The great masses of the people ... more easily fall a victim to a big lie than to a little one.

The idea behind the Hitler's version of the Big Lie is that anything so enormous, so extravagant, so pervasive, must be true. How could anyone hope to get away with such an enormous fabrication? Since the common man habitually lies about common things, he expects others to do so as well and will look at statements about small or inconsequential ideas with a skeptical eye. Since the common man is not overtly evil, however, he neither lies about larger, more important things, nor does he expect others to and can therefore be caught off his guard by them.

The way most people use this quote, you'd think Mein Kampf was written as a sort of "Guide to Establishing a Totalitarian Dictatorship". Yes, it's more or less in Mein Kampf (obviously not the exact quote, since it was written in German), but it is not, in context, advice on "telling a lie the Hitler way". Hitler's Mein Kampf cannot be treated like Sun Tzu's The Art of War or Machiavelli's The Prince. In fact the passage as it appears reflects Hitler's disgust with this particular method of propaganda. Anyone using this quote to condemn an alleged lie is agreeing with Hitler on the issue, not comparing the liar to him!

Written between 1923 and 1925 while serving a prison sentence for High Treason following The Beer Hall Putsch, Mein Kampf is Hitler's autobiography, declaration of intent to restore Germany to what he thought was its rightful place, and condemnation of the Jews as the source of all of Germany's problems. The passage in question falls under the third category, blaming the national Jewish conspiracy for concocting an enormous lie that Germany's loss of World War I was responsible for the country's subsequent collapse. Hitler's position (at least his public one) was that the loss of World War I was not the cause of Germany's collapse, but rather was, along with the collapse, one of the two most visible effects of a disease (an "ethical and moral poisoning") that had been rotting the country from the inside for some time.

The purpose of this alleged Big Lie was to destroy the credibility of powerful German leaders, such as Erich Ludendorff (one of Hitler's early supporters and a German hero of WWI), who had the judgement and influence to address Germany's disease at its source. By placing the blame for Germany's collapse on the military and political leadership that was in charge of the war, the Jewish conspirators defeated the most powerful threat to themselves.

Thus we see that when taken in its proper context, Hitler's "Big Lie" was not something he was endorsing, but rather a propaganda tool he accused the Jewish people of using against Germany's best interests. While it cannot be denied that Hitler used a number of Big Lies himself (in fact this whole hypocrisy is an outright example of one), anyone using the quote as an attack is in effect agreeing with Hitler's public position on the matter.

This most of all shows the assertion that the lost war was the cause of the German collapse to be a lie. No, this military collapse was itself only the consequence of the large number of symptoms of disease and their causes, which even in peacetime were with the German nation. This was the first consequence, catastrophic and visible to all, of an ethical and moral poisoning, of a diminution in the instinct of self-preservation and its preconditions, which for many years has begun to undermine the foundations of the people and the Reich.

It required the whole bottomless falsehood of the Jews and their Marxist fighting organization to lay the blame for the collapse on that very man who alone, with superhuman energy and will power, tried to prevent the catastrophe he foresaw and save the nation from its time of deepest humiliation and disgrace. By branding Ludendorff as guilty for the loss of the World War they took the weapon of moral right from the one dangerous accuser who could have risen against the traitors to the fatherland. In this they proceeded on the sound principle that the magnitude of a lie always contains a certain factor of credibility, since the great masses of the people in the very bottom of their hearts tend to be corrupted rather than consciously and purposely evil, and that, therefore, in view of the primitive simplicity of their minds they more easily fall a victim to a big lie than to a little one, since they themselves lie in little things, but would be ashamed of lies that were too big. Such a falsehood will never enter their heads and they will not be able to believe in the possibility of such monstrous effrontery and infamous misrepresentation in others; yes, even when enlightened on the subject, they will long doubt and waver, and continue to accept at least one of these causes as true. Therefore, something of even the most insolent lie will always remain and stick — a fact which all the great lie-virtuosi and lying-clubs in this world know only too well and also make the most treacherous use of.

The foremost connoisseurs of this truth regarding the possibilities in the use of falsehood and slander have always been the Jews; for after all, their whole existence is based on one single great lie, to wit, that they are a religious community while actually they are a race — and what a race! One of the greatest minds of humanity has nailed them forever as such in an eternally correct phrase of fundamental truth: he called them 'the great masters of the lie.' And anyone who does not recognize this or does not want to believe it will never in this world be able to help the truth to victory.

Adolf Hitler, Mein Kampf: Volume I Chapter 10 [Causes of the Collapse]
(Manheim Translation)