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Mis-Inflation: The Truth about Inflation, Pricing, and the Creation of Wealth
Everyone’s talking about inflation, and everyone seems remarkably misinformed.
In this conversational book, Douglas Wilson takes all his burning economic questions and pitches them to David L. Bahnsen. Doug starts their discussion with this one: Conservatives have been prophesying hyperinflation for generations now… so where is it?
Readers get to follow along as David’s answer to this question exposes false assumptions on both the right and the left (yes, even some of Doug’s). More questions follow: The inflation-hawk approach to public policy screams about creating inflation without realizing that that’s what government policies intend to do—they’re just terrible at it, as David shows. And those on the left continue to suffocate economic growth as they pursue their own counterproductive goals. But what both sides miss is that the best solution against inflation, deflation, and stagnation is found in enterprise. And it’s in their discussion of wealth creation that Doug and David begin to sketch a vision of how a faithful, successful nation might handle its people and their money. No, it’s not by putting gold coins in a sock or nosediving into bitcoin. Get the book to join the conversation.
In this conversational book, Douglas Wilson takes all his burning economic questions and pitches them to David L. Bahnsen. Doug starts their discussion with this one: Conservatives have been prophesying hyperinflation for generations now… so where is it?
Readers get to follow along as David’s answer to this question exposes false assumptions on both the right and the left (yes, even some of Doug’s). More questions follow: The inflation-hawk approach to public policy screams about creating inflation without realizing that that’s what government policies intend to do—they’re just terrible at it, as David shows. And those on the left continue to suffocate economic growth as they pursue their own counterproductive goals. But what both sides miss is that the best solution against inflation, deflation, and stagnation is found in enterprise. And it’s in their discussion of wealth creation that Doug and David begin to sketch a vision of how a faithful, successful nation might handle its people and their money. No, it’s not by putting gold coins in a sock or nosediving into bitcoin. Get the book to join the conversation.
117 pages, Paperback
First published January 1, 2022
56 people are currently reading
333 people want to read
About the author
David L. Bahnsen
10 books65 followersDavid L. Bahnsen, CFP®, CIMA® is the founder, Managing Partner, and Chief Investment Officer of The Bahnsen Group, a bi-coastal private wealth management boutique based in Newport Beach, CA and New York City. managing over $1.2 billion in client assets. David has been named as one of Barron’s America’s Top 1200 Advisors, as well as Forbes Top 250 Advisors and Financial Times Top 300 Advisors in America. He brought The Bahnsen Group independent through the elite boutique fiduciary, HighTower Advisors, in April 2015 after eight years as a Chairman’s Club Managing Director at Morgan Stanley and seven years as a First Vice President at UBS Financial Services. He is a frequent guest on CNBC, Fox Business, and Bloomberg and is a regular contributor to National Review and Forbes.
David serves on the Board of Directors for the National Review Institute, is vice president of the Lincoln Club of Orange County, and is a founding Trustee for Pacifica Christian High School of Orange County.
David is a disciple of Milton Friedman, a lover of Ronald Reagan, and a “National Review kind of conservative” (the only kind). His prolific writings strive to reflect an ideology of freedom principles integrated with transcendent truths. His heroes are his late father, Dr. Greg Bahnsen, and Larry Kudlow, and he proudly claims heavy ideological influence from John Calvin, Abraham Kuyper, F.A. Hayek, Winston Churchill, C.S. Lewis, William Buckley, Margaret Thatcher, George Gilder, and Father Robert Sirico.
David’s true passions include anything involving related to USC football, the financial markets, politics, and his house in the desert. His ultimate passions are his lovely wife of 16+ years, Joleen, their gorgeous and brilliant children, sons Mitchell and Graham, and daughter Sadie, and the life they’ve created together in Newport Beach, California. David spends 18-20 waking hours per day thinking about the free and virtuous society.
His first book, Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It, is scheduled for a February 2018 release.
David serves on the Board of Directors for the National Review Institute, is vice president of the Lincoln Club of Orange County, and is a founding Trustee for Pacifica Christian High School of Orange County.
David is a disciple of Milton Friedman, a lover of Ronald Reagan, and a “National Review kind of conservative” (the only kind). His prolific writings strive to reflect an ideology of freedom principles integrated with transcendent truths. His heroes are his late father, Dr. Greg Bahnsen, and Larry Kudlow, and he proudly claims heavy ideological influence from John Calvin, Abraham Kuyper, F.A. Hayek, Winston Churchill, C.S. Lewis, William Buckley, Margaret Thatcher, George Gilder, and Father Robert Sirico.
David’s true passions include anything involving related to USC football, the financial markets, politics, and his house in the desert. His ultimate passions are his lovely wife of 16+ years, Joleen, their gorgeous and brilliant children, sons Mitchell and Graham, and daughter Sadie, and the life they’ve created together in Newport Beach, California. David spends 18-20 waking hours per day thinking about the free and virtuous society.
His first book, Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It, is scheduled for a February 2018 release.
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Displaying 1 - 30 of 63 reviews
May 22, 2024
I think I understood some of the words in this book.
Maybe.
Maybe.
May 23, 2022
I'm really not sure what to think about this one.
First, I respect both men and loved the format of back-and-forth letters. The two authors are both postmillennial Christians and thus write out of a biblical worldview. Wilson (a Christian pastor) forms a letter to Bahnsen (Chief Investment Officer of a hedge fund which has over 3 billion under management) who then answers Wilson's question. Wilson's reason for writing is trying to find out why the doomsday scenario of hyper-inflation hasn't happened, if the premise of hard-money, free market, Austrian economics is true. It's a great topic to discuss, one I thought would be challenging to my beliefs (it was), and it made for an enjoyable listen.
Having said that, I'm not sure I agree with all the main points. Bahnsen argues that deflation (what he calls "Japanifiction" throughout), is the bigger threat to the economy over inflation. Money isn't being 'printed' but rather it's the government buying bonds so it's one form of money being exchanged for another (bonds to fiat). It is argued that the real issue is debt (government and household) which reduces the velocity (turn over) of money thus creating stagflation. The goal of this book is to turn gold/bitcoin hoarders and doomsday preppers into optimistic risk-takers who invest in stocks and assets instead of hiding gold coins under their bed as they await hyper-inflation.
I wonder if Wilson too easily accepted the "be an optimistic risk taker" premise because it lines up with his optimistic eschatology (which I also hold). I think it could be argued there's reason for cautiousness and a form of hedging/insurance to limit risk based on potential consequences from poor government stewardship. It's good to be optimistic when there's a reason for optimism (like Jesus ensuring his church is built) but we shouldn't expect good to come out of bad decisions (like the Proverbs teach).
I honestly need to read this book again and have some group discussions before I take a definitive stance myself. I'm willing to be proven wrong, which is why I picked up this book in the first place, but I'm unconvinced and left with more questions. Having said that, I still rate it highly because it was enjoyable read and provided a helpful counter-view to my economic beliefs. I enjoyed the challenge.
First, I respect both men and loved the format of back-and-forth letters. The two authors are both postmillennial Christians and thus write out of a biblical worldview. Wilson (a Christian pastor) forms a letter to Bahnsen (Chief Investment Officer of a hedge fund which has over 3 billion under management) who then answers Wilson's question. Wilson's reason for writing is trying to find out why the doomsday scenario of hyper-inflation hasn't happened, if the premise of hard-money, free market, Austrian economics is true. It's a great topic to discuss, one I thought would be challenging to my beliefs (it was), and it made for an enjoyable listen.
Having said that, I'm not sure I agree with all the main points. Bahnsen argues that deflation (what he calls "Japanifiction" throughout), is the bigger threat to the economy over inflation. Money isn't being 'printed' but rather it's the government buying bonds so it's one form of money being exchanged for another (bonds to fiat). It is argued that the real issue is debt (government and household) which reduces the velocity (turn over) of money thus creating stagflation. The goal of this book is to turn gold/bitcoin hoarders and doomsday preppers into optimistic risk-takers who invest in stocks and assets instead of hiding gold coins under their bed as they await hyper-inflation.
