On the Manipulation of Money and Credit
Three Treatises on Trade-Cycle Theory
Publication Year: 2012
Published by: Liberty Fund
Download PDF (557.1 KB)
Title Page, Copyright
Download PDF (933.7 KB)
Download PDF (951.1 KB)
Download PDF (914.1 KB)
This book is a collection of papers written by Mises during the 1920s and 1930s on money and the boom/bust trade cycle, the f_ield in which one f_inds perhaps Mises’s greatest contribution to economics. The pa-pers included in this volume were f_irst published in English with other materials by Free Market Books in 1978 and were reprinted later by the ...
Stabilization of theMonetary Unit—From the Viewpointof Theory
Download PDF (906.4 KB)
Attempts to stabilize the value of the monetary unit strongly inf_luence the monetary policy of almost every nation today. They must not be confused with earlier endeavors to create a monetary unit whose ex-change value would not be affected by changes from the money side. In those olden and happier times, the concern was with how to bring ...
IThe Outcome of Inflation
Download PDF (942.1 KB)
If the practice persists of covering government def_icits with the issue of notes, then the day will come without fail, sooner or later, when the monetary systems of those nations pursuing this course will break down completely. The purchasing power of the monetary unit will de-cline more and more, until f_inally it disappears completely. To be sure, ...
IIThe Emancipation of Monetary Valuefrom the Influence of Government
Download PDF (915.1 KB)
The f_irst condition of any monetary reform is to halt the printing presses. Germany must refrain from f_inancing government def_icits by issuing notes, directly or indirectly. The Reichsbank [Germany’s cen-tral bank from 187five.oldstyle until shortly after World War II] must not further expand its notes in circulation. Reichsbank deposits should be opened ...
IIIThe Return to Gold
Download PDF (911.6 KB)
In the years preceding and during the war, the authors who prepared the way for the present monetary chaos were eager to sever the con-nection between the monetary standard and gold. So, in place of a standard based directly on gold, it was proposed to develop a standard which would promise no more than a constant exchange ratio in for-...
IVThe Money Relation
Download PDF (913.9 KB)
No one can any longer maintain seriously that the rate of exchange for the German paper mark could be reestablished [in 1923] at its old gold value—as specif_ied by the legislation of December four.oldstyle, 1871, and by the coinage law of July 9, 1873. yet many still resist the proposal to stabilize the gold value of the mark at the currently low rate. Rather vague con-...
VComments on the “Balance of Payments”Doctrine
Download PDF (923.5 KB)
The generally accepted doctrine maintains that the establishment of sound relationships among currencies is possible only with a “favor-able 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 ...
VIThe Inflationist Argument
Download PDF (927.4 KB)
Nowadays, the thesis is maintained that sound monetary relationships may certainly be worth striving for, but public policy is said to have other higher and more important goals. As serious an evil as inf_lation is, it is not considered the most serious. If it is a choice of protecting the homeland from enemies, feeding the starving and keeping the country ...
VIIThe New Monetary System
Download PDF (914.5 KB)
The bedrock and cornerstone of the provisional new monetary system must be the absolute prohibition of the issue of any additional notes not completely covered by gold. The maximum limit for German notes in circulation [not completely covered by gold] will be the sum of the bank-notes, Loan Bureau Notes (Darlehenskassenscheinen), emergency cur-...
VIIIThe Ideological Meaning of Reform
Download PDF (897.1 KB)
The purely materialistic doctrine now used to explain every event looks on monetary depreciation as a phenomenon brought about by certain “material” causes. Attempts are made to counteract these imagined causes by various monetary techniques. People ignore, perhaps know-ingly, that the roots of monetary depreciation are ideological in nature. ...
Monetary Stabilizationand Cyclical Policy
Download PDF (915.0 KB)
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 f_luctuations in the econ-omy. Thanks to serious attempts at explaining and publicizing these most diff_icult economic problems, they have become familiar to al-...
Download PDF (912.1 KB)
Gold and silver had already served mankind for thousands of years as generally accepted media of exchange—that is, as money—before there was any clear idea of the formation of the exchange relationship between these metals and consumers’ goods, i.e., before there was an understanding as to how money prices for goods and services are ...
IIThe Gold Standard
Download PDF (928.0 KB)
Under the gold standard, the formation of the value of the monetary unit is not directly subject to the action of the government. The pro-duction of gold is free and responds only to the opportunity for prof_it. All gold not introduced into trade for consumption or for some other purpose f_lows into the economy as money, either as coins in circulation ...
IIIThe “Manipulation” of the Gold Standard
Download PDF (916.5 KB)
Most important for the old, “pure,” or classical gold standard, as origi-nally formulated in England and later, after the formation of the Em-pire, adopted in Germany, was the fact that it made the formation of prices independent of political inf_luence and the shifting views which sway political action. This feature especially recommended the gold ...
IV“Measuring” Changes in the PurchasingPower of the Monetary Unit
Download PDF (925.4 KB)
All proposals to replace the commodity money, gold, with a money thought to be better, because it is more “stable” in value, are based on the vague idea that changes in purchasing power can somehow be measured. Only by starting from such an assumption is it possible to conceive of a monetary unit with unchanging purchasing power as the ...
VFisher’s Stabilization Plan
Download PDF (930.4 KB)
The superiority of the gold standard consists in the fact that the value of gold develops independent of political actions. It is clear that its value is not “stable.” There is not, and never can be, any such thing as stability of value. If, under a “manipulated” monetary standard, it was government’s task to inf_luence the value of money, the question of how ...
VIGoods-induced and Cash-inducedChanges in the Purchasing Power ofthe Monetary Unit
Download PDF (918.3 KB)
Changes in the exchange ratios between money and the various other commodities may originate either from the money side or from the commodity side of the transaction. Stabilization policy does not aim only at eliminating changes arising on the side of money. It also seeks to prevent all future price changes, even if this is not always clearly ...
