"The king made silver and gold as common in Jerusalem as stones, and cedar as plentiful as sycamore-fig trees in the foothills."
The verse is praising the king for the great wealth and prosperity in his times. I get the part about gold and cedar. If there is a lot of it about, then by the law of supply and demand it is less expemsive, meaning everyone is wealthier.
But silver was what they used for money. Would not silver being as common as stones create severe inflation?
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Smiling Dave: I think so. After all, the supply of money is higher, decreasing its price, i.e. its purchasing power. Look at Spain in the 1500s. They got their gold and silver for free, without having to give away anything in exchange in trade, and still they had inflation. From wikipedia: Historically, infusions of gold or silver into an economy also led to inflation. From the second half of the 15th century to the first half of the 17th, Western Europe experienced a major inflationary cycle referred to as the "price revolution",[16][17] with prices on average rising perhaps sixfold over 150 years. This was largely caused by the sudden influx of gold and silver from the New World into Habsburg Spain.[18] The silver spread throughout a previously cash starved Europe and caused widespread inflation [disclosure: np]
I think so. After all, the supply of money is higher, decreasing its price, i.e. its purchasing power.
Look at Spain in the 1500s. They got their gold and silver for free, without having to give away anything in exchange in trade, and still they had inflation.
From wikipedia:
Historically, infusions of gold or silver into an economy also led to inflation. From the second half of the 15th century to the first half of the 17th, Western Europe experienced a major inflationary cycle referred to as the "price revolution",[16][17] with prices on average rising perhaps sixfold over 150 years. This was largely caused by the sudden influx of gold and silver from the New World into Habsburg Spain.[18] The silver spread throughout a previously cash starved Europe and caused widespread inflation
[disclosure: np]
Not so fast. If the money was gained by trade, then the Israelites had to produce goods and sell them to others to get that money. If they were innovative in their production methods or were rich in natural resources, this could easily lead to a non-inflationary accumulation of gold and silver. Hebrew society has traditionally been a society of savings and capital accumulation, so such a result is plausible.
The ostensible difference between this situation and that of Spain is precisely the transfer of goods rather than the lack thereof. If I have 100 barrels of olives and trade them for 100oz of silver when the barrels of olives had a total cost to me of 20oz of silver, this could easily lead to wealth accumulation in the short term. If there are 10,000oz of silver in the regional market (just for arguments' sake) and the supply of money does not change, each transaction makes me relatively wealthier. If, however, as in the case of Spain, there are (again, for arguments' sake) 10,000oz of money in the regional market, and without any change in production, 10,000oz more are brought in from the New World, each ounce of silver decreases in worth by half. One is inflationary, the other is not. I don't think the passage is suggesting that Solomon just mined all the silver and gold, so the accumulation there would be non-inflationary.
Have you checked if Gary North says anything about this passage in his economic commentaries on the Bible?
Also, and I don't think anyone mentioned the most "obvious" answer. It is tradition to think of Solomon as opening up a lot of trading routes, working with Tyre, and over all turning Israel into a more peaceful commercial kingdom than it had ever been in previous generations. So throw that out there just to make sure everyone realizes that.
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vive,
All very true, but let's say Obama did all that King Solomon did for the US economy. He dies and is eulogized for all those accomplishments, and also for making the US dollar close to worthless.
My original question is that by increasing the silver supply King Solomon was making the shekel close to worthless.
Would like a solid answer.
It seems that the additional gold was real wealth added to society. Opposed to our current situation, where we have false wealth being created through the printing of money.
1) I think it really depends on what is being said. I don't feel like pulling out my resources on Greek (and I know little of Hebrew / Aramaic, so if it an Aramaic phrase that would make it even more difficult) to know what is meant by "increasing silver". If it is more or less a phrase that was traditionally meant to mean "the inhabitants of the kingdom were prosperous(as silver was very much a prestige item)" than that is all we can look at and read into it, I would also likely consider that to be the best way to intepret the phrase - as it wasn't meant as a scientific proposition but a way to describe what was going on in Israel at the time.
The best way to refute it that I can think of would be by saying the Kingdom split due to heavy taxation at the time...but I think that is made clear due to unprecedented expensive building projects than showing a major devaluiing of currency.
2) I don't know how to make the claim that Solomon could inflate silver, nor do I know how silver could be inflated in this period. So far as I can discern, this was one of the "better times to be in the East Med / Near East. There were no "major" empires and wars and trade seemed to be booming. Solomon's silver was tied to Phoenician trading and colonization (and as I pointed out earlier maybe Hellenistic mining), as the Phoenician's were expanding westward, specifically for the silver trade. In fact before the 10th century, there is 0 indication that silver (or any metal) was circulating at any considerable level. This was an unprecedented era of trade, and perhaps the 1st time in history we had anthing of an international standard, and comming out of the "barter system" of old and into something close to actual "money".
So when "silver was increasing", we are looking at maybe for the 1st time civilizations reorginizing the way they thought and handled trade. Also, and very important - it is tough to date if silver would be the "de facto" currency at this period or a little later - perhaps silver was just the hallmark for saying "prestige object" rather than currency.
There is no evidence of inflation in this period of the Hellenistic city - states, Assyria, and Tyre (I can't comment on Egypt, Anatolia/Hittites or the Iranians at this point). In fact this seemed to be a long era of relative prosperity. There are a couple of Assyrian examples of note, but they are a few centuries later. And it can be stated with some certainty it isn't until the reign of Asurbanipal that inflation starts to kick in due to the increase of silver supplies.