I wonder if Wilson too easily accepted the "be an optimistic risk taker" premise because it lines up with his optimistic eschatology (which I also hold). I think it could be argued there's reason for cautiousness and a form of hedging/insurance to limit risk based on potential consequences from poor government stewardship. It's good to be optimistic when there's a reason for optimism (like Jesus ensuring his church is built) but we shouldn't expect good to come out of bad decisions (like the Proverbs teach).
I honestly need to read this book again and have some group discussions before I take a definitive stance myself. I'm willing to be proven wrong, which is why I picked up this book in the first place, but I'm unconvinced and left with more questions. Having said that, I still rate it highly because it was enjoyable read and provided a helpful counter-view to my economic beliefs. I enjoyed the challenge.
April 23, 2022
This book was a really helpful in explaining why pumping money into banks does not automatically create inflation. People must borrow that money. And right now people and particularly companies are not borrowing money. There a lot of variables that impact why something costs what it does at the local store. One single thing, such as stimulus money, is rarely to blame, though it may be part of the problem. Overall it cleared up some misconceptions I had, but it was over my head in some places. I am not well versed in economic theory.
Bahnsen is right that often doomsday economic predictions do not come true. More humility in this area by Christians would be wise. He also right that the main issue is what percentage of our GDP is connected to the government. The larger the percentage the less free we are. Shrinking the government would strike at the root of the problem.
I wish they had discussed more in depth whether or not real wages have kept up with inflation. It was mentioned ever so briefly in an early chapter. For most the question isn't, "Is inflation the same as 1980?" But "Are wages equal to 1980?"
I like his suggestion of incrementally downsizing government aid, etc. Dropping it all at once is unworkable and would not be received well. But slowly over years taking the percentage down is a worthy goal.
Their emphasis on production and investing, not being averse to risk, was excellent. I see more and more Christians using money in this way and it is encouraging.
Bahnsen is right that often doomsday economic predictions do not come true. More humility in this area by Christians would be wise. He also right that the main issue is what percentage of our GDP is connected to the government. The larger the percentage the less free we are. Shrinking the government would strike at the root of the problem.
I wish they had discussed more in depth whether or not real wages have kept up with inflation. It was mentioned ever so briefly in an early chapter. For most the question isn't, "Is inflation the same as 1980?" But "Are wages equal to 1980?"
I like his suggestion of incrementally downsizing government aid, etc. Dropping it all at once is unworkable and would not be received well. But slowly over years taking the percentage down is a worthy goal.
Their emphasis on production and investing, not being averse to risk, was excellent. I see more and more Christians using money in this way and it is encouraging.
April 2, 2024
The economy is truly a brilliant beast. If you are unfamiliar with economic mechanisms and terms you may initially feel a little overwhelmed, but boy is this a brilliant resource. Theory rich yet pastoral and practical, this is a great little read whether you love economics or not - we should all strive to understand the mechanisms that underpin the global financial system we depend on daily.
May 23, 2022
While I rated this book as four stars, I would recommend it on the level of a five (or, heck, maybe a six), at least if you’re a standard-issue reformed Christian kind of person such as myself. This book was corrective for me, in that it swept multiple wrong ideas out of my head, and will make me wiser in all future conversation/thought on this topic. However, it was not obliterative in an “everything you thought you knew was wrong” kind of way.
The letters format of the book was particularly effective for its didactic purpose. Pastor Wilson is the stand-in for most of us, asking the questions many of us have bubbling in the back of our minds. For example, “With all this sky-rocketing debt and money printing/creation I’m hearing about, why hasn’t the economic equivalent of the rapture (hyperinflation) happened yet?” Bahnsen provides the much-needed expert background knowledge, and does so as someone who is theologically/sociologically trustworthy. While the conversation does revolve around various hard economic questions, the conversation was also surprisingly theological as well (in a very non-forced manner), addressing things such as “how should we then live,” the importance of humility in economic discussions, and the creep of premillennial economic thinking into our ideas about the form the future will take.
By the way, if you do read it, I would recommend doing it with Youtube handy (i.e. to search "What is Quantitative Easing"). Also, plan on reading the book twice. It's a scant 127 small pages with wide margins and copious interline spacing so this is easier than you think.
Here are some reading notes both for myself and to whet your appetite:
- For inflation to take place, more is required than the entry of money into the monetary supply. Velocity (repeated exchange of the money) is also required. In short, if more money enters the economy, but just sits around in accounts doing nothing, there will be no appreciable inflation.
- On a related note, there are multiple inflationary/deflationary factors involved which can cancel each other out. One of the biggest deflationary pressures in increasing debt levels (in government, but also for businesses/individuals).
- In many respects inflation vs. deflation is the wrong focus for debate. Our biggest problem will likely be economic stagnation, which often includes deflation. More below.
- While conservatives often focus on the level of debt, where the money is going is the problem in the present (as opposed to the future). Whenever the government wastes money, it is taking money away from better ventures and squandering societal resources. We often underestimate the opportunity cost here. A good way to think of this is that government spending should be as low of a percentage of our GDP as is reasonable. The more, the wasteful-er and the more stagnant things become.
- Conservative economists have, historically, had a serious humility problem. Our catastrophic predictions have been wrong time and again, because we fail to take all variables into account (and who realistically could?). To use an analogy (not the authors), conservatives have been like population bomb or environmentalist doomsayers. We do napkin calculations that are just bad, plain and simple, but then after we’re wrong, we rush off to try again. Bahnsen admirably punts on some of Wilson’s questions, emphasizing that some things are just too hard to answer.
- The idea that our economic tomfoolery “all has to end” in a meteorite strike-level cataclysm is a questionable sociological/theological construction. We may be in for (and already are in) years of whimpering rather than in for a big bang. If we are in for years of whimpering, a lot of people are prepping for the wrong event, and there is a real opportunity cost involved here.
- “Trade deficit” (exports - imports) is a poisoning of the well kind of definition not indicative of national prosperity. Bahnsen prefers “Total Trade” (exports + imports) as a better barometer.
- The nature of our problem is ultimately spiritual. We have undertaken this funny business because we like it this way. The solution is also spiritual. No matter what is in store for the future, from an economic perspective, the best current preparation is to excel in the dominion mandate. Work hard, take risks, and create opportunity. If we become the kind of men and women we ought to be, we will be ready for anything and will have done the best thing we can do for the economy anyway.
The letters format of the book was particularly effective for its didactic purpose. Pastor Wilson is the stand-in for most of us, asking the questions many of us have bubbling in the back of our minds. For example, “With all this sky-rocketing debt and money printing/creation I’m hearing about, why hasn’t the economic equivalent of the rapture (hyperinflation) happened yet?” Bahnsen provides the much-needed expert background knowledge, and does so as someone who is theologically/sociologically trustworthy. While the conversation does revolve around various hard economic questions, the conversation was also surprisingly theological as well (in a very non-forced manner), addressing things such as “how should we then live,” the importance of humility in economic discussions, and the creep of premillennial economic thinking into our ideas about the form the future will take.
By the way, if you do read it, I would recommend doing it with Youtube handy (i.e. to search "What is Quantitative Easing"). Also, plan on reading the book twice. It's a scant 127 small pages with wide margins and copious interline spacing so this is easier than you think.
Here are some reading notes both for myself and to whet your appetite:
- For inflation to take place, more is required than the entry of money into the monetary supply. Velocity (repeated exchange of the money) is also required. In short, if more money enters the economy, but just sits around in accounts doing nothing, there will be no appreciable inflation.
- On a related note, there are multiple inflationary/deflationary factors involved which can cancel each other out. One of the biggest deflationary pressures in increasing debt levels (in government, but also for businesses/individuals).
