As a true disciple of Carl Menger, Ludwig von Mises began the presentation of his theory of money with an analysis of the nature of money itself. He then went on to deal with the determination of money’s purchasing power and with the impact of what he called Umlaufsmittel (fiduciary media) on the monetary system. In dealing with the nature of
This article will explore the economics of legal tender laws, arguing that they are not only a necessary prerequisite of paper money, but also benefit fractional-reserve banking. Such laws make paper money and fractional-reserve banking more widespread than they would otherwise be. Thus, legal tender laws must be understood as a major factor in
Volume 6, No. 4 (Winter 2003) Mainstream writings on monetary policy typically focus on the goals that are assumed to be the goals of monetary policy makers. Inflation targeting, employment, equilibration of the balance of payments, growth targets for monetary aggregates, the stabilization of exchange rates, GDP, or asset prices—these and similar
Volume 6, No. 4 (Winter 2003) The fundamental question we have to confront in the theory of monetary policy is therefore not whether money affects the real economy—yes it does, both in the short run and in the long run—but whether changes of the money supply can make society better off in the aggregate. Austrian economists who follow the
Volume 8, No. 4 (Winter 2005) The present work is a doctoral dissertation written at the University of Hamburg. It deals with Mises’s work on monetary economics and business cycle theory. After an introductory chapter, the author starts with a short presentation of Mises’s life and work and gives an overview of the Austrian School and
[Also available in HTML format .] This monograph addresses a critically important issue: the prevailing view that deflation (falling prices and/or falling money stock) is a catastrophe that must be stopped. Jorg Guido Hulsmann shows that deflation is nothing to fear. The government should permit it to happen as a path to economic recovery and even
The prospect of deflation haunts the political and economic establishment in our western democracies. Their fears are understandable, at any rate from an economic point of view. Consider the following three basic propositions of monetary economics: According to the first proposition, both the quantity of money and the price level are irrelevant
The practical offshoot of the Austrian theory of money is that the production of money should best be left to the free market. Government interventionism does not improve monetary exchanges; it merely enriches a select few at the expense of all other money users. And on the aesthetic side, the disaster is of course complete: rather than deal with
The notion that inflation is harmful is a staple of economic science. But most textbooks underrate the extent of the harm, because they define inflation much too narrowly as a lasting decrease of the purchasing power of money (PPM), and also because they pay scant attention to the concrete forms of inflation. To appreciate the disruptive nature of
It is my great pleasure to see this little essay in print. Written and presented more than five years ago, it was welcomed at the time by scholars with a background in Austrian economics. However, it was not understood and was rejected by those who did not have this background. In order to reach a broader audience, a short essay would simply not
What is the Mises Institute?
The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.