<blockquote>"...Mises embarked, in 1909, on his first monumental work, published in 1912 as
Theorie des Geldes nd der Umlaufsmittel (
The Theory of Money and Credit). It was a remarkable achievement, because for the first time, the micro/macro split that had begun in English classical economics with Ricardo was now healed. At long last, economics was whole, an integral science based on a logical, step-by-step analysis of individual human action. Money was fully integrated into an analysis of individual action and of the market economy.
By basing his analysis on individual action, Mises was able to show the deep fallacies of the orthodox mechanistic Anglo-American quantity theory and of Irving Fisher's "equation of exchange." An increase in the quantity of money does not mechanically yield a proportional increase in a non-existent "price level," without affecting relative utilities or prices. Instead, an increase lowers the purchasing power of the money unit, but does so by inevitably changing relative incomes and prices. Micro and macro are inextricably commingled. Hence, by focusing on individual action, on choice and demand for money, Mises not only was able to integrate the theory of money with the Austrian theory of value and price; he transformed monetary theory from an unrealistic and distorted concentration on mechanistic relations between aggregates, to one consistent with the theory of individual choice."
- Murray N. Rothbard,
Ludwig von Mises: Scholar, Creator, Hero</blockquote>