Money and Banking

Monetary theory is where Austrians diverge the most from mainstream. Mises built a new taxonomy of money. He said money included any checking account deposits. The marginal utility of gold on the last day of barter was determined by the uses of gold. People then demanded gold as money because there was preexisting value. A paper dollar must have such a connection to money. Government cannot create money. Money is not neutral. The natural trend of prices in a market economy is falling.

Murray Rothbard, in this classic essay originally published in 1991, offers the most "pure" proposal of all: private mintage, 100 percent reserve banking, circulating coins, full convertibility.

The Austrian economists—Mises, Rothbard, and Hayek most prominently—were not alone in predicting the baneful effects of central banking and paper money.

I have always been puzzled by the exact mechanisms through which the government keeps us from using gold as money, and my recent inquiries on a pri

Recorded at the 2005 Austrian Scholars Conference, Mises Institute, Auburn, Alabama.

Recorded at the Austrian Economics and Financial Markets conference at The Venetian Hotel Resort Casino, Las Vegas, 02-19-2005

Recorded at the Austrian Economics and Financial Markets conference at The Venetian Hotel Resort Casino, Las Vegas, 02-19-2005

Inflation is a giant rip off, a stealth tax stealing purchasing power. Money is not neutral. The first receivers of new money benefit. Savers and those on fixed incomes struggle. From 1857 until the war was a period of “free banking” where the fed had nothing to do with the banks and the states had little control over them. High economic growth and prosperity prevailed.

Part of the Brown Bag Seminar series. Recorded at the Mises Institute in Auburn, Alabama, on 10 February 2005.

Current monetary policy, writes Frank Shostak, is based on a theory of Knut Wicksell. How does Wicksell stack up to Mises?