10: The Exchange Ratio
Von Mises begins by dismissing considerations that cloud the consideration of the exchange ratios among currencies. Specifically, it is not meaningful to consider the exchange value of two currencies that are not in use at the same time (as they cannot be exchanged), nor between the value of currencies in different markets (as they reflect the exchange rate of their separate markets), not between currencies that are based on commodities (as they represent the value of the commodity, not of money).
(EN: With so much eliminated, it's difficult to discern the point. What, exactly, is subject to examination seems to be two competing currencies in simultaneous use in the same market, which is an odd situation, though not altogether unheard of.)
Natural Exchange Ratio Among Monies
The exchange ration between monies, which is often evident in the trade of domestic and foreign currencies, naturally concur with their exchange rations to a given economic gold. For example, a coin that represents an ounce of silver can be traded for four counts that represent a quarter-ounce - fundamentally, the same as making change in a single currency with coins of different denominations.
The same remains true when currencies are backed by different commodities: a sum of gold-backed money is exchanged for an amount of silver-backed money as if the metals were being exchanged: If gold is worth fifteen times the value of silver, an amount of money representing one ounce of gold will command an amount of money representing fifteen ounces of silver.
It has been observed that the movement of monies between nations may result in a favorable or unfavorable trade balance, by virtue of the goods in one country being in greater demand in another. Specifically, it is not the other way around, as in a situation of unrestricted trade, goods will go to where they command the best price - which is to say, where the quantity of money exceeds the quantity of goods, and more money can be had in trade for goods.
This is of no consequence to domestic trade, which his conducted based on the quantity of goods in the domestic market, not the quantity of money in the domestic market - contrary to the mercantilist view and the efforts of governments that subscribe to it to maintain "enough" money for domestic trade, which is entirely inconsequential.
Nevertheless, the notion that money creates wealth persists, in spite of sound arguments to the contrary, which Von Mises ascribes to "disciples amongst the great host of the half-educated who are proof against any argument [contrary to] their long-cherished illusions." (EN: Quite a polemic, but I suppose his frustration is warranted, given that economic policy often defies logic and caters to popular sentiment, however ill-informed.)
There is the notion of a demand for money, and the belief that wealthy nations can exploit poorer ones by stockpiling money to create a shortage of it overseas, thus generating an elevated demand for money, thus enabling them to loan money to cash-starved nations at significant interest rates. But again, consumer markets have no demand for money - they have a demand for goods - and money is merely a token by which goods are traded.
Were there a lack of fiduciary media, it would immediately become obvious that no country is in danger of losing its wealth to other nations. An absence of money would not create a corresponding absence of goods, nor the desire among the people to trade among themselves for goods of greater use-value, or trade them to foreign markets in exchange for goods to import to the domestic market.