PREFACE TO THE NEW EDITION
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Forty years have passed since the first German-language edition of this
volume was published. In the course of these four decades the world has gone
through many disasters and catastrophes. The policies that brought about these
unfortunate events have also affected the nations' currency systems. Sound money
gave way to progressively depreciating fiat money. All countries are today vexed
by inflation and threatened by the gloomy prospect of a complete breakdown of
their currencies.
There is need to realize the fact that the present state
of the world and especially the present state of monetary affairs are the
necessary consequences of the application of the doctrines that have got hold of
the minds of our contemporaries. The great inflations of our age are not acts of
God. They are man-made or, to say it bluntly, government-made. They are the
offshoots of doctrines that ascribe to governments the magic power of creating
wealth out of nothing and of making people happy by raising the "national
income."
One of the main tasks of economics is to explode the basic
inflationary fallacy that confused the thinking of authors and statesmen from
the days of John Law down to those of Lord Keynes. There cannot be any question
of monetary reconstruction and economic recovery as long as such fables as that
of the blessing of "expansionism" form an integral part of official doctrine and
guide the economic policies of the nations.
None of the arguments that
economics advances against the inflationist and expansionist doctrine is likely
to impress demagogues. For the demagogue does not bother about the remoter
consequences of his policies. He chooses inflation and credit expansion although
he knows that the boom they create is short-lived and must inevitably end in a
slump. He may even boast of his neglect of the long-run effects. In the long
run, he repeats, we are all dead; it is only the short run that
counts.
But the question is, how long will the short run last? It seems
that statesmen and politicians have considerably overrated the duration of the
short run. The correct diagnosis of the present state of affairs is this: We
have outlived the short run and have now to face the long-run consequences that
political parties have refused to take into account. Events turned out precisely
as sound economics, decried as orthodox by the neo-inflationist school, had
prognosticated.
In this situation an optimist may hope that the nations
will be prepared to learn what they blithely disregarded only a short time ago.
It is this optimistic expectation that prompted the publishers to republish this
book and the author to add to it as an epilogue an essay on monetary
reconstruction. [1]
LUDWIG VON MISES
New York
June 1952
[1] See pp. 413-457.
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