V. Comments on the “Balance of Payments” Doctrine
The generally accepted doctrine maintains that the establishment of sound relationships among currencies is possible only with a “favorable balance of payments.” According to this view, a country with an “unfavorable balance of payments” cannot maintain the stability of its monetary value. In this case, the deterioration in the rate of exchange is considered structural and it is thought it may be effectively counteracted only by eliminating the structural defects.
1. Stabilization of the Monetary Unit — From the Viewpoint of Theory (1923)
In recent years the problems of monetary and banking policy have been approached more and more with a view to both stabilizing the value of the monetary unit and eliminating fluctuations in the economy. Thanks to serious attempts at explaining and publicizing these most difficult economic problems, they have become familiar to almost everyone. It may perhaps be appropriate to speak of fashions in economics, and it is undoubtedly the “fashion” today to establish institutions for the study of business trends.
I. The Outcome of Inflation
Attempts to stabilize the value of the monetary unit strongly influence the monetary policy of almost every nation today.* They must not be confused with earlier endeavors to create a monetary unit whose exchange value would not be affected by changes from the money side.
II. The Emancipation of Monetary Value From the Influence of Government
The first condition of any monetary reform is to halt the printing presses. Germany must refrain from financing government deficits by issuing notes, directly or indirectly. The Reichsbank [Germany’s central bank from 1875 until shortly after World War II] must not further expand its notes in circulation. Reichsbank deposits should be opened and increased, only upon the transfer of already existing Reichsbank accounts, or in exchange for payment in notes, or other domestic or foreign money.
Foreword by Frank Shostak
This collection of articles on the business cycle, money, and exchange rates by Ludwig von Mises appeared between 1919 and 1946. Here we have the evidence that the master economist foresaw and warned against the breakdown of the German mark, as well as the market crash of 1929 and the depression that followed. He presents his business cycle theory in its most elaborate form, applies it to the prevailing conditions, and discusses the policies that governments undertake that make recessions worse.
Introduction by Percy L. Greaves, Jr.
“Every boom must one day come to an end.” —Ludwig von Mises (1928)
“The crisis from which we are now suffering is also the outcome of a credit expansion.” —Ludwig von Mises (1931)
The Causes of the Economic Crisis and Other Essays Before and After the Great Depression
The unhampered market creates economic inequality. Free marketeers tend to concede this fact as an unfortunate defect in an otherwise laudable system. F.A. Hayek, however, in a chapter from The Constitution of Liberty, argued that inequality is fundamental to a society’s progress. Hayek explained how, by purchasing luxuries unimaginable to the average man, the rich unwittingly perform a vital public service.
II. The Nationality Principle in Politics
That politics should be national is a modern postulate.
Mises Daily Tuesday by Matt McCaffrey:
“The Mises fellowship has been the single most important influence in my development as a scholar,” writes Matt McCaffrey in his discussion on being an Austrian economist in academia today. “No other program could have given me the resources I needed to start my career.”
