... and he that earns wages, earns wages to be put in a bag with holes (Haggai 1:6).
CHANCES are you received a raise fairly recently, but found that the extra money went no farther than did your previous salary. There is a reason for this. If a man gains a six percent raise, inflation eats up this raise in less than one year's time; and with the possible elevation to a higher tax bracket, his buying power could actually be LESS. Was this the "bag with holes" spoken of by the prophet Haggai in the sixth century B.C.? Inflation is now a worldwide crisis. The U. S. coin is clipped by about 6.2% a year, and, by exporting this inflation, the United States is bequeathing the world similar rates: 10% in Britain, 8% in Japan, 6% in Germany, etc. Inflation has had various definitions, but probably the simplest one is "too much money chasing too few goods." Wage increases have far outstripped rises in productivity, so "printing-press" money abounds, while output of goods stagnates. In the United States, for instance, wages climbed seven percent in 1963; but output per man-hour actually declined one percent. Since 1958, wages have skyrocketed 80% and output per man-hour less than 40%. European wage demands are even greater. Wages more than doubled in the 1960's in France and Germany. In Britain, demands for a 50% wage hike over just three years are not uncommon. Every English industry and service, including the Government service, seems to be hit by the strike "plague." Lord Stokes, chairman of British Leyland, Britain's largest car manufacturer, had to report in August 1970 that pretax profits of the Group in the first half year had fallen from E19.3 million to 21.1 million. One reason for the failure of business to improve he said, "was the continual anarchy in the Motor Industry." He added that to keep their factories going, they have been building cars without tires, glass, wipers, or starter motors, storing them as much as possible under cover, and later fitting in the missing components (missing due to strikes at the component factories). Other reasons for "too much money chasing too few goods" include the increasing social benefits given to people who "voluntarily" remain unemployed or who, because they need help and have no family to turn to, must be supported by public funds. Such spending increases by about 12 billion each year — in America alone! Today, in most countries, interest rates are at or near record levels — and this too is widely interpreted as the result of inflation. In the U. S., both the prime interest rate and corporate bond interest rates are at records which have not been approached since the 1920's, just prior to the Great Depression. Money supply has increased an average of seven percent annually over the last three years. And increasing money supply also contributes to the cheapening of your money's value. By the simple law of supply and demand, an excessive amount of money in circulation decreases the amount of goods and services that you can purchase with your salary. And now with the long-term rate of inflation accelerating from a "liveable" three percent per year or so, workers and unions have become more sophisticated by trying to anticipate inflation in their demands by demanding even higher salaries. And these higher salaries turn right around and increase inflation. So the "which came first: the chicken or the egg?" argument clearly applies. Which came first, inflation or wage demands? Which feeds off which? A great deal of study has gone into the matter of the relationship between wages and inflation. The general conclusion is that if the economy is run at a relatively high level of unemployment, pay increases will be restrained within acceptable bounds. The catch is that this unemployment level, though nobody knows what it is, is too high to be accepted! Linking raises in pay to gains in national productivity seems to most people to be the best permanent solution. But this will not work unless production is moving ahead rapidly, and that will not happen when the authorities are trying to restrain demand to control inflation all the while yielding to increased salary demands. So the problems continue with no solutions in sight. One solution, regarding people who refuse to work, is given clearly by Paul in II Thes. 3:10: "For even when we were with you, this we commanded you, that if any would not work, neither should he eat." Western nations cannot learn to "live with" inflation. It robs people who live on fixed incomes (such as pensions). It robs those long-term savings accounts and bonds which earn less than six percent annually. It causes a "spend now, don't save" attitude, which in turn spirals the inflation higher. History shows that when inflation passes a certain point, it becomes "runaway" such as in Germany and many other countries after the two World Wars. In Germany, million mark notes became literally worth less than a pfennig. What the prophet Haggai said is true! Our money has holes in it (the original Hebrew signifies "pierced or bored through") — clipped of its value! What can you do to hedge against inflation? Some say to invest in the metals which back the currency — silver and gold. But God says men will soon throw their idols of silver and gold to the moles and the bats (Isaiah 2 :20). Remember, you can't eat gold. It won't clothe or shelter you. It is only as valuable as people's confidence in it is maintained. Investment letters abound, telling you exactly where to place your "printing-press" money so it will gain more money for you instead of progressively losing more of its worth. Stocks, bonds, real estate, paintings, stamps, commodities, foreign currencies, and even old magazines are the varied suggestions. God warns us very sternly not to put our trust and confidence in physical representations of wealth that we have laid up where "moth and rust" — and He might well have added "inflation and collapse of an economy" — corrupt, but to make for ourselves treasures in heaven (Matthew 6:19-21). This world's way is to demand more but produce less, to get something for nothing by a lucky "investment," to build a "firm family financial foundation" out of "securities" — stocks, bonds, and other paper — which is no security at all. If a man gain the whole world and lose his life what has he got? (Matt. 16:26.) If you want to apply financial laws which fill those "holes" in your "money bags," write for two free booklets we offer, Managing Your Personal Finances and Ending Your Financial Worries.