The Bible describes two types of knowledge or truth: General Revelation and Specific Revelation. General Revelation are the observable truths that can be noted by anyone and everyone from observing the world around us. All truth is God’s truth and can be studied and observed in the physical sciences, psychological studies, the wonders of astronomy, the complexity of physics, and the laws of economics. These economic realities are observable, repeatable, and verifiable by evidence. Specific Revelation is the truth revealed by Divine intervention through the Scriptures. The Bible constantly gives us specific laws and truths about how money works as well. Therefore when we speak of Godonomics, we are looking for economic principles from both the observable world and the revealed Scriptures. When both are interpreted and understood correctly, they will testify to the same thing.
China raised interest rates at the end of December by 1/4 a point. This is still far below their inflation rate, so it will not solve the economic storm brewing in the East. Why? Well, when a country increases their interest rates, that means investors get more “return” (Interest) by investing in that country rather than investing in a different country. Since America’s interest rates are not going up (YET!) -the US offers less “bang for the buck” channeling money to China. Therefore, money begins to “flow” into the country of those buying Chinese dollars. The Chinese government is now forced to print more money to keep up with the increased demand…resulting in more inflation, the very thing they were trying to stop by raising interest rates.
If you listen to economists today, they will assure us that this kind of common sense explanation is too simplistic. They will assure us that their complicated charts and sophisticated degrees somehow override the realities of common sense. Many today are even saying that with rising commodity prices (corn, soy beans had a contract high… copper, cattle, and oil are headed toward $100), business won’t pass those prices on to the consumer since wages are not going up. What a silly premise. Since we are talking about the Chinese, let’s open up a Wonton Soup Stand (after all, everyone makes lemonade).
After coming up with an idea, the business begins with: Step 1) Buy supplies. You go out and buy some pork, some pasta, some bowls, and some green floaty things. Step 2) Price your wanton soup so you make more than it cost you to produce. So the supplies cost you $0.50 per bowl, but you sell it for $1.50 a bowl to make a profit and money for supplies and your employees’ salaries. There are many factors determining your success. The primary question is, “What will the consumer pay for your bowl of soup?” If the consumer will not pay $1.50 for your soup, then you need to cut the costs of your supplies and wages to stay in business. So if the prices go up for pork, corn, and soy beans on Wall Street, then what!? Well, now, you go to Sam’s Club to buy your soup supplies, and they’ve gone up on you as well. You then need to increase the cost of your soup in order to stay in business. If you can’t sell your soup for more, you must cut costs. You lay off staff, dilute the soup, take out an ingredient, etc. Bottom line, you pass on the price increase through either higher prices or decrease the quality. The business must go out of business, or raise prices. When commodities (like food) cost more, everything costs more, and everyone in a society is hurt. Remember what happened in Egypt?
Genesis 41:46 Joseph was thirty years old when he entered the service of Pharaoh king of Egypt. And Joseph went out from Pharaoh’s presence and traveled throughout Egypt. 47 During the seven years of abundance the land produced plentifully. 48 Joseph collected all the food produced in those seven years of abundance in Egypt and stored it in the cities. In each city he put the food grown in the fields surrounding it. 49 Joseph stored up huge quantities of grain, like the sand of the sea; it was so much that he stopped keeping records because it was beyond measure.
Joseph bought the food cheaply when prices were low and in high supply. But a few years later, the forces flipped.
53 The seven years of abundance in Egypt came to an end, 54 and the seven years of famine began, just as Joseph had said. There was famine in all the other lands, but in the whole land of Egypt there was food. 55 When all Egypt began to feel the famine, the people cried to Pharaoh for food. Then Pharaoh told all the Egyptians, “Go to Joseph and do what he tells you.”
56 When the famine had spread over the whole country, Joseph opened all the storehouses and sold grain to the Egyptians, for the famine was severe throughout Egypt. 57 And all the world came to Egypt to buy grain from Joseph, because the famine was severe everywhere.
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