. That’s at least a more lasting value than paper currency. But even as you’re looking at coins today, they may look gold, they may look silver, they may look like copper, but don’t think there’s too much value of precious metals in them, if any at all.

Furthermore, as World War II was coming to an end, an international conference of the Western allies was held in Bretton Woods, New Hampshire to come up with an agreement that produced the modern monetary system as we know it. And that included, the eventual creation of central banks and the Western democracies, and that includes the Federal Reserve Bank in the United States.

And then in the 1970s, under the presidency of Richard Nixon, the United States left the gold standard entirely. It used to be that the number of dollar bills, the number of dollars circulated by the United States through the Federal Reserve Bank had to be backed up with a commensurate amount of gold, very famously held very close to the spot from which I’m speaking to you right now.

I’m in Louisville, Kentucky. You have heard of Fort Knox. And Fort Knox was the great gold repository of the United States. It still is, but the United States government really hasn’t claimed, for about 50 years, that that gold is backing up every single American dollar. So what is backing it up? Trust and the full faith and credit of the United States of America.

Now you’re probably right now saying, “Well, I’m willing to extend that trust,” but just recognize that is a trust. And as Professor Buchanan points out, “It is a mass delusion.” Now, there’s no real alternative. You might say, “Well, look at real estate. I don’t trust currency, so I’m going to buy land.” Well, generally over time, that’s a pretty good investment, except for the fact that land doesn’t have an inherent value. How much is real estate worth? The answer is however much someone is willing to pay you for it.

There’s just no getting around the fact that an economy is a social reality. And that God made us as social creatures and we had to do business with one another, and to some degree, we have to trust one another. And the stability of currency is pretty important to building that trust. But then you have to mix in some very new developments, one of them is the cashless society.

Many Americans and others around the world actually don’t carry much cash because everything’s done with credit cards or these days with a chip that you basically tap to an appliance that communicates the transaction. And there is a decreasing circulation of American printed currency in the United States. So much so that The New York Times recently reported, Peter Coy was writing, he tells us that there are now more American dollars, that is to say more American paper money, circulating outside the United States than inside the United States.

And if that’s not surprising enough, here’s an even more surprising fact, there are currently more $100 bills, United States dollars, $100 bills in circulation than one dollar bills. Why? Well, there’s a lot of reason for that. For one thing, wealth begins to build up. It’s not really worth stacking up too many one dollar bills. $100 bills matter a whole lot more. But there’s something else. Much of what drives the international economy is the necessary anonymity of crime. And crime loves paper currency, because it’s very difficult to trace, it is easy to hand off. And for that matter, everyone has seen movies where the criminal loves to count the cash. It turns out, they still do. And they like $100 bills, non-sequential please.

The arrival of Bitcoin and other forms of currency raised the question as to whether the United States dollar will continue its international dominance. Well, time will tell. But the reality is that every form of currency, whether it’s Bitcoin or the American dollar, or as Jesus pointed out, a Roman coin with Caesar’s image on it, its value is whatever is socially determined by a certain level of social trust at any given time. Whether your Caesar or Bitcoin, those same rules pertain.

In a very real sense, the development of the economy, the emergence of currency, all these issues, just point out what it meant when God gave to human beings the responsibility to take dominion, to form society, to make things. And the modern economy, as well as modern politics, the modern neighborhood, all of that emerges from all of that human endeavor, and to the degree that it is done according to God’s plan, it brings God glory. But of course, on the other hand, in a fallen world, the economy shows every form of human sinfulness and every form of human confusion.

Part III

Dollar Tree is Raising Its Price to $1.25 Turns Out to Be a Metaphor for the Modern Economy

But finally, in our conversation about the Christian worldview and matters of current economic interest and just reminding ourselves how an economy emerged, how currency was developed, I want to take us back to Dollar Tree and the announcement that was made just back in November. That Dollar Tree is going to be raising its prices for its items from $1 to $1.25, not exactly the price rate of that slice of pizza in Brooklyn, but frankly, pretty close. There were some who immediately said, “Well, that’s going to be a disaster for Dollar Tree because Dollar Tree isn’t going to sound very honest when it’s $1.25, and renaming the corporation The Dollar 25 Tree probably isn’t a winning formula either.”

But it’s very interesting that Willy Shih a professor of business and former corporate executive, he teaches at the Harvard Business School, points out that the big issue there for Dollar Tree wasn’t so much the cost of the stuff, but the cost of packaging the stuff and transporting the stuff and charging you for the stuff in the store. The human cost turns out to be the biggest escalating factor. And he points to the fact that if the price just stayed at 99 cents, the problem is there would be fewer and fewer items Dollar Tree could actually offer in its stores for its customers. There just won’t be that many items that can be profitably sold for 99 cents, even with a very small profit margin.

He points to the blister packs of modern medicines. You can buy pills in so many of these stores. And yet, you had a blister pack that a few years ago may have had six pills and then four pills and now two pills for 99 cents. He pointed out one brand name medication that’s just over the counter, and he said, “You could walk in the store as of November and you could find a pack with two of those pills for 99 cents. But as the cost of packaging and transporting and transacting those pills goes up, at 99 cents, soon, the blister pack that had been six, then four, then two is going to be one. And it’s going to be really hard to sell one aspirin.”

Professor Shih points out that by raising the price to $1.25, what Dollar Tree did more than anything else was to increase the number of products it could actually put in its store and stay in business. Will it work or not? Who knows? But all this just reminds us that what happens in an economy, that trust between the consumer and the seller, one person and another, one community, even a vast international economy now, what happens in one place thousands of miles away can affect whether there’s one pill or two pills or no pills available for 99 cents on the store shelf.

But one last thought here, every economic problem also presents for someone an economic opportunity. And so we’re rightly concerned. Americans are concerned about the thief of inflation, but it just might be that in this very context, there is someone who comes up with an innovation that fundamentally changes the economy for the better. We have to hope so.

Thanks for listening to The Briefing.

For more information, go to my website at You can follow me on Twitter by going to For information on The Southern Baptist Theological Seminary, go to For information on Boyce College, just go to, where we keep the prices very, very low.

I’ll meet you again tomorrow on The Briefing.

R. Albert Mohler, Jr.

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