Tuesday, November 1, 2011

Mises on Government Lust for Inflation and Credit Expansion

"It is a fable that governments interfered with banking in order to restrict the issue of fiduciary media and to prevent credit expansion. The idea that guided governments was, on the contrary, the lust for inflation and credit expansion. They privileged banks because they wanted to widen the limits that the unhampered market draws to credit expansion or because they were eager to open the treasury a source of revenue. For the most part both of these considerations motivated the authorities. . . . The establishment of free banking was never seriously considered because it would have been too efficient in restricting credit expansion" (p. 441).
Ludwig Von Mises, Quoted in Mises on Money

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