- In many respects inflation vs. deflation is the wrong focus for debate. Our biggest problem will likely be economic stagnation, which often includes deflation. More below.
- While conservatives often focus on the level of debt, where the money is going is the problem in the present (as opposed to the future). Whenever the government wastes money, it is taking money away from better ventures and squandering societal resources. We often underestimate the opportunity cost here. A good way to think of this is that government spending should be as low of a percentage of our GDP as is reasonable. The more, the wasteful-er and the more stagnant things become.
- Conservative economists have, historically, had a serious humility problem. Our catastrophic predictions have been wrong time and again, because we fail to take all variables into account (and who realistically could?). To use an analogy (not the authors), conservatives have been like population bomb or environmentalist doomsayers. We do napkin calculations that are just bad, plain and simple, but then after we’re wrong, we rush off to try again. Bahnsen admirably punts on some of Wilson’s questions, emphasizing that some things are just too hard to answer.
- The idea that our economic tomfoolery “all has to end” in a meteorite strike-level cataclysm is a questionable sociological/theological construction. We may be in for (and already are in) years of whimpering rather than in for a big bang. If we are in for years of whimpering, a lot of people are prepping for the wrong event, and there is a real opportunity cost involved here.
- “Trade deficit” (exports - imports) is a poisoning of the well kind of definition not indicative of national prosperity. Bahnsen prefers “Total Trade” (exports + imports) as a better barometer.
- The nature of our problem is ultimately spiritual. We have undertaken this funny business because we like it this way. The solution is also spiritual. No matter what is in store for the future, from an economic perspective, the best current preparation is to excel in the dominion mandate. Work hard, take risks, and create opportunity. If we become the kind of men and women we ought to be, we will be ready for anything and will have done the best thing we can do for the economy anyway.
Read
July 18, 2022I can't give this a star rating because I just didn't understand enough of it. I was nineteen or so when I took that one economics class. Like most nineteen-year-olds, I knew everything. Now that I am fifty-four and know nothing, I wish I'd paid more attention when I was nineteen.
The one concept here that I did grasp, or that grasped me, was "risk-aversion is love-aversion." I live in a community with lots of entrepreneurs. They are an absolute delight to me. I haven't got an entrepreneurial bone in my body, which gives me even more awe of them. How do they do it? How do they have these ideas and know how to make them happen? 'Tis mystery all. The one thing I have understood is that their brick-and-mortar fruitfulness is a Good Thing. I wanted in. So I began to keep my eyes and ears out for something I could invest some of my savings in. And I found one! And that led to finding a second one. So last week I made my first self-chosen investments...in local businesses that I will get to see grow up close and personal. So this book encouraged me to think I was on the right track with that decision.
The one concept here that I did grasp, or that grasped me, was "risk-aversion is love-aversion." I live in a community with lots of entrepreneurs. They are an absolute delight to me. I haven't got an entrepreneurial bone in my body, which gives me even more awe of them. How do they do it? How do they have these ideas and know how to make them happen? 'Tis mystery all. The one thing I have understood is that their brick-and-mortar fruitfulness is a Good Thing. I wanted in. So I began to keep my eyes and ears out for something I could invest some of my savings in. And I found one! And that led to finding a second one. So last week I made my first self-chosen investments...in local businesses that I will get to see grow up close and personal. So this book encouraged me to think I was on the right track with that decision.
October 18, 2024
The best part of this book was the reminder that our theology and eschatology should inform our thinking about all of life, including our views on finances and the overall economy.
The Lord has dominion over all things and that should be the lens through which we view the economy.
I’m not saying I understood every word of this book. It’s admittedly hard for me to follow larger economic theory and argument. But I did learn a lot from this book and were I to read it again, I’m sure I would learn more.
The Lord has dominion over all things and that should be the lens through which we view the economy.
I’m not saying I understood every word of this book. It’s admittedly hard for me to follow larger economic theory and argument. But I did learn a lot from this book and were I to read it again, I’m sure I would learn more.
August 16, 2022
Note: these are random notes I took after reading Mis-Inflation two times. However, I still consider these notes to be tentative and rough, not a final viewpoint. I welcome criticism or feedback. Thanks.
What I liked about the book
There is much that I appreciated in Wilson and Bahnsen’s book, Mis-Inflation. I found both Wilson and Bahnsen to be entertaining in their writing style, and unlike some reviewers, I liked the format they chose to use. I love the succinct ways that Bahnsen articulates the dangers of statism. One sample quote in which he nails the problem is the following from pages 101-102:
"Deregulation is a better way to get to tax cuts than tax cuts are a way to get to deregulation. The size of the administrative state is the cause du jour of the central planner, and it is public enemy number one for the risk-taker. Regulation is not merely a path to a more complex and insidious state, but it is the path to creation of monopolistic mediocrities in business that use regulation as a subsidy - to crowd out real organic competition. With regulation comes cronyism, always and forever. The supply-side war is one of incentives, and nothing incentivizes productivity more than deregulation."
Another gem is on page 66:
"the government is too large, is too much of a part of the gross domestic product of the economy, is too much a part of the societal psychology, and ultimately serves to crowd out the dynamism and productivity of the private sector. This is the heart of the matter."
The good of the book is primarily that Bahnsen continues his free market apologetic that he articulated in his previous book. While I wasn't convinced by all of Bahnsen's conclusions, I did like the banter that sought to correct the "last train out" dooms-dayers. Though I am an ardent Austrian in my approach to economics, I wasn't a dooms-dayer in 1999 (leading up to y2k) and I'm not a dooms-dayer now. There is nothing about Austrian economics that would necessitate me being a dooms-dayer. I wasn't an "Uncle Wyatt" who hoarded nothing but gold back then or now (though I do like some gold and silver for other reasons than those being attacked in the book). I haven't abandoned the stock market entirely since I believe that a profit can be made in every up and down of the stock market (and I have made a lot of profit during this downturn by shorting the market and then picking up juicy stocks that went down in an irrational reaction). So what troubles me about the book? A lot.
What I didn’t like as well
There was much in this book that made me very unsettled. I couldn’t always put my finger on it. At times it was his non-Austrian definitions of certain things (inflation, GDP, Fisher’s equation, etc). At other times it was assertions that just seem false on the surface (see below). At times it was his sarcastic attitude toward hard money Austrians (and I suspect, he especially had Gary North in mind in some of his rants). At other times he seems to (unwittingly??) leave the reader with the impression that it is our Christian duty to jump into the stock market with “postmillennial” faith in the future, and it is unchristian to hedge our investments or pull most of our stock investments out of the market into cash during over-priced periods. I doubt he believes this impression that I get, but his obvious disgust with Gary North and other gold bugs (symbolized by Uncle Wyatt) gives the distinct impression that he advises people to go to the other extreme of Wyatt and just dollar cost average continual purchases in the stock market into the unforeseeable future irrespective of dips and bobbles in the stock market. (I feel sorry for anyone who took him up on it in 2022.) Again, this may be unfair, but having read it twice, this was still the impression that I got. Here are some specific issues and questions that still linger in my mind even after his masterful explanations:
Issue one – non-Austrian definitions of some economic terms
1. His endorsement of Fischer’s equation (MV=PT or that P=MV/T) is definitely not Austrian and readers need to realize that. For a very cogent refutation of Fischer’s equation of exchange, see Murray Rothbard, Man, Economy, and the State, chapter 11.
2. Austrians consider the current discussions related to “velocity of money” to not be relevant to the topic of “price inflation,” yet Bahnsen pins a great deal of his discussion of inflation on velocity of money. He says, “The ratio of loans-to-deposits in our banks is at the lowest it has been in fifty years, and with that decline in loan demand comes a collapse in velocity of money, the sine qua non of inflation.” No Austrian would agree, and readers who think Bahnsen is Austrian should realize that. Frank Shostak says, “Contrary to popular thinking the velocity of money doesn’t have a life of its own. It is not an independent entity and hence it can’t cause anything. The apparent simplicity of the equation of exchange and its consequent widespread acceptance by mainstream economists has been instrumental in the erroneous assessments of the true state of the economy.” https://mises.org/wire/money-supply-a...
