 In my opinion, one of the most important people of the modern age is Lou Rockwell, who started the Mises Institute for a very specific mission. There was a revival of interest in Austro-economics in the 1970s. What happened is that libertarian institutions, with some billionaire backers, they started to want to move away from Mises in favor of other Austrians that were seen as more politically expedient, less intransigent. One of the scholars who really helped set the modern Austrian movement is our next speaker, Dr. Joe Salerno. Absolutely. He has some great contributions in some of the great debates, including on the de-homogenization of Mises and Hayek, free banking debates, and also putting Austro punks, some of these new age Austrians that wanted to kind of give away some of the traditions of Mises and Rothbard, but he put them back in their place. He's also really the dean of the modern Austrian school in his role as academic vice-president, where he has helped shape new generations, people like Patrick Newman, through his work with our fellowship program, Mises University, Rothbard Graduate Seminars, and others. Along with that role, he has a senior fellow at the Mises Institute. He is the economics professor emeritus at Pace University and the editor of the quarterly journal of Austrian economics, Dr. Joe Salerno. Thank you. I'm really delighted to be here. Good morning to everyone. So a dream come true. I mean, when I first got involved with the Mises Institute in the early 80s, I never thought I'd be speaking to a Saturday morning crowd of 130 people, and I'm grateful for this event that's been so magnanimously sponsored by the Schrader family. A little bit earlier, Dr. De Lorenzo mentioned the cultural, social, moral, and familial effects of inflation and how important exploring those areas were. And I want to do a little bit of that today, and I'm going to focus on the effect on human personality of inflation. And some of what I have to say may surprise you. Economists and historians have clearly explained and documented that the destruction of the value and function of money by hyperinflation makes economic calculation impossible, that is, a calculation of profits, losses, and wealth, and leads to economic and social disintegration and widespread poverty. What is not so clearly understood, even by many economists, is that during periods of rapid inflation, the inability to calculate economically, to figure out your profits, your losses, what wealth your household has, and so on, it undermines the very nature of property and causes a withering of human personality, which is intimately connected, as we'll see, with property ownership. By eliminating the means of appraising and rationally allocating one's property, hyperinflation eliminates the very basis of independent human existence and personality under a system of social cooperation. The inevitable result is the dissolution of a society, a voluntary contract, and its replacement by totalitarian order in which property and personality is collectivized. And speaking of human personality, by the way, I'm referring to what has been called the bourgeois personality, often derisively. This is the common state of thinking and being that characterizes the modern individual operating in a money exchange private property order. The bourgeois person is goal-oriented, self-interested, but not selfish, not necessarily selfish, thrifty, and someone who sees time as a method of improving their productivity and enhancing their future well-being. The concrete effects of the destruction of money and property on human personality are demonstrated most vividly in the German hyperinflation of 1923. As a general medium of exchange, money is a tool of appraising one's property, estimating one's wealth, and judging one's prospects of future well-being. Once the future value of money becomes impossible to reliably forecast, ordinary people lose the ability of planning for the future. This leaves little choice but to dissipate their wealth and energy in striving after immediate gratification. This rise in time preference, that is the degree to which people prefer immediate instant gratifications or instant satisfactions to satisfactions in the future, this rise in time preference nullifies the value of productive work, thrift, and sober investment. It brings about a social revolution in which the productive middle class, entrepreneurs, capitalists, and inventors are destroyed and replaced by gamblers, con artists, and swindlers at the top of the social structure. Inflation does not just wipe out the savings of the productive classes and divert their energy into sterile and corrupt pursuits. It also deforms and attenuates their personalities. Whether we like it or not, men and women exist in a world where they cannot live and flourish physically or spiritually without property. Thus property is a foundation of human personality. No meaningful motion, activity, or expression of thought is impossible without it. And that includes the property in your own body. Property therefore is not a haphazard collection of things that can be completely described in physical terms, but rather the coherent objective embodiment of the yearnings and aspirations of the human spirit. In a real sense then, property defines and delimits an individual's personality. A person cannot be whatever he or she wants to be. Here she is rigidly limited by the means at their disposal. One is not truly a novelist unless he possesses a room, a computer, a word processing software. One is not a restaurateur. A restaurateur must have access to a building with a fully equipped kitchen stock with food. Someone cannot even pursue leisure or vocational activities without possessing specific concrete means, goods and property. One is not a fisherman