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

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money What is the effect of government’s spending more than it collects in taxes or borrows from the people by increasing the quantity of money What is the effect on prices when those who receive some of this increased quantity of money spend it We shouldn’t be very strict in judging the governments which increase the quantity of money because they want to spend more than they collect from the people. e situation in Parliament, Congress, or the parliamentary body is that there is, on the one hand, a very unpopular tax, very unpopular, and on the other side there is a very popular expenditure. You know government expenditures are always popular with those people who receive the money the government spends. Now this is a fact, you know; you can’t change it. ere is a very popular expenditure. And elections are not far away. Now what does the government do in such a situation, a weak government Don’t say that if you were in control, you would have a better government; perhaps you would also be weak if you were in this situation. e government resorts to inflation, and that means an increase in the quantity of money. And this is the second monetary problem. 61
CHAPTER FIFTEEN Deficit Financing and Credit Expansion I assume that you know how the banking system developed and how the banks could improve the services rendered by gold by transferring assets from one individual to another individual in the books of the banks. When you study the development of the history of money you will discover that there were countries in which there were systems in which all the payments were made by transactions in the books of a bank, or of several banks. e individuals acquired an account by paying gold into this bank. ere is a limited quantity of gold so the payments which are made are limited. And it was possible to transfer gold from the account of one man to the account of another. But then the governments began something which I can only describe in general words. e governments began to issue paper which they wanted to serve the role, perform the service, of money. When people bought something they expected to receive from their bank a certain quantity of gold to pay for it. But the government asked: What’s the difference whether the people really get gold or whether they get a title from the bank that gives them the right to ask for gold It will be all the same to them. So the government issued paper notes, or gave the bank the privilege to issue paper notes, which gave the receiver the right to ask for gold. is led to an increase in the number of paper banknotes which gave to the bearer the right to ask for gold. Not too long ago our government proclaimed a new method for making everybody prosperous: a method called “deficit financing.” Now that is a wonderful word. You know, technical terms have the bad habit of not being understood by people. e government and the journalists who were writing for the government told us about this “deficit spending.” It 62
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LUDWIG VON MISES ON MONEY AND INFLA
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Copyright © 2010 by the Lu
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14 Two Monetary Problems 59 15 Defi
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CHAPTER ONE Human Cooperation Human
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CHAPTER TWO e Medium of Exchange—
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CHAPTER THREE e Role of the Courts
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from resorting to violence. Now, vi
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the power to call non-potatoes “p
Page 18 and 19: CHAPTER FOUR Gold as Money Now, we
Page 20 and 21: accepted, is that an increase in th
Page 22 and 23: know; it reduced the ratio of gold
Page 24 and 25: CHAPTER FIVE Gold Inflation e gold
Page 26 and 27: such a government to increase the q
Page 28 and 29: CHAPTER SIX Inflation e first rule,
Page 30 and 31: the fact that these countries will
Page 32 and 33: of view of clear fine theories, thi
Page 34 and 35: When the prices of the products whi
Page 36 and 37: ment spends also billions of tax mo
Page 38 and 39: But when he reached his sixtieth bi
Page 40 and 41: CHAPTER EIGHT Inflation and Governm
Page 42 and 43: wanted milk to be more readily avai
Page 44 and 45: CHAPTER NINE Money, Inflation, and
Page 46 and 47: have been in a position to deliver
Page 48 and 49: Germany went to war, the government
Page 50 and 51: constitutional law, that is whether
Page 52 and 53: ery inter-human relation by undermi
Page 54 and 55: servative way with the forests whic
Page 56 and 57: man newspaper with regard to econom
Page 58 and 59: CHAPTER TWELVE Currency Debasement
Page 60 and 61: market has been preserved because o
Page 62 and 63: However, these inflationary methods
Page 64 and 65: and, therefore, impairing their con
Page 66 and 67: CHAPTER FOURTEEN Two Monetary Probl
Page 70 and 71: was wonderful! It was considered so
Page 72 and 73: sures.” ey have invented many oth
Page 74 and 75: est. In fact the only thing that is
Page 76 and 77: CHAPTER SEVENTEEN Balance of Paymen
Page 78 and 79: ties abroad—in France champagne a
Page 80 and 81: French producers of wine. And the p
Page 82 and 83: CHAPTER EIGHTEEN Inter-bank Liquidi
Page 84 and 85: ate in order to stop the withdrawal
Page 86 and 87: per gold is something which the gov
Page 88 and 89: tants would have to use other figur
Page 90 and 91: CHAPTER TWENTY Conclusion We must r
Page 92: a very popular expenditure on the e
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