3. While Bahnsen does occasionally speak of inflation as the increase of money chasing fewer goods (a good definition), the word “inflation” is most frequently associated with price fluctuations upwards. But even he uses illustrations (gold, copper, etc) to show weird fluctuations in the price of commodities over time. I will speak more to this topic below, but it is clear to me that he is not Austrian in his views. Indeed, it is hard to figure out if he holds to any one “system” of economics since he borrows ideas from more than one.
4. There are problems with using GDP as a measure of economic development and material progress. Austrians argue that GDP is a tool of politics, not economics. It is Keynesian. But for the sake of the argument, let’s assume GDP is a useful measure of the economic progress of a nation. There is still not a correlation between the government’s share of GDP and the amount of “price inflation” as he claims. On page 29 he says, “There is only one sustainable way to get the growth we want in an economy, and ultimately avoid the inflationary and deflationary parasites that come with various government abuses - and that is a smaller government as a percentage of GDP." If this was the case, why did the 1970s have higher CPI than today? The government’s share of the GDP was far lower back then. The facts show that the boom-bust cycle of monetary inflation/deflation is a better answer. And I will use non-Austrian charts to be fair. The following charts show the year-by-year GDP and “inflation” (i.e. CPI). I believe these charts completely contradict his thesis. https://www.thebalance.com/us-gdp-by-... and https://www.thebalance.com/u-s-inflat...
5. Typical of Chicagoites, Bahnsen doesn’t define money correctly. He speaks very ill of gold and silver, but Biblically gold and silver are indeed money (cf. כסף in Gen. 17:12, 13, 17:23, 27; 23: 13; etc. and and זָהָב in Gen. 44:8; Ex. 25:3; etc.). But even apart from that issue, it is problematic for him to treat Treasury Bonds as money – which he clearly does: After speaking of cash being exchanged for Treasury notes, he says, “The private sector does not come out of the transaction with more money - they come out of it with different money” (p. 12). But Treasury Notes do not meet all the parts of a definition of money. Technically money has the following characteristics: it is a medium of exchange, unit of account, store of value, fungible, durable, portable, uniform, limited in supply, acceptable, and divisible. Furthermore, Austrians would treat all time deposits that are only redeemable at a certain point in the future as a credit instrument rather than a form of warehouse receipt and would not treat a credit instrument as a surrogate for cash. Murray Rothbard said, “In The Theory of Money and Credit, Mises set down the correct guidelines: money is the general medium of exchange, the thing that all other goods and services are traded for, the final payment for such goods on the market … Ludwig von Mises distinguished carefully between a credit and a claim transaction: a credit transaction is an exchange of a present good (e.g., money which can be used in exchange at any present moment) for a future good (e.g., an IOU for money that will only be available in the future). In this sense, a demand deposit, while legally designated as credit, is actually a present good — a warehouse claim to a present good that is similar to a bailment transaction, in which the warehouse pledges to redeem the ticket at any time on demand… It might be, and has been, objected that credit instruments, such as bills of exchange or Treasury bills, can often be sold easily on credit markets — either by the rediscounting of bills or in selling old bonds on the bond market, and that therefore they should be considered as money. But many assets are ‘liquid,’ i.e., can easily be sold for money. Blue-chip stocks, for example, can be easily sold for money, yet no one would include such stocks as part of ‘the money supply.’ The operative difference, then, is not whether an asset is liquid or not (since stocks are no more part of the money supply than, say, real estate) but whether the asset is redeemable at a fixed rate, at par, in money. Credit instruments, similarly to the case of shares of stock, are sold for money on the market at fluctuating rates. The current tendency of some economists to include assets as money purely because of their liquidity must be rejected; after all, in some cases, inventories of retail goods might be as liquid as stocks or bonds, and yet surely no one would list these inventories as part of the money supply. They are other goods sold for money on the market. ” https://mises.org/library/austrian-de...
Issue two – undue optimism (sometimes labeled as economic postmillennialism)
The next issue that concerns me is that undiscerning readers might jump into the stock market with all feet and get burned. Anyone who did so immediately after this book was published would have been hammered in the stock market correction this year. Sometimes Bahnsen comes across as a salesperson for the stock market, implying that if you pull out you are not “postmillennial.” To be fair, Bahnsen does state that we must balance two doctrines, though he doesn’t develop the other one. On page 67 he says, “As to the question of preparation for the future, yes, I would argue that a robust eschatology and biblical anthropology is the need of the hour.” Biblical anthropology includes many things. It includes the image of God in man. This image gives some optimism of what the unregenerate can do. But Biblical anthropology also includes unregenerate man’s total depravity (not that man can’t get worse – he can, but that the totality of his being is affected by sin – including his economic thinking). Total depravity explains fear (a big subject in the book), greed, manipulation, and many other things. Depravity keeps one from being naive about the markets since both fear and greed are endemic to the human heart and often are part of irrational dips and bubbles. When a vastly overpriced market corrects, fear can lead to perfectly good companies (with a fantastic P/E) also dipping to insanely low P/E ratios, making fantastic deals that can be snapped up (I just snapped one up recently with a P/E of 0.83). Yes, Bahnsen plays lip service to the doctrine of anthropology, but that doctrine makes me much more cautious than he appears to be. The bottom line is that Bahnsen comes across as a salesperson for the stock market - and the cynic in me wonder - why wouldn't he? Morgan Stanley needs people to be optimistic about the market place.
But in addition to postmillennialism and depravity, there are other Biblical doctrines and presuppositions that need to undergird our investments. As our nation becomes more and more corrupt, I also take into account God's holy judgments of nations in history. One of the most frequent tools of judgment is the tyranny of the state - but even there, people can make a profit if they are wise. Would it have been un-postmillennial for Jews to pull out of the Israelite stock market and to invest in the Babylonian stock market in the sixth century BC? Obviously not. I’m sure Bahnsen would agree with the above, but the book never seems to offer such cautions.
But most importantly, Bahnsen seems to have drifted from (or is unaware of) the 22 Biblical axioms that necessitate an Austrian approach to economics rather than a monetarist or Chicago School approach to economics. BiblicalBlueprints.com will soon have the axioms of economics and many other disciplines posted on its website. If one’s investments are guided by those 22 axioms, one can anticipate many market moves and make a profit in any situation. But those 22 axioms have made me extremely leery of the stock market right now as it is still overvalued – even with the recent corrections.
Issue three – His discussion of QE, Fischer’s equation, and inflation is problematic
Third, Bahnsen’s discussion of QE, Fischer’s equation, inflation, and deflation is problematic. The word "inflation" is almost always used to describe price fluctuations up, though he will occasionally give lip service to the Austrian definition of inflation. But I want to illustrate some problems in his discussions of this topic. It may be that I have misunderstood him (and he is far more brilliant than I am, so I am certainly open to correction), but having read the book two times, I don’t think so.