without fishing tackle and access to a boat and body of water. And one cannot be a golfer or a gardener without the possession of or the means of attaining, that is money, the needed golfing equipment or gardening tools. Furthermore, in an exchange economy, it is economic calculation that is figuring out the value of the things that you possess based on money prices that gives the meaning to a collection of different kinds of concrete goods and enables the actor to transform these goods into an integrated structural property that is suited to pursuing their goals. Without money prices to guide him in his calculations, a person is unable to specialize in a particular profession or business because he can never know whether these activities will generate sufficient income to sustain his existence. People cannot even know what or who they will be in the future without knowing the monetary value of their accumulated savings and assets. All their plans for themselves and their children are shaped by this knowledge. Will a person likely retire to a gated community with a plush golf course at the age of 60, or they'd be greeting people at Walmart in their 70s? Without economic calculation based on sound money, not only is it impossible for entrepreneurs and businesses to reasonably calculate the outcome of alternative investments, but it also becomes impossible for a person to even know who he is or to reasonably assess the possibilities of what he can become. In the German hyperinflation, for example, university professors and high ranking civil servants on relatively fixed salaries could no longer support themselves and their families, and overnight they became taxi drivers and waiters. With all that implies for their professional and personal relationships, their social position, and their retirement prospects. In the extreme case of hyperinflation, as the value of money hurdles towards zero, property loses its meaning. Human personality withers and society disintegrates. This all important connection between money and property on the one hand and human personality on the other was dramatically expressed by the German historian and sociologist Conrad Haydn, a shrewd observer of hyperinflation who was a big critic of Hitler and was chased out of Germany. Here's what he wrote, quote, the German people was one of the first to witness the decay of those material values which a whole century had taken as the highest of all values. The German nation was one of the first to experience the death of the unlimited free property which had lent such a royal pride to modern humanity. Money had lost its value. What then could have any value? Of course, many were accustomed to having no money, but that even with money you had nothing. That was the twilight of the gods. A cynical frivolity pervaded men, penetrated men's souls. No one knew what he really possessed and some met men wondered what they really were. Haydn's insights are illustrated in the statements of a woman who lived through the German hyperinflation, Erne von Postau, was a middle class resident of Hamburg who was interviewed by the eminent American writer Pearl Buck. Postau's reminiscences reveal how the German people lost their intellectual and spiritual warrings amid the chaos, the calculational chaos of hyperinflation. The inability to perform simple arithmetic calculations with money that were a matter of routine in the past caused confusion of thought and language. As Postau recalled to Buck, quote, but you see, we could hardly say that our mark was falling since in figures it was constantly going up and up and up. Postau's wages went up to a billion marks per week. And this was much more visible than the realization that the value of our money was going down. It sounds confusing, doesn't it? But this confusion belongs to inflation. It is inseparably connected with it and was one of the reasons why the people gave up thinking things out. It all just seemed madness and it made the people mad, unquote. And that was Erne von Postau. According to a popular song of the day, she quoted the following line, which indicated the destruction of wealth caused by the unrestrained lust for immediate gratification, quote, this is the line from the song she was quoting. We are drinking up our grandma's little hut and the first and second mortgage, too. So all their wealth is being dissipated in immediate satisfactions. A music lover, Postau related an ordeal in which she and her suddenly impoverished middle class friends were forced to wait for hours in line to purchase standing room tickets to see Wagner's The Twilight of the Gods. Most of the seats in the theater had been bought by people who chose to attend not because they were genuine music lovers, but because they had gained a windfall from the inflation. Dr. Newman pointed out that the people who received the money first did quite well during inflation, especially during a hyperinflation. This incident impressed on Postau that the malfunctioning of money penetrated to the very core of one's self-identity, and it radically reshaped her most cherished goals and beliefs about the world. Here's what she said, quote, Wagner's gods set fire to the entire world in the Twilight of the Gods. Yet they did it for great things, for heroic deeds, for love, for this beautiful thing love. And how is it with us? We fight for tickets, we fight for pennies. It's these ugly little things that break us down. It was also mixed up with money. She signed up for recollections of the hyperinflation by comparing it to the cultural and moral effects of hyperinflation to that of war. She says, for a battle it was this inflation, fought out with financial means. The cities were still there. The houses not yet bombed and in ruins, but the victims were billions of people that had lost