The rascal offers wealth untold, But gives the glitter, not the gold. -- Goethe's Faust, Part II
In his Speech in the Committee for Action and Economic Expansion, March 27, 1952, Jacques Rueff, the great monetary statesman, anticipated the recent speech by Bundesbank president Jens Weidmann by 60 years. Rueff:
A German economist called Wageman, who was somewhat prominent under Hitler, said, in a book published during the war, that “the most important scientific work of the French in the monetary field was Zola’s great novel Money.”
Notwithstanding the fact that, being the modest author of “Theory of Monetary Phenomena,” I feel personally somewhat slighted, I shall demonstrate that I bear no hard feelings by replying to Wage- man that it was Germany which gave the world its greatest money theorist—Goethe. He was, to be sure, no economist, yet it was he who in Faust (Part II) clearly demonstrated that inflation was and could only be an invention of the devil.
Disguised temporarily as the king’s jester, Mephistopheles prompts the Lord Chancellor to say: Here and behold this leaflet rich in fate That turns our woes to prosperous estate: “To whom It may concern, this note of hand Is worth a thousand ducats on demand, The pledge whereof and guarantee is found In treasure buried in the Emperor’s ground.”
Here and behold this leaflet rich in fate That turns our woes to prosperous estate: “To whom It may concern, this note of hand Is worth a thousand ducats on demand, The pledge whereof and guarantee is found In treasure buried in the Emperor’s ground.”
He then fully sets forth the theories of exchange media and fully employment:
None has the power to stay the flying chits,
they run as quick as lightning on their way,
And money-booths kept open night and day,
When every single note is honored duly
With gold and silver—though with discount truly. [an early example of monetary deprecation]
From there it flows to wine-shops, butchers, bakers,
with half the world as glutton merry-makers,
The other bent on flaunting fashion-showing,
The clothiers cutting-out, the tailors sewing . [full employment]
“His Majesty!”—toasts flow and cellar clatters . . .
[the political advantages of inflation].
But in his commentary on the festivities, the Herald foresees an unhappy outcome:
Now see the charming mob all grabbing rush,
They almost maul the donor in the crush.
The gems he flicks around as in a dream,
And snatchers fill the hall in greedy stream.
But lo, a trick quite new to me:
The thing each seizes eagerly
Rewards him with a scurvy pay,
The gift dissolves and floats away.
The pearls are loosened from their band,
And beetles scurry round his hand.
And round his head they buzz about.
With solid goods before their eyes,
Some grab, and catch frail butterflies.
The rascal offers wealth untold,
But gives the glitter, not the gold.1
1Excerpts form Philip Wayne’s translation of Goethe Faust (Part II)(Baltimore: Penguin Books, Inc., 1959).
Nothing is missing: the technical formula, the political advantages, the social consequences. The poet was indubitably more clear-sighted than are most economists; he understood and clearly demon-started that inflation was the work of the devil be- cause it respected appearances but destroyed reality.
Collected in The Age of Inflation, by Jacques Rueff, Henry Regnery Company, Chicago, 1954, pp. 62 - 64