Price fluctuations aren’t technically inflation or deflation. Inflation is an increase in the money supply chasing the same (or less) amount of goods. With Robert Murphy (a great Christian), I prefer to keep the two ideas of price inflation and monetary inflation well-defined and strictly separated. While monetary inflation does lead to price inflation, it doesn’t do so in a mathematically calculated formula (as friends of mine who have lived through the hyper-inflation in Zimbabwe will tell you). Austrians know this. For example, Mises pointed out that a doubling of money into the economy may produce far more than a doubling of price of a consumer good if people begin fearfully dumping money in exchange for goods. On the other hand, if people have no fear of depreciation, doubling money may not double the price of a good. The subjective value people impute to something needs to be accounted for. Austrian economics uses tools of subjective value theory, not the mechanistic approach that is assumed by Fisher's equation. Bahnsen does acknowledge the massively complex nature of the economy, but wants to have his cake and eat it too when he uses Fisher's equation. Austrians do not discount the observation that "the particular circumstances that impact prices are vast, complex, filled with variables, and therefore are not level across all goods and services." (pp. 119-120). But it is this very complexity that attracts me to a pure deductive Austrian approach (or better, to a purely Biblicist approach - since the Bible provides the 22 presuppositions of Austrian economics plus more). It seems to me that unless a person is omniscient, the Chicago School can never accurately define the numbers in his more complex equation given by Irving Fisher that MV=PT or that P=MV/T. (Or as it is often written, MV=PQ with Q being quantity.) Sure, we can know the Money Supply (M) even though that is complex. But how on earth can you accurately measure the Velocity of money at any given moment, let alone in any given year? It is simply not possible to know every exchange of every dollar. And since you are multiplying that velocity times the total Supply of Goods and Services (T), I'm not sure how useful that equation is to investing. For one of many critiques of Fisher's equation, see https://mises.org/wire/monetary-infla... and see Murray Rothbard’s book, Man, Economy, and the State, chapter 11. Also see my comments in the first section above.
Issue four – his belief (stated several times) that the Treasury bond prices are the best indicator of where real price inflation is at
Let me give quotes on these issues. On pages 12-13 he says,
"No new cash or money enters the economy as a result of QE... Treasury bonds are pulled out of the economy, and put on the balance sheet of the Federal Reserve. In this sense, it is an asset swap - not asset creation. The Fed adds to bank reserves, and the banks sell their treasuries to the Fed. The private sector does not come out of the transaction with more money - they come out of it with different money.
The banks do end up with massive new reserves, and if the banks lent them all out, and consumers spent that borrowed money, it would result in a higher velocity of money, which combined with the increased money supply would perfectly meet the algebraic definition of more inflation."
On page 49 he says, "bond prices tell us more about inflation than potentially idiosyncratic price movements." However, Treasury bonds are not the best indicator. Just look at the side-by-side comparison of CPI and Treasury Bond prices in this chart and you will see that Bahnsen is way off. https://www.thebalance.com/u-s-inflat...
While I agree that idiosyncratic price movements of certain commodities do not accurately describe true inflation (true inflation is the dilution of the value of the dollar by creating more dollars), I also don't think that the bond prices tells us much of anything about either monetary inflation or price inflation. On page 38 he says, "The bond market is the judge and jury here." His point is that if inflation were really here, people wouldn't be buying bonds & treasury notes. He says on page 39, "TRILLIONS of SMART dollars cannot buy ten-year government paper at 1.5% if they believe it will be subject to 4%, 6%, or 8% annual inflation between now and then. If financial actors were all that stupid, we got capitalism wrong." Then why doesn't he buy those bonds? Obvious answer: he can make more money elsewhere and treasury notes do not even remotely keep up with the officially posted CPI . If you bought U.S. Treasuries in March of 2020, the one-month Treasury bill and the three-year Treasury were trading at 0.81% and 0.54%, respectively. It's gone...[I've run out of space. Oh well.]
What I liked about the book
There is much that I appreciated in Wilson and Bahnsen’s book, Mis-Inflation. I found both Wilson and Bahnsen to be entertaining in their writing style, and unlike some reviewers, I liked the format they chose to use. I love the succinct ways that Bahnsen articulates the dangers of statism. One sample quote in which he nails the problem is the following from pages 101-102:
"Deregulation is a better way to get to tax cuts than tax cuts are a way to get to deregulation. The size of the administrative state is the cause du jour of the central planner, and it is public enemy number one for the risk-taker. Regulation is not merely a path to a more complex and insidious state, but it is the path to creation of monopolistic mediocrities in business that use regulation as a subsidy - to crowd out real organic competition. With regulation comes cronyism, always and forever. The supply-side war is one of incentives, and nothing incentivizes productivity more than deregulation."
Another gem is on page 66:
"the government is too large, is too much of a part of the gross domestic product of the economy, is too much a part of the societal psychology, and ultimately serves to crowd out the dynamism and productivity of the private sector. This is the heart of the matter."
The good of the book is primarily that Bahnsen continues his free market apologetic that he articulated in his previous book. While I wasn't convinced by all of Bahnsen's conclusions, I did like the banter that sought to correct the "last train out" dooms-dayers. Though I am an ardent Austrian in my approach to economics, I wasn't a dooms-dayer in 1999 (leading up to y2k) and I'm not a dooms-dayer now. There is nothing about Austrian economics that would necessitate me being a dooms-dayer. I wasn't an "Uncle Wyatt" who hoarded nothing but gold back then or now (though I do like some gold and silver for other reasons than those being attacked in the book). I haven't abandoned the stock market entirely since I believe that a profit can be made in every up and down of the stock market (and I have made a lot of profit during this downturn by shorting the market and then picking up juicy stocks that went down in an irrational reaction). So what troubles me about the book? A lot.
What I didn’t like as well
There was much in this book that made me very unsettled. I couldn’t always put my finger on it. At times it was his non-Austrian definitions of certain things (inflation, GDP, Fisher’s equation, etc). At other times it was assertions that just seem false on the surface (see below). At times it was his sarcastic attitude toward hard money Austrians (and I suspect, he especially had Gary North in mind in some of his rants). At other times he seems to (unwittingly??) leave the reader with the impression that it is our Christian duty to jump into the stock market with “postmillennial” faith in the future, and it is unchristian to hedge our investments or pull most of our stock investments out of the market into cash during over-priced periods. I doubt he believes this impression that I get, but his obvious disgust with Gary North and other gold bugs (symbolized by Uncle Wyatt) gives the distinct impression that he advises people to go to the other extreme of Wyatt and just dollar cost average continual purchases in the stock market into the unforeseeable future irrespective of dips and bobbles in the stock market. (I feel sorry for anyone who took him up on it in 2022.) Again, this may be unfair, but having read it twice, this was still the impression that I got. Here are some specific issues and questions that still linger in my mind even after his masterful explanations:
Issue one – non-Austrian definitions of some economic terms
1. His endorsement of Fischer’s equation (MV=PT or that P=MV/T) is definitely not Austrian and readers need to realize that. For a very cogent refutation of Fischer’s equation of exchange, see Murray Rothbard, Man, Economy, and the State, chapter 11.
2. Austrians consider the current discussions related to “velocity of money” to not be relevant to the topic of “price inflation,” yet Bahnsen pins a great deal of his discussion of inflation on velocity of money. He says, “The ratio of loans-to-deposits in our banks is at the lowest it has been in fifty years, and with that decline in loan demand comes a collapse in velocity of money, the sine qua non of inflation.” No Austrian would agree, and readers who think Bahnsen is Austrian should realize that. Frank Shostak says, “Contrary to popular thinking the velocity of money doesn’t have a life of its own. It is not an independent entity and hence it can’t cause anything. The apparent simplicity of the equation of exchange and its consequent widespread acceptance by mainstream economists has been instrumental in the erroneous assessments of the true state of the economy.” https://mises.org/wire/money-supply-a...
3. While Bahnsen does occasionally speak of inflation as the increase of money chasing fewer goods (a good definition), the word “inflation” is most frequently associated with price fluctuations upwards. But even he uses illustrations (gold, copper, etc) to show weird fluctuations in the price of commodities over time. I will speak more to this topic below, but it is clear to me that he is not Austrian in his views. Indeed, it is hard to figure out if he holds to any one “system” of economics since he borrows ideas from more than one.
