The Theory of Money and Credit Quotes

“A government always finds itself obliged to resort to inflationary measures when it cannot negotiate loans and dare not levy taxes, because it has reason to fear that it will forfeit approval of the policy it is following if it reveals too soon the financial and general economic consequences of that policy. Thus inflation becomes the most important psychological resource of any economic policy whose consequences have to be concealed; and so in this sense it can be called an instrument of unpopular, i.e. of anti-democratic, policy, since by misleading public opinion it makes possible the continued existence of a system of government that would have no hope of the consent of the people if the circumstances were clearly laid before them. That is the political function of inflation. It explains why inflation has always been an important resource of policies of war and revolution and why we also find it in the service of socialism.”
― Ludwig von Mises, The Theory of Money and Credit

“There is no room at all for independent enterprise under any variety of State Socialism. Prices are to be regulated authoritatively; authority is to fix what is to be produced, and how, and in what quantities. There is to be no speculation, no 'excessive' profit, no loss. There is to be no innovation unless it be decreed by authority. The official is to direct and supervise everything.”
― Ludwig von Mises, The Theory of Money and Credit

“To a naive observer, money made out of precious metal was 'sound money' because the piece of precious metal was an 'intrinsically' valuable object, while paper money was 'bad money' because its value was only 'artificial'. But even the layman who holds this opinion accepts the money in the course of business transactions, not for the sake of its industrial use-value, but for the sake of its objective exchange-value, which depends largely upon its monetary employment. He values a gold coin not merely for the sake of its industrial use-value, say because of the possibility of using it as jewellery, but chiefly on account of its monetary utility. But, of course, to do something, and to render an account to oneself of what one does and why one does it, are quite different things.”
― Ludwig von Mises, The Theory of Money and Credit

“The role played by man in production always consists solely in combining his personal forces with the forces of Nature in such a way that the cooperation leads to some particular desired arrangement of material. No human act of production amounts to more than altering the position of things in space and leaving the rest to Nature.”
― Ludwig von Mises, The Theory of Money and Credit

“Production is quite possible without money. There is no need for money either in the isolated household or in the socialized community. Nowhere can we discover a good of the first order of which we could say that the use of money was a necessary condition of its production.”
― Ludwig von Mises, The Theory of Money and Credit

“Inflation made it possible to divert the fury of the people to 'speculators' and 'profiteers'. Thus it proved itself an excellent psychological resource of the destructive and annihilist war policy.”
― Ludwig von Mises, The Theory of Money and Credit

“But even though questions of currency policy are never more than questions of the value of money, they are sometimes disguised so that their true nature is hidden from the uninitiated. Public opinion is dominated by erroneous views on the nature of money and its value, and misunderstood slogans have to take the place of clear and precise ideas. The fine and complicated mechanism of the money and credit system is wrapped in obscurity, the proceedings on the Stock Exchange are a mystery, the function and significance of the banks elude interpretation. So it is not surprising that the arguments brought forward in the conflict of the different interests often missed the point altogether. Counsel was darkened with cryptic phrases whose meaning was probably hidden even from those who uttered them. Americans spoke of 'the dollar of our fathers' and Austrians of 'our dear old gulden note'; silver, the money of the common man, was set up against gold, the money of the aristocracy. Many a tribune of the people, in many a passionate discourse, sounded the loud praises of silver, which, hidden in deep mines, lay awaiting the time when it should come forth into the light of day to ransom miserable humanity, languishing in its wretchedness.”
― Ludwig von Mises, The Theory of Money and Credit

“But when States did debase the coinage, it was always from purely fiscal motives. The government needed financial help, that was all; it was not concerned with questions of currency policy.”
― Ludwig von Mises, The Theory of Money and Credit

“What is thus improperly regarded as profit, instead of as part of capital, is consumed by the entrepreneur or passed on either to the consumer in the form of price-reductions that would not otherwise have been made or to the labourer in the form of higher wages, and the government proceeds to tax it as income or profits. In any case, consumption of capital results from the fact that monetary depreciation falsifies capital accounting.”
― Ludwig von Mises, The Theory of Money and Credit

