Die Inflation

[Title Page and Table of Contents]: Title page and detailed table of contents for Richard Kerschagl's 1973 work on inflation, outlining 25 sections covering theoretical foundations and historical case studies. [Foreword]: Kerschagl defines inflation as a form of fraud against savers and creditors, arguing it is a moral and social collapse rather than just a monetary issue. He discusses the relationship between political systems and currency stability, critiquing both parliamentary short-sightedness and dictatorial recklessness while advocating for widespread economic literacy to prevent future crises. [The Concept of Inflation]: The author expands the definition of inflation beyond money to include any imbalance of supply and demand, such as administrative or military inflation. He distinguishes between credit based on savings and pure purchasing power creation, warning that excessive money printing leads to demonetization and a return to primitive natural economies. [History of Inflation]: A historical survey of inflation from Ancient Rome to the 18th century, focusing on coin debasement (Münzverschlechterung) as the primary mechanism before paper money. Kerschagl analyzes the Roman fiscal collapse, Spanish inflation following the discovery of the New World, and the early experiments with paper currency in France under John Law and the Revolution. [The Monetary Side of Inflation]: Kerschagl examines the mechanics of money supply, comparing primitive quantity theory with the more complex models of Keynes and Schumpeter. He introduces the concept of 'cost-push inflation' (Kosteninflation), where price increases precede money supply growth, and discusses the psychological impact of 'illusionary wealth' created by nominal income increases. [The Goods Side of Inflation]: This section focuses on how imbalances in the production and availability of goods contribute to inflation. The author critiques the use of money printing to finance long-term infrastructure (like power plants) without immediate goods output, discusses the failure of state-mandated price controls, and explains how inflation leads to the 'schizophrenia of money' through rationing and black markets. [Creeping Inflation]: Kerschagl analyzes 'dosed' or creeping inflation (schleichende Inflation), describing it as a dangerous addiction where small doses eventually require massive increases. He argues that once the inflation rate exceeds the market interest rate, real capital erosion begins, and warns that using inflation to maintain over-employment destroys labor incentives and export viability. [Imbalances and Social Upheaval]: Inflation is characterized as a profound economic and social revolution that redistributes wealth from savers to debtors and the state. The author describes the resulting 'economy of as-if,' where investment stops, corruption flourishes, and the social fabric dissolves as intellectual labor is devalued in favor of immediate consumption and speculation. [Inflation and Central Banks]: The author examines the diminishing power of central banks to control inflation in modern economies. He critiques traditional instruments like discount rates as merely symbolic when faced with massive fiscal deficits and political pressure for full employment, arguing that central banks need greater independence and a strict priority on currency stability over political goals. [The State and Inflation]: Kerschagl identifies the state as both the primary cause and a major beneficiary of inflation, as it allows for the 'fraudulent' repayment of public debt in devalued currency. He discusses the role of trade unions in the wage-price spiral and the temptation for governments to choose inflation over unpopular tax increases or spending cuts, ultimately leading to a loss of public trust. [Gold and Inflation]: A critical evaluation of gold's role in monetary stability. While gold acts as a brake on money supply, Kerschagl notes that 'gold inflation' is possible and that modern 'paper gold' (SDRs) has turned the metal into a symbolic fiction. He argues that gold is not a panacea and that stability depends more on economic discipline than on metallic backing. [Inflation and Financial Institutions]: Kerschagl describes how inflation forces banks to shift from traditional lending to risky stock market speculation and capital dilution. He explains the erosion of deposits, the struggle of insurance companies to maintain real value without indexation, and the eventual collapse of financial transparency as balance sheets become meaningless. [Full Employment and Inflation]: The author critiques the pursuit of full employment 'at any price,' arguing that it often leads to 'over-employment' of unproductive labor financed by inflation. He