Inflation

This fourth lesson primarily focuses on the concept of money creation. History repeats itself and has long shown, particularly during the episode of the discovery of massive gold and silver reserves from America in the 16th century, how the quantity of money or its massive issuance is a source of rising prices and, as such, constitutes a very poor solution for attempting to solve financial problems. Although, as Mises shows us, inflation can sometimes also be used as a means, more effective and less unpopular for politicians than taxation, to collect funds.

Mises demonstrates, through very concrete examples, the mechanisms by which inflation spreads, gradually, not in an equal and generalized manner, but progressively. It affects different categories of the population very differently, with its winners and losers, and with a time lag.

He also mentions the hyperinflation of the 1920s in Germany, fueled again by the massive issuance of money by the central bank. This often results, in any era, in the collapse of the currency and all that it implies.

As a result, while in the short term rulers may be tempted by these solutions that amount to saying, like Madame de Pompadour, "After us, the deluge," we inevitably pay the - high - price later.

He also highlights the role of unions, inclined to strike movements to increase wages above the level they would have in an unhindered market, which quickly results in unemployment, in a lasting manner. Then, depending on the era and systems in place, this leads to a devaluation of the currency (as in the case of Great Britain after World War I), and ultimately a decrease in real wages (purchasing power).

Ultimately, Mises tells us that the most important thing to remember is that inflation never falls from the sky. It is the result of a deliberate policy, a recourse by leaders who consider it a lesser evil than unemployment. Except that in the short term, inflation does not truly cure unemployment. Therefore, these inflationary policies must be abandoned, the money supply must cease to be inflated, and the state budget must be balanced (a lesson that the Germans have particularly well learned).

                                            Foreign Investment

In this fifth lesson, Mises explains what determines the difference in development between countries, and consequently, the wage levels of employees.

As he points out, the British in 1750 did not consider themselves "underdeveloped," even though economic conditions were much worse than in India at the time of his lecture. Therefore, there is no reason for countries considered "developing" at that time to request aid.

The explanation for the development gap (and the remuneration of equally competent employees as in more advanced countries) is simply the lower endowment of capital goods in these countries, which leads to lower marginal productivity, due to the time lag related to accumulated savings. It is these savings that allow investment in modern equipment, enabling increased marginal productivity and subsequently higher levels of remuneration.

This is where foreign investment comes in. Thanks to, for example, investments by British capitalists in different parts of the world in the 19th century (railways, gas industry, capital goods, etc.), particularly in Europe, development spreads much faster than it would take for each country to catch up to the British level of development on its own. This is therefore nothing to be ashamed of and also shows, incidentally, that a trade deficit is not necessarily to be interpreted negatively.

These foreign investments even constitute, according to Mises, the greatest historical event of the 19th century, in that it allowed many countries to derive enormous benefits from it. The same applies to loans between states to finance heavy investments. In this sense, all the obstacles and expropriations that subsequently took place in certain countries only had the effect of counteracting all these benefits, particularly attempts to create socialist enterprises, as in India under Nehru. The same is true for protectionism: from the moment a developing country's domestic savings are insufficient to finance the investments necessary for the modernization of the economic fabric, without foreign investments it can only hope to progress very slowly.

In conclusion, there is no reason to be wary of foreign investments, which many countries nevertheless tend to consider today. As for American savings, particularly through their insurance systems (and pension funds), it is these that allow the ownership and financing of American companies. In both cases, it is the principles of freedom, not socialism, that will raise individuals' standards of living.

                                             Politics and Ideas

In this final lesson, Mises discusses the evolution of political party structures and their transformation into pressure groups. Each of these groups represents a minority and is incentivized to ally with other pressure groups. This leads to a failure to represent the nation as a whole, instead resulting in increased public spending at the taxpayers' expense. Each small minority group seeks privileges at the majority's expense, such as through tariffs or subsidies. Interventionism thus dominates, rather than political discourse focusing on humanity’s broader issues, such as freedom versus tyranny.

This creates a race for privileges and public spending among those who are supposed to represent the nation, following the principles of political markets and the negative outcomes they produce.

Each elected official, within their jurisdiction, promotes new public infrastructure projects. This generates additional expenses, inflation, tax increases, or further debt, making it nearly impossible for any official to reduce spending even if they wish to do so. These patterns are all too familiar.

Mises draws a parallel with history, pointing to the decline and fall of the Roman Empire, which suffered from similar problems: inflation, price controls, migration to rural areas, and disruptions in the division of labor.

Despite this grim comparison, Mises remains optimistic. He believes that today we have access to knowledge, books, and intellectual exchanges. The solution lies in continuous efforts to educate and convince people to combat ignorance and help them understand how a free economy can benefit them and offer a brighter future.

He concludes: "Everything that happens in our time is the result of ideas—both good and bad. What is necessary is to fight against bad ideas. We must oppose everything we dislike in public life. We must replace bad ideas with better ones. We must refute doctrines that encourage union violence. We must stand against property confiscation, price controls, inflation, and all these evils from which we suffer."