This book provides the intelligent layperson with a concise yet comprehensive overview of the theory, history, and practice of money and banking, with a focus on the United States. Although the author considers himself an Austrian school economist, most of the material in this book is a neutral presentation of historical facts and an objective description of the mechanics of money creation in today’s world.
The book is intended to be a reference for all readers, whether “Austrian” or not, and to bridge the gap by providing a crash course in the necessary theory and history while keeping the discussion tethered to current events.
— From the Introduction
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Robert P. Murphy is a Senior Fellow with the Mises Institute. He is the author of numerous books: Contra Krugman: Smashing the Errors of America’s Most Famous Keynesian; Chaos Theory; Lessons for the Young Economist; Choice: Cooperation, Enterprise, and Human Action; The Politically Incorrect Guide to Capitalism; Understanding Bitcoin (with Silas Barta), among others. He is also host of The Human Action Podcast and The Bob Murphy Show.
This week, Bob explains Cantillon effects: the insight that new money doesn't raise all prices equally or simultaneously, but flows through the economy in a sequence that benefits early recipients at the expense of everyone else. Then, he shows why this phenomenon is the foundation on which the entire Austrian theory of the business cycle is built.
Bob untangles two arguments that even Austrian economists sometimes conflate: Mises' calculation problem and Hayek's knowledge problem. Then, he explains why the distinction matters, especially in light of recent claims that AI and modern computing could finally make central planning viable.
In memory of Roger Garrison, Bob walks through Garrison's famous capital-based macroeconomics diagrams, showing how they translate the Mises-Hayek theory of the boom-bust cycle into the language of modern macroeconomics.
Robert P. Murphy
Published 2021 by the Mises Institute.
This work is licensed under the Creative Commons Attribution 4.0 International License (CC BY 4.0). http://creativecommons.org/licenses/by/4.0/
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ISBN: 978-1-61016-740-6