VIIThe Goal of Monetary Policy
Download PDF (918.4 KB)
Monetary policy of the preliberal era was either crude coin debase-ment, for the benef_it of f_inancial administration (only rarely intended as Seisachtheia,1 i.e., to nullify outstanding debts), or still more crude paper money inf_lation. However, in addition to, sometimes even in-stead of, its f_iscal goal, the driving motive behind paper money inf_la-...
IStabilization of the Purchasing Power ofthe Monetary Unit and Elimination ofthe Trade Cycle
Download PDF (923.0 KB)
...“Stabilization” of the purchasing power of the monetary unit would also lead, at the same time, to the ideal of an economy without any changes. In the stationary economy there would be no “ups” and “downs” of business. Then, the sequence of events would f_low smoothly and steadily. Then, no unforeseen event would interrupt the provision-...
IICirculation Credit Theory
Download PDF (946.1 KB)
If notes are issued by the banks, or if bank deposits subject to check or other claim are opened, in excess of the amount of money kept in the vaults as cover, the effect on prices is similar to that obtained by an in-crease in the quantity of money. Since these f_iduciary media, as notes and bank deposits not backed by metal are called, render the service of ...
IIIThe Reappearance of Cycles
Download PDF (944.3 KB)
From the instant when the banks start expanding the volume of cir-culation credit until the moment they stop such behavior, the course of events is substantially similar to that provoked by any increase in the quantity of money. The difference results from the fact that f_idu-ciary media generally come into circulation through the banks, i.e., as ...
IVThe Crisis Policy of the Currency School
Download PDF (902.8 KB)
Every advance toward explaining the problem of business f_luctuations to date is due to the Currency School. We are also indebted to this School alone for the ideas responsible for policies aimed at eliminating business f_luctuations. The fatal error of the Currency School consisted in the fact that it failed to recognize the similarity between banknotes ...
VModern Cyclical Policy
Download PDF (930.9 KB)
The cyclical policy recommended today, in most of the literature deal-ing with the problem of business f_luctuations and toward which con-siderable strides have already been made in the United States, rests entirely on the reasoning of the Circulation Credit Theory.1 The aim of much of this literature is to make this theory useful in practice by ...
VIControl of the Money Market
Download PDF (921.6 KB)
There are many indications that public opinion has recognized the sig-nif_icance of the role banks play in initiating the cycle by their expan-sion of circulation credit. If this view should actually prevail, then the previous popularity of efforts aimed at artif_icially reducing the interest rate on loans would disappear. Banks that wanted to expand their issue ...
VIIBusiness Forecasting for Cyclical Policyand the Businessman
Download PDF (911.6 KB)
The popularity enjoyed by contemporary business cycle research, the development of which is due above all to American economic research-ers, derives from exaggerated expectations as to its usefulness in prac-tice. With its help, it had been hoped to mechanize banking policy and business activity. It had been hoped that a glance at the business ...
VIIIThe Aims and Method of Cyclical Policy
Download PDF (918.5 KB)
Without doubt, expanding the sphere of scientif_ic investigation from the narrow problem of the crisis into the broader problem of the cycle represents progress.1 However, it was certainly not equally advanta-geous for political policies. Their scope was broadened. They began to The economy could be organized so as to eliminate cyclical changes ...
The Causes ofthe Economic CrisisAn Address
IThe Nature and Role of the Market
Download PDF (919.2 KB)
The Marxian critique censures the capitalistic social order for the anar-chy and planlessness of its production methods. Allegedly, every entre-preneur produces blindly, guided only by his desire for prof_it, without any concern as to whether his action satisf_ies a need. Thus, for Marx-ists, it is not surprising if severe disturbances appear again and again ...
IICyclical Changes in Business Conditions
Download PDF (911.5 KB)
In our economic system, times of good business commonly alternate more or less regularly with times of bad business. Decline follows eco-nomic upswing, upswing follows decline, and so on. The attention of economic theory has quite understandably been greatly stimulated by this problem of cyclical changes in business conditions. In the begin-...
IIIThe Present Crisis
Download PDF (951.7 KB)
The crisis from which we are now suffering is also the outcome of a credit expansion. The present crisis is the unavoidable sequel to a boom. Such a crisis necessarily follows every boom generated by the attempt to reduce the “natural rate of interest” through increasing the f_iduciary media. However, the present crisis differs in some essential ...
IVIs There a Way Out?
Download PDF (908.4 KB)
The severe convulsions of the economy are the inevitable result of poli-cies which hamper market activity, the regulator of capitalistic produc-tion. If everything possible is done to prevent the market from fulf_ill-ing its function of bringing supply and demand into balance, it should come as no surprise that a serious disproportionality between supply ...
The Current Status ofBusiness Cycle Researchand Its Prospects for theImmediate Future
Download PDF (928.9 KB)
It is frequently claimed that if the causes of cyclical changes were understood, economic programs suitable for smoothing out cyclical “waves” would be adopted. The upswing would then be throttled down in time to soften the decline that inevitably follows in its wake. As a re-sult, economic development would proceed at a more even pace. The ...
The Trade Cycle andCredit Expansion: TheEconomic Consequencesof Cheap Money
Download PDF (943.6 KB)
The author of this paper is fully aware of its insuff_iciency. yet, there is no means of dealing with the problem of the trade cycle in a more satisfactory way if one does not write a treatise embracing all aspects of the capitalist market economy. The author fully agrees with the dic-tum of Böhm-Bawerk: “A theory of the trade cycle, if it is not to be ...
Download PDF (936.6 KB)
Page Count: 217
Publication Year: 2012