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

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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- 73
creased quantity of American paper bills is now chasing a not-increased quantity of goods available for consumption.” If all imports and exports were stopped, the various countries would return to autarky; they would have to forego all the advantages which result from exchange in other countries. Now the only thing we can learn from the whole situation is this. e market, the people buying and selling on the market outside of the government, have developed in the course of centuries a system of money based on the precious metals, silver and gold. e governments interfered again and again. Government interference excluded silver from the monetary system which the market had developed, leaving only gold as money. Yet governments—the individual governments, the various governments, and now the cooperation of the various governments in the International Monetary Fund—have not succeeded yet in bringing about the demolition of this system. Whatever one says about it, one has to realize that money is a creation of the market, a creation of the people buying, selling, and producing. It is not something that the government can manipulate just to make it possible for the government to spend more than the people are prepared to pay. 74
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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
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CHAPTER FOUR Gold as Money Now, we
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accepted, is that an increase in th
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know; it reduced the ratio of gold
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CHAPTER FIVE Gold Inflation e gold
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such a government to increase the q
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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 68 and 69: money What is the effect of governm
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 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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