"In Central Europe, the first country to follow Great Britain's example was the Republic of Czecho-Slovakia. In the years immediately after the War, Czecho-Slovakia, for reasons of prestige, had heedlessly followed a policy which aimed at raising the value of the krone, and she did not come to a halt until she was forced to recognize that increasing the value of her currency meant hindering the exportation of her products, facilitating the importation of foreign products, and seriously imperilling the solvency of all those enterprises that had procured a more or less considerable portion of their working capital by way of bank credit. During the first few weeks of the present year, however, the gold-parity of the krone was reduced in order to lighten the burden of the debtor enterprises, and in order to prevent a fall of wages and prices and so to encourage exportation and restrict importation. Today, in every country in the world, no question is so eagerly debated as that of whether the purchasing power of the monetary unit shall be maintained or reduced." - Source: The Theory of Money and Credit, pp. 16-17
The passage is about the short-term benefits of currency depreciation. All in all, Ludwig von Mises identified five immediate benefits so far:
1. Assisting export industry
2. Restricting import of foreign goods
3. Easing the financial burden of local companies with big debts
4. Preventing the fall of wages, and
5. Maintaining the prices of goods and services.
During his time, Mises mentioned Czecho-Slovakia as the country which adopted this policy of currency depreciation after the example of Great Britain. Previously, Czecho-Slovakia practiced the stronger currency policy. But after witnessing the impact of a strong krone on both export and import, the government decided to change its direction.
Moreover, strong krone that time would also mean putting the domestic companies, which depend on bank credit for their working capital on a serious financial risk. And so krone was depreciated in order to reduce the financial burden of these local companies.
Reading this section, I realized that during Mises' time, currency depreciation was a hot issue in every country. Today, yes, it's becoming hotter in countries that are aware about what's going on in global economy. How about in the Philippines? Is this the kind of issue that is now being publicly debated? Why not? Are we not part of the global economy? Or do our policy makers think that our economy is too strong and protected from currency depreciation? In fact, not many Filipinos are aware that we are following the same path as the United States in terms of monetary depreciation.
Currency depreciation is a serious monetary and economic issue that affects our standard of living. Politicians cannot see the long-term detrimental results of such monetary policy for they only focus on immediate results. I wish and pray that the deafening silence about this very important subject will soon be stopped. And that the Lord will raise political leaders that truly understand this topic and will bring it into public attention.