“For hundreds, even thousands, of years, people completely failed to see that variations in the objective exchange-value of money could be induced by monetary factors. They tried to explain all variations of prices exclusively from the commodity side.”
― Ludwig von Mises, The Theory of Money and Credit

“Under certain conditions, index numbers may do very useful service as an aid to investigation into the history and statistics of prices; for the extension of the theory of the nature and value of money they are unfortunately not very important.”
― Ludwig von Mises, The Theory of Money and Credit

“Alterations in real prices occur slowly as a rule. But this stability of prices has its cause in the stability of the price-determinants, not in the Law of Price-determination itself. Prices change slowly because the subjective valuations of human beings change slowly. Human needs, and human opinions as to the suitability of goods for satisfying those needs, are no more liable to frequent and sudden changes than are the stocks of goods available for consumption, or the manner of their social distribution;”
― Ludwig von Mises, The Theory of Money and Credit

“Wieser expressly refers to the incomplete nature of the previous treatment. In his criticism of the Quantity Theory he argues that the Law of Supply and Demand in its older form, the application of which to the problem of money constitutes the Quantity Theory, has a very inadequate content, since it gives no explanation at all of the way in which value is really determined or of its level at any given time, but confines itself without any further explanation merely to stating the direction in which value will move in consequence of variations in supply or demand;”
― Ludwig von Mises, The Theory of Money and Credit

“Once an exchange-ratio between money and commodities has been established in the market, it continues to exercise an influence beyond the period during which it is maintained; it provides the basis for the further valuation of money. Thus the past objective exchange-value of money has a certain significance for its present and future valuation. The money-prices of to-day are linked with those of yesterday and before, and with those of to-morrow and after.”
― Ludwig von Mises, The Theory of Money and Credit

“Even in ancient times general recognition must have been accorded to the view which later in the shape of the maxim pecunia pecuniam parere non potest was to be the basis of all discussion of the problem of interest for hundreds and even thousands of years, and Aristotle undoubtedly did not state it in the famous passage in his Politics as a new doctrine but as a generally-accepted commonplace.2”
― Ludwig von Mises, The Theory of Money and Credit

“In fact, the role played by man in production always consists solely in combining his personal forces with the forces of Nature in such a way that the cooperation leads to some particular desired arrangement of material.”
― Ludwig von Mises, The Theory of Money and Credit

“An attempt is sometimes made to demonstrate the desirability of measures directed against speculation by reference to the fact that there are times when there is nobody in opposition to the bears in the foreign-exchange market so that they alone are able to determine the rate of exchange. That, of course, is not correct. Yet it must be noticed that speculation has a peculiar effect in the case of a currency whose progressive depreciation is to be expected while it is impossible to foresee when the depreciation will stop, if at all. While, in general, speculation reduces the gap between the highest and lowest prices without altering the average price-level, here, where the movement will presumably continue in the same direction, this naturally can not be the case. The effect of speculation here is to permit the fluctuation, which would otherwise proceed more uniformly, to proceed by fits and starts with the interposition of pauses.”
― Ludwig von Mises, The Theory of Money and Credit

“Any intervention, such as that of the German Reichsbank in the Spring of 1923, in which only a small part of the increasing note-expansion was recovered by the banks through the sale of foreign bills, would necessarily be unsuccessful. Led by the idea of opposing speculation, inflationistic governments have allowed themselves to become involved in measures whose meaning is hardly intelligible. Thus at one time the importation of notes, then their exportation, then again both their exportation and importation, have been prohibited. Exporters have been forbidden to sell for their own country's notes, importers to buy with them.”
― Ludwig von Mises, The Theory of Money and Credit

“It is not easy to determine whether there are any who still adhere in good faith to the doctrine that traces back the depreciation of money to the activity of speculators. The doctrine is an indispensable instrument of the lowest form of demagogy; it is the resource of governments in search of a scapegoat. There are scarcely any independent writers nowadays who defend it; those who support it are paid to do so.”
― Ludwig von Mises, The Theory of Money and Credit

