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

French producers of wine. And the prices which they will have to charge
will have to drop in order to make it possible for them to sell all their
production, their whole production, somewhere else, either in France or
in other countries. ey will have to sell at lower prices than those which
they would have received if the Americans had bought this French product.
at means that there will be in France now people who are no longer
in a position to maintain the standard of living which they maintained before.
ey will have to restrict their consumption. ey will, for instance,
have to restrict purchases of imported commodities, let us say, of American
cars. And in this way they will adjust themselves to the new situation.
is means that when you prohibit the importation of some goods from
foreign countries, you necessarily make, not only American imports decrease,
but also those American exports which would have been sold in
payment for these imports of French luxury goods. And this does not refer
only to France. e connection is a little bit more complicated; other
countries are included; the French do not only restrict their consumption
of American goods, but they restrict also the importation of goods from
other countries. And then these other countries are in the chain of causation
which finally brings about necessarily a drop in American exports also.
If all countries of the world, consistently keeping to this balance of
payments theory, were to proceed in the same way in order to make their
domestic currencies independent of international valuation, i.e., their purchasing
power parity, this system would finally bring an end to any kind
of international trade. All imports would be prevented. And the result of
stopping all imports will mean, of course, also the end of export trade. Every
country will be self-sufficient, autarkic, as the Greek term says. Now
there was such a period in history. Not so long ago there were many
countries in the world that had no commercial relations with other countries,
especially not with far distant countries. And there was once, long,
long ago, a period of history in which there was no foreign trade at all.
And when foreign trade developed it always meant both exporting and
importing.
Foreign trade is not one-sided. It is always necessarily a mutual exchange
of commodities and services between various countries. is has
nothing to do with the appraisal of the purchasing power of the monetary
unit. It is not the import of French wines that makes the price of domestic
commodities go up. e price of these domestic commodities goes
up on account of the fact that the government has increased the quantity
of money and, therefore, as expressed in a very questionable way, “an in-
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