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On The International Monetary Problem

2 min read

On The International Monetary Problem

Ludwig von Mises stands as one of the most influential economists of the Twentieth Century, and his work, from the perspective of the presently unrolling world financial debacle, appears more important than ever. In this article that first appeared in the pages of American Opinion magazine in 1967, the great economist explains the problems of “expansionist policy” and warns, from the perspective of 1967: “Today we are still able to stop the progress of inflation and to return to sound principles of financing government expenditure. But will we have the same opportunity tomorrow?” -Ed.

WHAT IS NOWADAYS called governmental monetary management encompasses two kinds of policy. It is on the one hand deficit spending, i.e., undisguised inflation to enable the government to spend beyond the amount of funds collected by taxation or borrowed from the public. It is on the other hand a policy of easy money, i.e., of attempts to lower the market rate of interest by credit expansion.

The governments as well as their henchmen are fully convinced that this expansionist policy is highly beneficial to the immense majority of all decent people. They emphatically deny that increasing the quantity of money in circulation is what economists, politicians, and all sane people used to call and still call inflation. As they see it, inflation has nothing to do with the quantity of money in circulation; it is rather a reprehensible procedure of greedy businessmen that ought to be prevented by government control of prices. Interest is, in the eyes of the official doctrine, essentially a factor hindering the development of “really productive” business. Such a doctrine views interest as a tribute that the industrious members of society are compelled to pay to a race of lazy moneylenders.

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