their fortunes, their savings. They were dazed and inflation shocked and did not understand how it had happened to them and who the foe was who had defeated them. Yet they had lost their self-assurance. They're feeling that they themselves could be the masters of their own lives, if only they worked hard enough. And lost, too, were the old values of morals, of ethics, of decency. Now, the sociologists Haydn summarized the lessons of the experiences of millions of Germans, like Emma. He wrote, man had measured himself by money. His worth had measured by money. Through money, he was someone, or at least hoped to be someone. Men had come and gone, risen and fallen. But money had been permanent and immortal. Now the state had managed to kill this immortal thing. The state was a conqueror and successor of money. And thus the state was everything. Man looked down at himself and saw that he was nothing, unquote. As Haydn keenly perceived in Germany, the abolition of money through hyperinflation rendered property meaningless and thereby obliterated the basis of human personality. Social and economic institutions long taken for granted, disintegrated and disappeared. And the social structure itself began to dissolve, causing human existence to become atomized and aimless. Thought, language, values, culture all were deformed, as the interior life of the individual was drained of meaning and purpose. Now Haydn summed this up, he said, quote, the state wiped out property, livelihood, personality, squeezed and pared down the individual. Destroyed his faith in himself by destroying his property, or worse, his faith and hope in property. Minds were ripe for the great destruction. The state broke the economic man beginning with the weakest. So what was left? There was nothing left, definite, or there's nothing definite left, but the state to fill the economic and spiritual void created by the German hyperinflation. Now there was a shrewd and cunning politician named Adolf Hitler, who understood the nature of inflation as a gigantic material and spiritual swindle and recognized the deforming of German souls and personalities and the corresponding disintegration of German society. Hitler taunted the German people for tolerating the swindle, and at the same time promised them material relief and spiritual regeneration in the state, the successor of money. Haydn reported that Hitler told the following story at a meeting in the summer of 1923. That's 10 years before he came to power. And I'm quoting Hitler here. We have just had a big gymnastic festival in Munich. 300,000 athletes from all over our country assembled there. That must have brought our city lots of business, you think. There was an old woman who sold picture postcards. She was glad because the festival would bring her plenty of customers. She was beside herself with joy when sales far exceeded her expectations. Business had been really good or so she thought. But now the old woman is sitting in front of an empty shop crying her eyes out. For with the miserable paper money she took in her for her cards, she can't buy 100th of her old inventory. Her business is ruined. Her livelihood absolutely destroyed. She can go begging. And the same despair is seizing the whole people. We are facing revolution, unquote. No, that was Hitler. Hitler perceptibly noted that once government had begun to run the printing presses full time, it was from that moment doomed to continue the swindle until the bitter end of a hyperinflationary breakdown. Stopping the monetary expansion would reveal to workers that their real income was substantially less than they realized. This revelation, Hitler understood, would spell the downfall of government. In the meantime, people's confidence in the established moral and social order associated with capitalism would be shattered as the vicious would replace the virtuous at the top of the socioeconomic structure. Now, Hitler wrote in his newspaper in 1923 the following, the government goes on calmly printing these scraps because if it stopped, that would mean the end of the government. Because once the printing presses stopped, the swindle would at once be brought to light. For then the worker would realize that he's only making a third of what he made in peacetime. Believe me, our misery will increase. The scoundrel will get by, but the decent, solid businessman who doesn't speculate will be utterly crushed. First a little fellow on the bottom, but in the end, the big fellow on top too. But the scoundrel and the swindler will remain top and bottom. The reason? Because the state itself has become the biggest swindler and crook, a robber's state, unquote. That was Hitler. Now, although Hitler spoke more truly about the nature and effects of inflation than our current central bankers and academic economists, his intent was not to present a program for abolishing the robber's state and restoring sound money, private property, and the moral and social order of capitalism. Rather, Hitler wanted to frighten and shame the propitilist and demoralized German masses into abandoning the corrupt and short-sighted socialist politicians of the Weimar Republic. And to seek salvation in a dictatorial state run by his national socialist movement. Accordingly, Hitler forewarned the people who were earning billions of marks, forewarned that people who were earning billions of marks, and they were, I mean, billions and billions per week, that they would face starvation. The farmer will stop selling his products for the worthless billions, which they did. You couldn't, no matter how much money you would offer to a farmer, he would not give you a single egg. And so what Hitler said was that, quote, the farmer could paper his outhouse on the manure heap, unquote. What Hitler hoped to bring about was what he himself