4. There are problems with using GDP as a measure of economic development and material progress. Austrians argue that GDP is a tool of politics, not economics. It is Keynesian. But for the sake of the argument, let’s assume GDP is a useful measure of the economic progress of a nation. There is still not a correlation between the government’s share of GDP and the amount of “price inflation” as he claims. On page 29 he says, “There is only one sustainable way to get the growth we want in an economy, and ultimately avoid the inflationary and deflationary parasites that come with various government abuses - and that is a smaller government as a percentage of GDP." If this was the case, why did the 1970s have higher CPI than today? The government’s share of the GDP was far lower back then. The facts show that the boom-bust cycle of monetary inflation/deflation is a better answer. And I will use non-Austrian charts to be fair. The following charts show the year-by-year GDP and “inflation” (i.e. CPI). I believe these charts completely contradict his thesis. https://www.thebalance.com/us-gdp-by-... and https://www.thebalance.com/u-s-inflat...
5. Typical of Chicagoites, Bahnsen doesn’t define money correctly. He speaks very ill of gold and silver, but Biblically gold and silver are indeed money (cf. כסף in Gen. 17:12, 13, 17:23, 27; 23: 13; etc. and and זָהָב in Gen. 44:8; Ex. 25:3; etc.). But even apart from that issue, it is problematic for him to treat Treasury Bonds as money – which he clearly does: After speaking of cash being exchanged for Treasury notes, he says, “The private sector does not come out of the transaction with more money - they come out of it with different money” (p. 12). But Treasury Notes do not meet all the parts of a definition of money. Technically money has the following characteristics: it is a medium of exchange, unit of account, store of value, fungible, durable, portable, uniform, limited in supply, acceptable, and divisible. Furthermore, Austrians would treat all time deposits that are only redeemable at a certain point in the future as a credit instrument rather than a form of warehouse receipt and would not treat a credit instrument as a surrogate for cash. Murray Rothbard said, “In The Theory of Money and Credit, Mises set down the correct guidelines: money is the general medium of exchange, the thing that all other goods and services are traded for, the final payment for such goods on the market … Ludwig von Mises distinguished carefully between a credit and a claim transaction: a credit transaction is an exchange of a present good (e.g., money which can be used in exchange at any present moment) for a future good (e.g., an IOU for money that will only be available in the future). In this sense, a demand deposit, while legally designated as credit, is actually a present good — a warehouse claim to a present good that is similar to a bailment transaction, in which the warehouse pledges to redeem the ticket at any time on demand… It might be, and has been, objected that credit instruments, such as bills of exchange or Treasury bills, can often be sold easily on credit markets — either by the rediscounting of bills or in selling old bonds on the bond market, and that therefore they should be considered as money. But many assets are ‘liquid,’ i.e., can easily be sold for money. Blue-chip stocks, for example, can be easily sold for money, yet no one would include such stocks as part of ‘the money supply.’ The operative difference, then, is not whether an asset is liquid or not (since stocks are no more part of the money supply than, say, real estate) but whether the asset is redeemable at a fixed rate, at par, in money. Credit instruments, similarly to the case of shares of stock, are sold for money on the market at fluctuating rates. The current tendency of some economists to include assets as money purely because of their liquidity must be rejected; after all, in some cases, inventories of retail goods might be as liquid as stocks or bonds, and yet surely no one would list these inventories as part of the money supply. They are other goods sold for money on the market. ” https://mises.org/library/austrian-de...
Issue two – undue optimism (sometimes labeled as economic postmillennialism)
The next issue that concerns me is that undiscerning readers might jump into the stock market with all feet and get burned. Anyone who did so immediately after this book was published would have been hammered in the stock market correction this year. Sometimes Bahnsen comes across as a salesperson for the stock market, implying that if you pull out you are not “postmillennial.” To be fair, Bahnsen does state that we must balance two doctrines, though he doesn’t develop the other one. On page 67 he says, “As to the question of preparation for the future, yes, I would argue that a robust eschatology and biblical anthropology is the need of the hour.” Biblical anthropology includes many things. It includes the image of God in man. This image gives some optimism of what the unregenerate can do. But Biblical anthropology also includes unregenerate man’s total depravity (not that man can’t get worse – he can, but that the totality of his being is affected by sin – including his economic thinking). Total depravity explains fear (a big subject in the book), greed, manipulation, and many other things. Depravity keeps one from being naive about the markets since both fear and greed are endemic to the human heart and often are part of irrational dips and bubbles. When a vastly overpriced market corrects, fear can lead to perfectly good companies (with a fantastic P/E) also dipping to insanely low P/E ratios, making fantastic deals that can be snapped up (I just snapped one up recently with a P/E of 0.83). Yes, Bahnsen plays lip service to the doctrine of anthropology, but that doctrine makes me much more cautious than he appears to be. The bottom line is that Bahnsen comes across as a salesperson for the stock market - and the cynic in me wonder - why wouldn't he? Morgan Stanley needs people to be optimistic about the market place.
But in addition to postmillennialism and depravity, there are other Biblical doctrines and presuppositions that need to undergird our investments. As our nation becomes more and more corrupt, I also take into account God's holy judgments of nations in history. One of the most frequent tools of judgment is the tyranny of the state - but even there, people can make a profit if they are wise. Would it have been un-postmillennial for Jews to pull out of the Israelite stock market and to invest in the Babylonian stock market in the sixth century BC? Obviously not. I’m sure Bahnsen would agree with the above, but the book never seems to offer such cautions.
But most importantly, Bahnsen seems to have drifted from (or is unaware of) the 22 Biblical axioms that necessitate an Austrian approach to economics rather than a monetarist or Chicago School approach to economics. BiblicalBlueprints.com will soon have the axioms of economics and many other disciplines posted on its website. If one’s investments are guided by those 22 axioms, one can anticipate many market moves and make a profit in any situation. But those 22 axioms have made me extremely leery of the stock market right now as it is still overvalued – even with the recent corrections.
Issue three – His discussion of QE, Fischer’s equation, and inflation is problematic
Third, Bahnsen’s discussion of QE, Fischer’s equation, inflation, and deflation is problematic. The word "inflation" is almost always used to describe price fluctuations up, though he will occasionally give lip service to the Austrian definition of inflation. But I want to illustrate some problems in his discussions of this topic. It may be that I have misunderstood him (and he is far more brilliant than I am, so I am certainly open to correction), but having read the book two times, I don’t think so.
Price fluctuations aren’t technically inflation or deflation. Inflation is an increase in the money supply chasing the same (or less) amount of goods. With Robert Murphy (a great Christian), I prefer to keep the two ideas of price inflation and monetary inflation well-defined and strictly separated. While monetary inflation does lead to price inflation, it doesn’t do so in a mathematically calculated formula (as friends of mine who have lived through the hyper-inflation in Zimbabwe will tell you). Austrians know this. For example, Mises pointed out that a doubling of money into the economy may produce far more than a doubling of price of a consumer good if people begin fearfully dumping money in exchange for goods. On the other hand, if people have no fear of depreciation, doubling money may not double the price of a good. The subjective value people impute to something needs to be accounted for. Austrian economics uses tools of subjective value theory, not the mechanistic approach that is assumed by Fisher's equation. Bahnsen does acknowledge the massively complex nature of the economy, but wants to have his cake and eat it too when he uses Fisher's equation. Austrians do not discount the observation that "the particular circumstances that impact prices are vast, complex, filled with variables, and therefore are not level across all goods and services." (pp. 119-120). But it is this very complexity that attracts me to a pure deductive Austrian approach (or better, to a purely Biblicist approach - since the Bible provides the 22 presuppositions of Austrian economics plus more). It seems to me that unless a person is omniscient, the Chicago School can never accurately define the numbers in his more complex equation given by Irving Fisher that MV=PT or that P=MV/T. (Or as it is often written, MV=PQ with Q being quantity.) Sure, we can know the Money Supply (M) even though that is complex. But how on earth can you accurately measure the Velocity of money at any given moment, let alone in any given year? It is simply not possible to know every exchange of every dollar. And since you are multiplying that velocity times the total Supply of Goods and Services (T), I'm not sure how useful that equation is to investing. For one of many critiques of Fisher's equation, see https://mises.org/wire/monetary-infla... and see Murray Rothbard’s book, Man, Economy, and the State, chapter 11. Also see my comments in the first section above.
