Mises and Greaves, “On Current Monetary Problems” (1969)

This 1969 interview with Percy L. Greaves presents Mises’s monetary theory as a political diagnosis. After naming world war as the supreme political danger, he defines the urgent domestic task as:

The re-establishment of financial integrity and making an end to inflation.

The governing thesis is that inflation is not a mysterious rise of prices but a fiscal evasion. Government creates money by fiat to spend beyond what taxes or genuine public borrowing would permit; higher prices are the consequence of that act.

Inflation is a policy of increasing the quantity of money in order to make it possible for the government to spend more than it collects in taxes or borrows from the public.

Mises’s first conceptual move is the non-neutrality of money. New money enters through particular groups, who can buy before others’ incomes adjust. Inflation therefore redistributes purchasing power while pretending to be a general monetary measure: early receivers gain, later receivers and fixed-income holders lose.

There cannot be justice in the distribution of the additional quantity of money that the government creates.

His strongest social argument reverses the claim that inflation helps poor debtors against rich creditors. That may have described Solon’s Athens, but not capitalism. Ordinary households now hold savings deposits, insurance policies, bonds, and pension funds; wealthier owners more often hold real estate, equities, and indebted business assets. Depreciation strikes the monetary claims of the less wealthy and can destroy endowed charities and schools, as European wartime inflations did.

These poorer people are the big losers from inflation.

The interview then links monetary policy to unemployment. If wage rates stand above what consumers repay through product prices, some workers cannot profitably be hired. Inflation can hide this only by lowering real wages beneath unchanged nominal wages; when unions seek compensation for the higher cost of living, unemployment returns.

Inflation can cure unemployment only by reducing the potential wage earner's real wage.

Here Mises treats employers as agents of consumers and stresses that workers are also consumers. Capitalism is “mass production for supplying the masses,” not production for a separate capitalist class. Minimum wage laws or union rates above the market level exclude workers whose output consumers will not support at the imposed wage.

Greaves next raises the balance-of-payments explanation of American monetary trouble. Mises rejects it as an attempt to absolve government policy and blame citizens for imports or foreign travel. Import restrictions redirect dollars into domestic markets and leave foreigners with fewer dollars for American exports. Protectionism, carried through, means autarky.

Foreign trade is not one-sided.

This gives the interview its 1969 relevance: in the late Bretton Woods setting, Mises reads dollar weakness and gold anxiety as consequences of domestic money creation, not international exchange. His comparisons with trade among U.S. states, or between Brooklyn and Manhattan, expose the nationalist illusion that spending abroad is impoverishment.

The remedy is fiscal and constitutional. Government should spend only what the budget permits, tax openly, and, if it borrows, sell bonds to the public rather than to banks capable of monetizing deficits. Gold ownership matters because it gives citizens a defense against paper depreciation; “raising the price of gold” merely admits currency depreciation.

At the theoretical center is the claim that money begins in the market. Courts enforce contracts and define monetary obligations, but governments abuse that power when they give paper legal-tender status and expand it at will.

Money is not a creation of the government.

Mises defends the gold standard as an institutional restraint. Gold’s merit is that officials cannot manufacture it cheaply to cover deficits; its quantity is outside the ordinary ambitions of parties and pressure groups.

The gold standard did not fail. The governments sabotaged it and still go on sabotaging it.

The interview’s structure—definition of inflation, distributional analysis, wage critique, trade-policy rebuttal, and gold-standard defense—serves one thesis: sound money is inseparable from limited government. Monetary crisis begins when spending is severed from open taxation and market borrowing, and ends only when money is protected from discretionary fiscal ambition.