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Ludwig Von Mises Ludwig Von Mises was born in 1881 in Austro- Hungarian city of Lemberg Ludwigs father was a successful engineer which is where Ludwig found his inspiration to work hard When he turned nineteen Mr Mises enrolled in the University of Vienna Here with the great learning atmosphere of the University he studied economic greats Carl Menger who is the founder of the Austrian school and also attended the seminar of the great professor at the school Eugen Von Bohm-Bawerk Ludwig Von Mises received his doctorate at age 27 In 1912 after receiving his PhD Mises started his first piece of work The Theory of Money and Credit Mises unlike other Austrian economist that came before him which followed the classical school in separating money from the rest of the economy and analyzed it in separate theoretical terms Mises argued that just as the price of any commodity is determined by supply and demand so is the purchasing power of money its price Mises showed in his work that prices increase faster or slower than the money supply the amount and speed of price increases depending on peoples desire to hold cash He also argued that because prices increase only relative to one another monetary inflation brings about redistribution of wealth from savers and earners to banks and government and its connected interested groups Even more damaging are the business cycles of booms and busts that monetary inflation causes In broad outline when government inflates it lowers the interest rate below the proper market level which depends on saving The artificially low interest rate misleads businesses onto making uneconomic investments and creates an inflationary boom When the credit expansion slows or stops investments errors are revealed and bankruptcies and unemployment result Central Banks like Federal Reserve will inevitable create the business cycle What is to be done to stop the cycle Mises argued that because money originated as a market
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