contrasts free market labor dynamics with socialist command economies and concludes that only a stable currency can provide genuine, long-term employment security. [Psychology of Inflation]: This section explores the psychological distortions caused by inflation, such as the 'income illusion' where people feel rich while becoming poor. Kerschagl describes the 'flight to real values' (Sachwerte), the loss of the saving instinct, and the moral decay that occurs when speculation is rewarded over honest labor, drawing parallels to the Spanish Conquistadors. [Escaping Inflation and Indexation]: Kerschagl discusses various methods individuals use to protect their wealth, including investing in real assets, stocks, and gold, or using value-protection clauses (Wertsicherungsklauseln). He warns that these are often ineffective due to state intervention, legal prohibitions, or the 'burning house' problem where no room is truly safe from the fire of inflation. [Deflation and Stabilization]: The author examines the difficult process of ending inflation through deflation or stabilization. He argues that deflation is often socially impossible due to wage rigidity and that stabilization requires international cooperation and a loss of national sovereignty to be effective, as seen in post-WWI Austria and Germany. [Shrinking Money (Schwundgeld)]: Kerschagl critiques the 'Schwundgeld' theories of Silvio Gesell, which propose money that loses value over time to force circulation and eliminate interest. He argues these ideas are essentially 'dosed inflation' that would destroy capital formation and lead to a planned economy, citing the failed experiment in Wörgl as evidence. [Theoretical Summary]: A concise summary of the theoretical portion of the book, reiterating that inflation is a multi-faceted phenomenon (monetary, goods-based, and psychological) that central banks struggle to control and that ultimately leads to the destruction of the savings-based social order. [Historical Case Study: John Law and the Assignats]: A detailed analysis of the two great French paper money inflations. Kerschagl defends John Law's original plan while blaming its failure on political interference, and compares it to the Revolutionary Assignats, which failed despite being backed by confiscated church lands, demonstrating that land-backing cannot prevent monetary collapse. [Post-WWI Inflation in Austria and Successor States]: The author describes the chaotic dissolution of the Austro-Hungarian monetary union after 1918. He details the stabilization of the Austrian Schilling under League of Nations supervision and the various currency reforms (stamping and deflationary experiments) in Czechoslovakia, Hungary, Poland, Yugoslavia, and Romania. [Post-WWII Inflation in Austria]: Kerschagl details the transition from the Reichsmark back to the Schilling after 1945. He highlights the role of the Marshall Plan in rebuilding Austria's industrial base and the series of currency laws (1945, 1947) that reduced the money supply and stabilized the exchange rate, leading to the 'economic miracle' of the 1950s. [Inflations in Germany]: A history of German monetary crises, from the 1923 hyperinflation and the 'miracle of the Rentenmark' to the repressed inflation of the Nazi era and the 1948 reform. Kerschagl also discusses the modern challenges of the Deutsche Bundesbank, including 'imported inflation' caused by the strength of the Mark and international capital flows. [Inflations in England]: The author traces the decline of the Pound Sterling from its 19th-century dominance to the devaluations of 1949 and 1967. He attributes England's chronic inflation to the loss of its empire and, more significantly, to aggressive trade union activity and 'wildcat strikes' that created a persistent wage-price spiral. [Inflations in France]: Kerschagl analyzes the frequent devaluations of the French Franc, driven by the costs of wars in Indochina and Algeria and the pursuit of nuclear prestige. He discusses De Gaulle's failed attempt to make the Franc a gold-backed global lead currency and France's cautious approach to a European monetary union. [Inflations in the USA]: The final case study examines the US Dollar's transition from a gold-backed anchor to a fluctuating currency. Kerschagl discusses the impact of the New Deal, the Marshall Plan, and the Vietnam War on the US budget and gold reserves, culminating in the 1971 devaluation and the collapse of the Bretton Woods system. [Concluding Remarks]: Kerschagl concludes by emphasizing that the history of inflation is a history of human error and fiscal irresponsibility. He argues that true stability requires addressing the underlying national and global economic causes rather than just monetary symptoms.