“It is true that the speculator may happen to go astray in his estimate of future prices. What is usually overlooked in considering this possibility is that under the given conditions it is far beyond the capacities of most people to foresee the future any more correctly. If this were not so, the opposing group of buyers or sellers would have got the upper hand in the market. The fact that the opinion accepted by the market has later proved to be false is lamented by nobody with more genuine sorrow than by the speculators who held it. They do not err of malice prepense; after all, their object is to make profits, not losses.”
― Ludwig von Mises, The Theory of Money and Credit

“Speculation does not determine prices; it has to accept the prices that are determined in the market. I ts efforts are directed to correctly estimating future price-situations, and to acting accordingly. The influence of speculation cannot alter the average level of prices over a given period; what it can do is to diminish the gap between the highest and the lowest prices.”
― Ludwig von Mises, The Theory of Money and Credit

“It is not the poverty of individuals and the community, not indebtedness to foreign nations, not the unfavourableness of the conditions of production, that force up the rate of exchange, but inflation.”
― Ludwig von Mises, The Theory of Money and Credit

“The balance-of-payments theory forgets that the volume of foreign trade is completely dependent upon prices; that neither exportation nor importation can occur if there are no differences in prices to make trade profitable.”
― Ludwig von Mises, The Theory of Money and Credit

“According to the current view, the maintenance of sound monetary conditions is only possible with a 'credit balance of payments'.

The confutation of this and related objections is implicit in the Quantity Theory and in Gresham's Law. The Quantity Theory shows that money can never permanently flow abroad from a country in which only metallic money is used (the 'purely metallic currency' of the Currency Principle). The tightness in the domestic market called forth by the efflux of part of the stock of money reduces the prices of commodities, and so restricts importation and encourages exportation, until there is once more enough money at home. The precious metals which perform the function of money are distributed among individuals, and consequently among separate countries, according to the extent and intensity of the demand of each for money. State intervention to assure to the community the necessary quantity of money by regulating its international nlovements is supererogatory.”
― Ludwig von Mises, The Theory of Money and Credit

“All that the State need do, and can do, in order to preserve the monetary system undisturbed, is to refrain from such intervention. That is the essence of the monetary theory of the classical economists and their immediate successors, the Currency School. It is possible to refine and amplify this doctrine with the aid of the modern subjective theory; but it is impossible to overthrow it, and impossible to put anything else in its place. Those who are able to forget it only show that they are unable to think as economists.”
― Ludwig von Mises, The Theory of Money and Credit

“The agents of etatism have certainly not been lacking in zeal and energy. But, for all this, economic affairs cannot be kept going by magistrates and policemen.”
― Ludwig von Mises, The Theory of Money and Credit

“They did not suffer shipwreck because the entrepreneurs were not public-spirited, as the socialist-etatistic legend has it. They were bound to fail because the economic organization based upon division of labour and private property in the means of production can function only so long as price-determination in the market is free.”
― Ludwig von Mises, The Theory of Money and Credit

“The government desires to purchase; it desires to use the market, not to disorganize it. But the officially-fixed price does disorganize the market in which commodities and services are bought and sold for money. Commerce, so far as it is able, seeks relief in other ways. It re-develops a system of direct exchange, in which commodities and services are exchanged without the instrumentality of money. Those who are forced to dispose of commodities and services at the fixed prices do not dispose of them to everybody, but merely to those to whom they wish to do a favour. Would-be purchasers wait in long queues in order to snap up what they can get before it is too late; they race breathlessly from shop to shop, hoping to find one that is not yet sold out.”
― Ludwig von Mises, The Theory of Money and Credit

“For once the commodities have been sold that were already on the market when their price was authoritatively fixed at a level below that demanded by the situation of the market, then the emptied store-rooms are not filled again. Charging more than a certain price is prohibited, but producing and selling has not been made compulsory. There are no longer any sellers. The market ceases to function. But this means that economic organization based on division of labour becomes impossible. The level of money-prices cannot be fixed without overthrowing the system of social division of labour.”
― Ludwig von Mises, The Theory of Money and Credit

“The attempt to restrain prices within limits has to be given up. A government that sets out to abolish market prices is inevitably driven towards the abolition of private property.”
― Ludwig von Mises, The Theory of Money and Credit