Front Page Titles (by Subject) 5.: The Economic Depression - Omnipotent Government: The Rise of the Total State and Total War
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5.: The Economic Depression - Ludwig von Mises, Omnipotent Government: The Rise of the Total State and Total War 
Omnipotent Government: The Rise of the Total State and Total War, edited with a Foreword by Bettina Bien Greaves (Indianapolis: Indiana, 2011).
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The Economic Depression
The great German inflation was the result of the monetary doctrines of the socialists of the chair. It had little to do with the course of military and political events. The present writer forecast it in 1912. The American economist B. M. Anderson confirmed this forecast in 1917. But most of those men who between 1914 and 1923 were in a position to influence Germany’s monetary and banking policies and all journalists, writers, and politicians who dealt with these problems labored under the delusion that an increase in the quantity of bank notes does not affect commodity prices and foreign exchange rates. They blamed the blockade or profiteering for the rise of commodity prices, and the unfavorable balance of payments for the rise of foreign exchange rates. They did not lift a finger to stop inflation. Like all pro-inflation parties, they wanted to combat merely the undesirable but inevitable consequences of inflation, i.e., the rise of commodity prices. Their ignorance of economic problems pushed them toward price control and foreign exchange restrictions. They could never understand why these attempts were doomed to fail. The inflation was neither an act of God nor a consequence of the Treaty of Versailles. It was the practical application of the same etatist ideas that had begotten nationalism. All the German political parties shared responsibility for the inflation. They all clung to the error that it was not the increase of bank credits but the unfavorable balance of payments that was devaluing the currency.
The inflation had pauperized the middle classes. The victims joined Hitler. But they did not do so because they had suffered but because they believed that Nazism would relieve them. That a man suffers from bad digestion does not explain why he consults a quack. He consults the quack because he thinks that the man will cure him. If he had other opinions, he would consult a doctor. That there was economic distress in Germany does not account for Nazism’s success. Other parties also, e.g., the Social Democrats and the communists, recommended their patent medicines.
Germany was struck by the great depression from 1929 on, but not to a greater extent than other nations. On the contrary. In the years of this depression the prices of foodstuffs and raw materials that Germany imports decreased more than the prices of manufactures that it exports.
The depression would have resulted in a fall in wage rates. But as the trade unions would not permit wage cuts, unemployment increased. Both the Social Democrats and the communists were confident that the increase of unemployment would strengthen their forces. But it worked for Nazism.
The great depression was international. Only in Germany, however, did it result in the victory of a party recommending armaments and war as a panacea.