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

However, these inflationary methods are very popular. ey are popular
because they are very comfortable for the government. ey are also
very comfortable from the point of view of the individual member of a
parliamentary body. e member of Parliament is not made responsible
for higher taxes, but he accepts with pleasure the responsibility for higher
expenditures. erefore, if you read those reports of the parliamentary
bodies which are not reprinted in all newspapers, you will find that most
members of Parliament, of any parliament—I am not talking about the
parliaments of the countries represented in this room—are very quick to
suggest additional expenditures and to suggest additional taxes of the kinds
which the voters in their district do not pay. At the same time, they have
some inhibitions with regard to what they consider as the unjust overburdening
of their own voters with taxes.
I once heard a government official, the minister of finance of a country
which was famous for its inflation and not for anything else, say, “My
minister of education says he needs more money. I am the minister of
finance. I have to provide the money. I have to print the money.” It
doesn’t matter whether the purpose is a good one or a bad one. What it
brings about is that there is now on the market an additional demand for
commodities and services which was created out of nothing.
An increase in the quantity of many things is very good—yes, an increase
in the supply of those things which are useful. But an increase in the
supply of, let us say rats and mice, would not be very useful. Fortunately
this is not a problem men have to decide because the interests of all people
agree in this regard. But their interests do not agree with regard to money.
What misleads the thinking of many people, and unfortunately also the
thinking of those people who are operating our governmental and political
activities, is the idea that the quantity of money counts. It is certainly
better for the individual to have more money than less. But it is not better
for the whole economic system to have more money than less. Money is
a medium of exchange. And that means, first of all, that its quantity is
without any importance for the perfection of its functions. If you increase
the total quantity of money, the total quantity of the medium of exchange,
you do not improve conditions generally; you only change exchange ratios
between the individuals’ evaluations of goods and services and of the thing
used as money. I want to make this clearer by pointing to a very simple
case taken from daily affairs.
e most outspoken defender and preacher of inflation in our age,
Lord Keynes, was right from his point of view when he attacked what is
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