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

ties abroad—in France champagne and other French wines, for instance.
And the remedy recommended is to make it impossible by acts of legislation
for these people to use “our money”—again in quotation marks—for
the purchase of such useless things as French wines. ey say the reason
why prices expressed in dollars and prices expressed in other currencies are
going up is due to you, the people. e people are responsible, according
to the governments, because they are drinking imported champagne
and because they are traveling in foreign countries. Why do they speak
about champagne and about traveling in foreign countries Because, as
the governments consider it, these are luxury things. erefore, what the
government does is simply, “Look at these bad people who are drinking
champagne. ey are responsible for the inflation, for the higher prices;
they are responsible for all evils under the sun.” e way in which the
American government deals with the problem is only one of the ways in
which the government justifies its action. is is “the luxury excuse.”
But there is a second excuse, “the necessities of life” excuse, which
countries give when imports consist predominantly of goods that are considered,
by public opinion, as necessary and indispensable. In such countries—for
instance, in all those European countries that are predominantly
industrial, exporting industrial products, manufactures, in order to import
food and raw materials. ey say: “What is responsible for our unfavorable
development of foreign exchange rates is the fact that we are poor insofar
as we cannot produce on our own territory all the foodstuffs and raw
materials needed and we have to import them. ese other nations, the
‘have’ nations, are exploiting us.” is is the version which, for instance,
was used by Mussolini in order to justify his aggression: “Why must we
go to war against other countries Because we are forced to import things
which are absolutely necessary for the support of the life and health, and
so on, of our population.”
What the government does not say—when it blames the balance of
payments for the effect of inflation on the purchasing power parity—is
that if people are prevented from spending dollars to import champagne,
they would buy something else. ey would not put the dollars in a package
and send this package to the government so it would have more money
for paying the deficits of its enterprises, the post office, for instance. If instead
of buying imported champagne, they are buying other things on the
domestic market, the prices of those things would go up on account of the
fact that there is now a greater demand for them. is will bring about
higher prices for some things which previously were exported. And those
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