called the revolt of the starving billionaires. According to Hitler, quoting, if the horrified people can starve on billions, they must arrive at this conclusion. We will no longer submit to a state that is built on the swindling idea of the majority. We want dictatorship, unquote. So Hitler was banking on people turning to the state and to a dictator, a leader, to bail them out morally, spiritually, and materially from what had happened during the inflation. Hitler, however, used more than fear to motivate his listeners. He capitalized on the self-contempt of those who had been swindled out of their property and moral values and whose sense of self had been shattered. He saw that the people like these had regressed to the immature state of adolescence and were ready to follow a leader, to reconstruct their own moral codes and personalities according to the artificial, collectivist, and nationalist ideal projected in the leader's twisted vision. And the leader, of course, is Hitler himself. Hitler addressed and chastised the German people accordingly. Here's what he said. The German people is made up of children. For only a childish people will accept million mark bills, and there were million and even billion mark bills at the end of the hyperinflation. Now, Haydn's insightfully connected Hitler's aim in his speeches on hyperinflation with the derangement of Hitler's own personality as a product of the same moral, economic, and social catastrophe of hyperinflation. So Hitler himself, his personality, had been shaped by the hyperinflation. Here's what Haydn said about the link. It was the artificial building of a new national character, a fake character, an attitude created in accordance with an artificial plan. The people dream, and the soothsayer, Hitler, tells them what they are dreaming. This continuous, domineering, yet intimate conversation with the people could only be carried on by a man, Hitler, who was people and enemy of the people in one, a torn personality who felt himself a trampled fragment of the people in his own downtrodden, miserable non-entity and rebelled with the people against his destiny, but who at the same time was convinced of the absolute necessity of trampling, coercing, and shaking the master's fist, unquote. So, Hitler not only utilized the theme of the degeneration and reconstruction of personality as a rhetorical device, he developed it into one of the fundamental principles of the National Socialist Philosophy. In fact, he had a chapter entitled Personality and the Conception of the Focus, or Nazi State, in his book, Mein Kampf. Hitler went on to elaborate his vision of the National Socialist State, whose chief task he saw as educating and preserving the bearer of the state. Underlying the state would be a philosophy that, quote, builds not upon the idea of the majority, but upon the idea of personality. So what's Hitler getting at about personality? Well, personality goes from the authority from the top to the bottom, according to Hitler, and suddenly you realize what he's getting at. So for Hitler, personality emerged from the inventive ideas and creative actions of especially able individuals. But Hitler warped the principle of personality. For him, it pervades and organizes all fields of human endeavor, including thought, art, and economic life. He argued that the idea of personality is everywhere dominant, its authority downward, and its responsibility towards a higher personality. Hitler concluded, quote, the best state and state form, state constitution, state form, is that which raises the best minds in the national community to leading position and leading influence. Within a decade of the publication of these works, Hitler was to have his ideal state that would displace money and private property as a shape of human personality and society. So what Hitler was saying was that personality doesn't arise from within. It was destroyed when money and property was destroyed. It penetrates from without. It penetrates from the leader on down. And that was his idea of the state and of society. There was no difference between the two. Let me conclude. German hyperinflation is a concrete example of how the destruction of property affected human personality among a particular people in a given historical epic. Nonetheless, it illustrates a link between property and personality that is based on the universal principles established by praxeology, the same science of human action that encompasses sound economics, such as Austrian economics. In contrast, the mechanistic and hyper-mathematical discipline that is contemporary macroeconomics can never begin to grasp the full moral and social enormity of hyperinflation. Its narrowly specialized practitioners are not even conversant, these are the macroeconomists, with all the branches of economic science, let alone the closely related disciplines of history, sociology, psychology, and political philosophy. A working knowledge of the main conclusions of these disciplines, which Mises, Hayek, and Rothbard had, is necessary for an economist who seeks to fully explain the causes and consequences of a complex economic event, such as the German hyperinflation of 1923. As Friedrich Hayek pointed out, quote, no one can be a great economist who is only an economist. And I am even tempted to add that the economist who is only an economist is likely to become a nuisance if not a positive danger, unquote. So what are our macroeconomists telling us now? They want the dollar to depreciate at 2% per year. So they want inflation. And that is one step toward hyperinflation because once you've established the principle of having the money continuously depreciated and devalued, it's now institutionally set and it can be easily raised. So I will stop there. Thank you for your attention. Thank you.