This article analyzes Chile's monetary policy after the 1973 military coup and the failed attempt at nominal stabilization during the dictatorship. Two causes of the persistent inflation are identified: i) the reduction of the fiscal deficit in 1974 did not curb the high monetary issuance and inflation, due to the insufficiency of such reduction, which perpetuated the inflation necessary to finance the fiscal deficits, and ii) economic agents perceived that the fiscal needs, financed with seigniorage, would not allow reducing the growth of the monetary base or inflation. This perception maintained the high levels of inflation after the coup. Successful shock therapy would have required a further reduction in the fiscal deficit and the perception that these lower deficits would be permanent. Without a credible deficit reduction policy, inflation stabilized only in the late 1970s.