Mises Daily Articles
The Best Book on Money Ever Written
What's the best book on money ever written? That's an easy one: What Has Government Done to Our Money? by Murray N. Rothbard. If you have read it, you are nodding your head in agreement right now. If you haven't, you will find that it will open new vistas of understanding, not just on the topic of money but on the whole of political economy. The quality of money in an economy, Rothbard shows, has everything to do with the health of an economy and the future of freedom itself.
But we are low on stock after a big surge in orders from classrooms and booksellers. Although we must reprint right away, we are using the opportunity to really jazz up this book. We're adding a spectacular new cover, including a wonderful new introduction by Guido Hülsmann, improving the binding and typeface, and preparing a full-scale blitz to get the word out.
Best of all, we are uniting this book with its natural complement: a detailed reform proposal for a 100 percent gold dollar. "The Case for a 100 Percent Gold Dollar" was written a decade before the last vestiges of the gold standard were abolished. Yet his unique plan for making the dollar sound again still holds up. Some people have said: Rothbard tells us what is wrong with money but not what to do about it. Well, by adding this essay, the problem and the answer are united in a comprehensive whole.
Certainly it will be timely. So many of our current troubles in the US—and around the world—trace to the theory and policy of money. It's a complicated topic, and certainly over the heads of most politicians. Why? Mainstream economists have made it this way. Their explanations and house historians recite dry data instead of the real stuff of history.
In the 19th century, it was different. Everyone debated the subject. Whole elections would turn on the questions about gold, silver, bimetallism, and the central bank. Only the Austrian School—especially the writings of Murray Rothbard—make the subject as interesting and revealing as it should be.
Nowadays, when it comes to money, we are just supposed to take Alan Greenspan's word for it and shut up. But Rothbard wasn't willing to do that. Before the last remnants of the gold standard collapsed, he wrote this modern classic. Whereas Mises had explained the origin and value of money, Rothbard set out to also explain the destruction of money at the hands of a government-backed central bank.
The book made huge theoretical advances. He was the first to prove that the government, and only the government, can destroy money on a mass scale, and he showed exactly how they go about this dirty deed. But just as importantly, it is beautifully written. He tells a thrilling story because he loves the subject so much.
The passion that Murray feels for the topic comes through in the prose and transfers to the reader. Readers become excited about the subject, and tell others. Students tell professors. Some, like the great Ron Paul of Texas, have even run for political office after having read it.
It was Ron Paul who introduced legislation that would implement Rothbard's plan for a new gold standard. The idea is to use the government's existing gold stock, define the dollar as a particular weight of gold, and guarantee full convertibility. That way the government could get out of the money business all together, and leave it to the free market.
Can you imagine what that would do to political life? The government would not be allowed to inflate, bail out, or spend beyond its means. You could count on the value of your savings. Inflation would stop. The business cycle would stop. No more monetary manipulations and schemes. The financial system would be just as modern, but without the disruptions, bubbles, panics, and crazed debts.
Getting this book into the hands of more people could make a huge difference in the political affairs of our time. It could put monetary reform, even the gold standard, back into the spotlight.
Can we really have free-market money? Rothbard shows that money is not a creation of the government but of the market itself, while providing many historical examples. Even coinage, and weights and measures, are market institutions. He shows how and why gold became money, and why and how banks came into existence. He then marches through the disastrous history of the banking-government partnership.
With its supplemental essay, he doesn't leave the reader hanging. We now have guidance for the future as well.
As Rothbard explains, the age of the gold standard was an age of freedom and stability. Every step away from it has empowered the state against individuals and families.
What an eye-opener this book is! After reading it, you can't possibly look at politics the same way. It shows how fiat paper money funds big government, steals our savings, rewards profligacy, unleashes bureaucrats, generates the business cycle, threatens to bring about national bankruptcy, and has even led to social upheavals and wars abroad.
Rothbard shows precisely how banks create money out of thin air and how the central bank, backed by government power, allows them to get away with it. He shows how exchange rates and interest rates would work in a true free market. When it comes to describing the end of the gold standard, he is not content to describe the big trends. He names names and ferrets out all the interest groups involved.
A main problem Rothbard addresses is, of course, the relentless declines in the value of money. We are always being told that inflation has been conquered. It's not true. We still live in the Age of Inflation; we've just gotten used to it.
The central bank and fiat money are silent killers. Did you know that the dollar has lost nearly one-third of its purchasing power just since 1991 (as measured by the CPI)? Just having recovered from the last paper-money boom time, the paper dollar is creating little boomlets in many countries around the world, even as the dollar falls on international exchange. Savings rates are at historic lows right now, and debt at all-time highs.
Most of the worst trends in our nation's financial data date from that the fateful day when Richard Nixon shut down the last remnants of the gold standard. Murray Rothbard's book is the best one to connect the dots. It is the one that makes the case, not just against the central bank but for a wonderful alternative of free-market money.
This is why it is the choice of many financial professions who care that their clients are well informed. Professors around the world use it in their classrooms.
Since Rothbard's death, scholars have worked to assess his legacy, and many of them agree that this little book is one of his most important. Though it has sometimes been inauspiciously packaged and is surprisingly short, its argument took huge strides toward explaining that it is impossible to understand public affairs in our time without understanding money and its destruction.
This book can take on a much larger life in this new edition. It's the kind of book that you will want to buy by the stack so that you can hand them to friends and co-workers who express curiosity about business cycles, debt, inflation, and exchange rates. For that matter, it will be just the book to hand out the next time someone cancels a trip to Europe because the dollar is so weak. No other book on money has this kind of reach, this degree of persuasive power, this ability to guide the reader toward a new way of understanding the whole topic.
Alan Greenspan once told Ron Paul he still believed in the gold standard. In the unlikely event that's true, here's his blueprint. Please help us get it out as never before.
Thanks to generous supporters of the Mises Institute, you can read What Has Government Done To Our Money for free online here.