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

CHAPTER
NINETEEN
Does the World Need a World Bank and More Money
As a medium of exchange, the situation of money is different from that of
other commodities. If there is an increase in the quantity of other commodities,
this always means an improvement of conditions for people. For
instance, if there is more wheat available, some people for whom there was
no wheat available before can now get some, or they can get more than
they would have received under the previous conditions. But with money
the situation is very different.
To point this out, you have only to consider what happens if there
is an increase in the quantity of money. Such an increase is considered
bad because it favors those who get the new money first at the expense of
others; it never happens in such a way as to leave relations among individuals
unchanged. Let us take the following situation. Imagine the world
as our world is, you know. Some people own money and also claims on
money, claims to get money from somebody else; they are creditors. en
there are also people who are debtors, who have debts in money. Now
imagine a second world which is precisely the same as the first world except
for one thing, that wherever there is a quantity of money available,
a cash holding, or a demand for money in the first world, there is in the
second world the double of it. at means that everything is the same
in both worlds, nothing is changed except something in the arithmetic.
Everything in the second world is multiplied by two. en you will say,
“It doesn’t make any difference for me whether I live in the first world or
the second world. Conditions are the same.” However, if changes in the
supply of money were to bring this about, one might think that this also
was only a problem of arithmetic, a problem for accountants; the accoun-
80