Issue four – his belief (stated several times) that the Treasury bond prices are the best indicator of where real price inflation is at
Let me give quotes on these issues. On pages 12-13 he says,
"No new cash or money enters the economy as a result of QE... Treasury bonds are pulled out of the economy, and put on the balance sheet of the Federal Reserve. In this sense, it is an asset swap - not asset creation. The Fed adds to bank reserves, and the banks sell their treasuries to the Fed. The private sector does not come out of the transaction with more money - they come out of it with different money.
The banks do end up with massive new reserves, and if the banks lent them all out, and consumers spent that borrowed money, it would result in a higher velocity of money, which combined with the increased money supply would perfectly meet the algebraic definition of more inflation."
On page 49 he says, "bond prices tell us more about inflation than potentially idiosyncratic price movements." However, Treasury bonds are not the best indicator. Just look at the side-by-side comparison of CPI and Treasury Bond prices in this chart and you will see that Bahnsen is way off. https://www.thebalance.com/u-s-inflat...
While I agree that idiosyncratic price movements of certain commodities do not accurately describe true inflation (true inflation is the dilution of the value of the dollar by creating more dollars), I also don't think that the bond prices tells us much of anything about either monetary inflation or price inflation. On page 38 he says, "The bond market is the judge and jury here." His point is that if inflation were really here, people wouldn't be buying bonds & treasury notes. He says on page 39, "TRILLIONS of SMART dollars cannot buy ten-year government paper at 1.5% if they believe it will be subject to 4%, 6%, or 8% annual inflation between now and then. If financial actors were all that stupid, we got capitalism wrong." Then why doesn't he buy those bonds? Obvious answer: he can make more money elsewhere and treasury notes do not even remotely keep up with the officially posted CPI . If you bought U.S. Treasuries in March of 2020, the one-month Treasury bill and the three-year Treasury were trading at 0.81% and 0.54%, respectively. It's gone...[I've run out of space. Oh well.]
May 30, 2022
I know very little about economics, so it was a hard book to wrap my head around. I like the letter format and I think I'll go back to it once I have some more knowledge in this area.
April 8, 2022
Read for the audiobook. Really good.
April 18, 2022
Really valuable information for Christians who want a good theology of culture in this day and age. Not always the most clearly communicated, but worth the read.
April 27, 2022
This was a fun read. David responds to Doug's questions about the economy in a way that is easy for an infant in economics (like me) to understand. The general premise of David's philosophy behind what we are seeing in the American economy is similar to what we've been seeing in Japan; deflation.
Money is not created when the treasury prints it. It is not created when the banks receive it. It isn't even created once a citizen takes a loan out from it. It is created once that loaned money is spent. Printed money doesn't do anything unless it is actually used. Using the money creates velocity. Once there is velocity, if there is no increase in supply/goods, but the demand is raised by the increase of money production (actually being spent on goods), then you have inflation. The reason we aren't seeing inflation the way "dooms dayers" have predicted is because even though the government has handed citizens a decent amount of money over the last few years, that money is being saved, or spent once (maybe twice) and then being saved again; it isn't in circulation, thus not creating inflation.
The reason we are seeing inflation in housing, student loans, and medical is because those are the three sectors of the economy that the government has subsidized the most. If the government has its money involved in a particular sector, you can expect that sector to rely more and more on the government and become more and more of a burden to the people.
The moral of the story: smaller federal government, larger self-government. We need more Christians with a robust post-millennial worldview, who believe the Gospel is going to take over the earth, to be risk takers; not like those who hide their talents waiting for the Master to return because they are afraid of losing some of it. What the Lord has given you, invest; trust Him and with wisdom, try turning a profit on it. What value can you add to society? What can you build that might help your neighbor? In what ways can you give? How can you invest? An increase in self-government will increase productivity. Increasing productivity creates goods and services, which stimulates growth. This is the backbone of a thriving economy; entrepreneurial men and women of God.
Really insightful stuff, easy to read, and very helpful in beginning to get my mind wrapped around how the economy works and what variables affect what commodities. I'm interested in reading Bahnsen's book "There's No Free Lunch: 250 Economic Truths" next.
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Money is not created when the treasury prints it. It is not created when the banks receive it. It isn't even created once a citizen takes a loan out from it. It is created once that loaned money is spent. Printed money doesn't do anything unless it is actually used. Using the money creates velocity. Once there is velocity, if there is no increase in supply/goods, but the demand is raised by the increase of money production (actually being spent on goods), then you have inflation. The reason we aren't seeing inflation the way "dooms dayers" have predicted is because even though the government has handed citizens a decent amount of money over the last few years, that money is being saved, or spent once (maybe twice) and then being saved again; it isn't in circulation, thus not creating inflation.
The reason we are seeing inflation in housing, student loans, and medical is because those are the three sectors of the economy that the government has subsidized the most. If the government has its money involved in a particular sector, you can expect that sector to rely more and more on the government and become more and more of a burden to the people.
The moral of the story: smaller federal government, larger self-government. We need more Christians with a robust post-millennial worldview, who believe the Gospel is going to take over the earth, to be risk takers; not like those who hide their talents waiting for the Master to return because they are afraid of losing some of it. What the Lord has given you, invest; trust Him and with wisdom, try turning a profit on it. What value can you add to society? What can you build that might help your neighbor? In what ways can you give? How can you invest? An increase in self-government will increase productivity. Increasing productivity creates goods and services, which stimulates growth. This is the backbone of a thriving economy; entrepreneurial men and women of God.
Really insightful stuff, easy to read, and very helpful in beginning to get my mind wrapped around how the economy works and what variables affect what commodities. I'm interested in reading Bahnsen's book "There's No Free Lunch: 250 Economic Truths" next.
---------------------------
Follow!
www.laymansprogress.com
https://www.instagram.com/laymansprog...
April 12, 2023
A helpful book for laymen who do not know much about economics and wonder why we are not yet the Wymar Republic or Zimbabwe. This book was written in an easy to understand question and response format. I found it interesting that Bahnsen actually argues that we should be more concerned about deflation than inflation and more concerned with entering 'Japanification' (a period of economic stagnation) than we with becoming the Wymar Republic or Zimbabwe.
May 18, 2022
This was helpful on many points. Bahnsen was hard to understand at times, but I believe his central thesis is that government overspending and overreach are what threaten the American economy and not inflation in the Friedman sense of too much money chasing too few goods. I also appreciated Wilson’s thoughtful questions voicing the concerns and confusions of lay people like me.
Read
May 27, 2022I came to this book with some real skepticism, but was mostly convinced by the arguments and vision that the letters teased out.
Even if it doesn't convince you, this book is fun and very clear, you will certainly find food for thought and a challenge to some of your cherished ideas.
Liked it a lot.
Even if it doesn't convince you, this book is fun and very clear, you will certainly find food for thought and a challenge to some of your cherished ideas.
Liked it a lot.
January 18, 2026
Bahnsen and Wilson write a series of letters back and forth in this book on the subject of inflation in the USA. Bahnsen helps to correct some errors of thought and verbiage while putting forth his own, albeit minority, views on economics and finance. If you have no background in these things, you will probably really enjoy getting your feet wet here, but if you have a strong understanding of the topic you will have some questions about Bahsnens view that will go unanswered as well as some head scratching comments that muddle the financial waters.
May 9, 2022
Interesting take on economics to say the least, especially coming from a "gold-in-the-mattress" kind of family. I am encouraged to read more on the subject.
May 17, 2022
My favorite Pastor and his wonderful witticisms collaborating with my favorite economist of the day. This book could have been twice as long and I would’ve soaked in every minute of it.
Additionally, it made me incredibly grateful to be married to a man who takes risks and leads me instead of leaving me to bury everything in the ground.
