Ludwig von Mises on Money and Inflation.pdf - The Ludwig von ...

When talking about conditions in France, one should not overlook
what inflation actually means. e French were right when, in the nineteenth
century and in the beginning of our century, they declared that the
social stability and the welfare of France is to a great extent based upon the
fact that the masses of the French population are owners of governmentissued
bonds and therefore consider the financial welfare of the country,
of the government, as their own financial advantage. And now this has
been destroyed. Frenchmen who were not in business themselves, i.e., the
majority of the population, were fanatical savers. All their savings were
destroyed when the tremendous inflation reduced the value of the franc to
practically nothing. e French franc may not have declined completely to
zero, but for a Frenchman, who had $100 before and then had only one
dollar—for such a Frenchman, the difference was not very great. Only
a very few people can still consider themselves owners of some property
when their property is reduced to 1% of what it was before.
In talking about inflation, we should not forget that over and above
the consequences of destroying a country’s monetary standard, there is the
danger that depriving the masses of their savings will make them desperate.
For decades there were only a very few who would agree with me in this
position. Even so, I was astonished to read today in Newsweek that the
majority of the people in the nation are not interested in the preservation
of the purchasing power of the monetary unit. Unhappily, the article did
not say that the destruction of the savings of the masses was a much more
serious matter than the “famous” war now being waged on poverty.
It is ridiculous for the government to finance a “war on poverty” 2 by
taxing, inflating, and spending, and so sacrificing the savings of the masses
who are trying to improve themselves through their own efforts. is is
one of the many contradictions which we have in our political, not our
economic, system. To explain what I have in mind, consider the dreadful
contradiction of the American government when it says: “We have to
wage a war against poverty. Certainly many people are poor and we must
make them wealthier.” And yet this government taxes the people in order
to make bread more expensive. You will say, “So, bread is more expensive;
this is an exception.” But it is not an exception! e American govern-
2 President Lyndon Johnson had announced, in his January 8, 1964 State of the Union
address, an “unconditional war on poverty in America.” e money was intended especially
for “the chronically distressed areas of Appalachia.” (World Almanac, 1965, p. 142)
By December of that year, Congress had appropriated $784.2 millions for various projects
in Appalachia and parts of 10 other states, primarily for highways and new jobs. (World
Almanac, 1965, pp. 42, 47)
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