“The Catastrophic Depreciation of Our Currency,” Wrote Mises in 1919, “Must Be Accepted As Our Inescapable Fate”

The catastrophic depreciation of our currency must be accepted as our inescapable fate. Imperialist and militarist policies are inevitably linked with inflationism. A consistent implementation of socialization necessarily leads to the total collapse of the monetary system. This fact is corroborated not only by the history of the French Revolution but by what is happening in Russia under Bolshevism and in a series of other countries that have more or less closely followed the Russian example, but where less bloody methods have replaced the appalling brutality of the Jacobins and the Bolsheviks. No matter how disastrous a collapse may be, it does at least have a salutary effect in that it annihilates the system that brought it into being. The collapse of the assignats dealt a deathblow to the policies of the Jacobins. After the collapse, new policies were pursued. In our case, too, the collapse of the currency will give us a fresh start in our economic policy. . . . 

Moreover, the psychological significance of a complete depreciation of the crown on foreign-exchange markets should not be underestimated. The crown has already lost a lot of ground in the wholesale and real-estate markets, and it is becoming more and more common to buy and sell with foreign currencies, even in the retail market. As the value of the crown falls close to zero in foreign-exchange markets, this tendency will become all the more pronounced and will assume catastrophic proportions as soon as the crown becomes valueless in Zurich and Amsterdam. It is obvious that it will become impossible to sell imported commodities in crowns. As soon as the “black marketers”—on whom the urban population in German-Austria is entirely dependent for its food supply—refuse to accept crowns, they will be completely displaced from the domestic markets. Crowns will still be accepted for taxes, for the payment of rent, and for rationed food supplies, but they will no longer be usable on the unregulated markets.

—Ludwig von Mises, “On the Actions to Be Taken in the Face of Progressive Currency Depreciation,” in Between the Two World Wars: Monetary Disorder, Interventionism, Socialism, and the Great Depression, ed. Richard M. Ebeling, vol. 2 of Selected Writings of Ludwig von Mises (Indianapolis: Liberty Fund, 2002), 49-50.