Additionally, it made me incredibly grateful to be married to a man who takes risks and leads me instead of leaving me to bury everything in the ground.
June 1, 2022
Very good especially in the format of letters asking questions and letters back with an answer or two. Could be email. I’m old fashioned
September 25, 2022
Well, I understand some things. And still don’t understand many things. BUT I found it helpful. I listened on audio on the Canon+ App
April 19, 2022
Informative, refreshing to have a Christian perspective on our current economic situation.
December 12, 2022
A fascinating exchange of letters. Well worth the read. It is the layman's guide to our current economic woes related to inflation, gold, debt etc. Highly recommend.
May 5, 2022
I took a few business classes in college and had a few of the questions Doug Wilson asked. This was enlightening. I recommend it.
June 20, 2022
3.5 stars
June 21, 2024
Do you have some questions about the economy? Perhaps you want to know about inflation or deflation or stagflation. Maybe your interest is in gold or deficit spending. Well, this little book has those questions and a few more, and it contains answers to those questions. Douglas Wilson asks the questions, and David Bahnsen gives the answers. The format is a series of letters where Mr. Wilson poses a question or two in a letter, and Mr. Bahnsen responds with some answers in a letter back to Mr. Wilson. Then Mr. Wilson writes another letter in which he reviews the answers and asks more questions, and so it goes.
It is easy reading. I say that because the economy is discussed in layman’s terms. Although Mr. Bahnsen claims he is an economist of sorts, he also runs a financial service company and invests people’s money for them. His primary area of investing is the stock market. Both of them are conservative Christians and have somewhat similar views, so the exchange is collegial with an effort to impart understandable information. It is important to know their backgrounds as it influences their thinking.
David Bahnsen is a bit of a contrarian in that he thinks we are heading for deflation or perhaps stagflation. He argues that we need to be productive to make society function well for the benefit of all people. At my age (82), I am not going to get a job or start a business, but I can still be productive. David Bahnsen is younger, so that colors his advice, but I think his advice is good for most people. He addresses some of the common errors or assumptions about the economy and shows their falsity and how it leads to poor conclusions. It’s interesting that both liberals and conservatives have misunderstandings that David attempts to correct.
Disclosure: David Bahnsen’s dad, Greg Bahnsen, and I were friends, but I really don’t know David at all. However, I can see his dad’s influence in the logical way David thinks and writes. That’s a positive. Read the book if you want answers to the pressing questions on the economy today.
It is easy reading. I say that because the economy is discussed in layman’s terms. Although Mr. Bahnsen claims he is an economist of sorts, he also runs a financial service company and invests people’s money for them. His primary area of investing is the stock market. Both of them are conservative Christians and have somewhat similar views, so the exchange is collegial with an effort to impart understandable information. It is important to know their backgrounds as it influences their thinking.
David Bahnsen is a bit of a contrarian in that he thinks we are heading for deflation or perhaps stagflation. He argues that we need to be productive to make society function well for the benefit of all people. At my age (82), I am not going to get a job or start a business, but I can still be productive. David Bahnsen is younger, so that colors his advice, but I think his advice is good for most people. He addresses some of the common errors or assumptions about the economy and shows their falsity and how it leads to poor conclusions. It’s interesting that both liberals and conservatives have misunderstandings that David attempts to correct.
Disclosure: David Bahnsen’s dad, Greg Bahnsen, and I were friends, but I really don’t know David at all. However, I can see his dad’s influence in the logical way David thinks and writes. That’s a positive. Read the book if you want answers to the pressing questions on the economy today.
February 2, 2026
Quick little read about the current economic pressures and the real underlying problems that seem to be effecting the prices of things in our world.
This is a conversational book between Wilson and Bahnsen, and I very much appreciate Wilson’s use of analogy as a witty yet didactic tool for summarizing the heady concepts that Bahnsen is propounding.
I came away from the book with a better idea of perhaps how we got to this point in the economy, some of the variables involved that can be fixed, and what we, as Christians, should be “investing in”.
I will say that I do have a point of contention with Bahnsen (although perhaps I am just missing something in my own understanding) regarding “trade deficits” between the U.S. and other nations. He argues that our trade isn’t as lopsided as many say it is. If this were true, how has Trump gotten away with justifying tariffs under the guise of “balancing trade deficiencies”? This book was published before Trump assumed office for his 2nd term, so I’m sure Bahnsen would have lots to say about this new economic reality, but that’s the one big question/contention I came away.
This is a conversational book between Wilson and Bahnsen, and I very much appreciate Wilson’s use of analogy as a witty yet didactic tool for summarizing the heady concepts that Bahnsen is propounding.
I came away from the book with a better idea of perhaps how we got to this point in the economy, some of the variables involved that can be fixed, and what we, as Christians, should be “investing in”.
I will say that I do have a point of contention with Bahnsen (although perhaps I am just missing something in my own understanding) regarding “trade deficits” between the U.S. and other nations. He argues that our trade isn’t as lopsided as many say it is. If this were true, how has Trump gotten away with justifying tariffs under the guise of “balancing trade deficiencies”? This book was published before Trump assumed office for his 2nd term, so I’m sure Bahnsen would have lots to say about this new economic reality, but that’s the one big question/contention I came away.
March 9, 2023
Interesting dialogue about why post-COVID government spending has not caused the hyperinflation doomsday scenario some conservative economists envisioned. Bahnsen argues that inflation should be measured against the bond market, not just rising commodity prices (which can be localized). When doing so, it becomes apparent deflation rather than inflation is the real issue facing the US economy. In particular, debt (where the government is the borrower) has caused a stagnation of productivity - while there is a greater money supply for consumers, the velocity of money is down causing no economic growth. The best way to handle deflation, then, is risk-taking enterprise - a conclusion that recognizes that wealth is inherently anthropomorphic. This ties in well with the biblical vision that human being should "fill the earth and subdue it" (i.e. risk-taking enterprise) rather than to simply hedge against a doomsday future in order to simply survive.
August 17, 2023
Previous Knowledge Required
The book is not overly complex, it’s quite straightforward, asking simply questions and getting equally simple and hopefully easy to understand answers about complex economic realities. However, by virtue of this being a book about real economics, one does need to be somewhat knowledgeable about economics and the jargon in the Econ world. If you don’t know what in the world inflation or money volatility means before you read this book, you might want to do some Econ 101 reading to at least get the lay of the land of certain terms and realities so you can benefit the most from this book.
Even if your not familiar with every term tho, like I was, you can still feel your way around in the dark a bit and get a really good chunk of what is being asked and explain here, which means you can still understand most of what is being said and hopefully understand money and the policy surrounding it a little bit better after reading it, like I have!
The book is not overly complex, it’s quite straightforward, asking simply questions and getting equally simple and hopefully easy to understand answers about complex economic realities. However, by virtue of this being a book about real economics, one does need to be somewhat knowledgeable about economics and the jargon in the Econ world. If you don’t know what in the world inflation or money volatility means before you read this book, you might want to do some Econ 101 reading to at least get the lay of the land of certain terms and realities so you can benefit the most from this book.
Even if your not familiar with every term tho, like I was, you can still feel your way around in the dark a bit and get a really good chunk of what is being asked and explain here, which means you can still understand most of what is being said and hopefully understand money and the policy surrounding it a little bit better after reading it, like I have!
April 2, 2022
A good book. Bahnsen has appropriate conclusions, even though his monetary theory is a little lacking (or in the very least a little unclear). If he understood the endogenous credit theory of money better than I think it would provide even better support for his conclusions, but more importantly such an understanding would give him (and this book) more clarity. As it stands, the book was slightly muddled... but only slightly. Also, a more precise understanding of the endogenous credit theory of money would help to provide more creative structural solutions for our monetary problems, beyond the solutions Bahnsen advocates (and don't get me wrong, Bahsen advocates for some good stuff here, but I think some more interesting systemic changes would complement what he's advocating for and make it even better).
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