Monday 4 March 2013

Murray Rothbard - The Mystery of Banking

Although ostensibly it is dodgy real estate loans that are bringing the banks down this year [2008], in the seminal book that you hold, Rothbard shows that it is really the fraudulent nature of fractionalized banking that is the real culprit for the bankers’ demise.
          From the introduction by Douglas French

It's a strange fact about life that whilst we can pay incredible levels of attention to complex towering issues, the most fundamental and axiomatic questions often go not only unanswered but unasked. One glaring example of this is money, we use it all the time yet how often do we consider what it is, where it comes from and why it has value?

I remember when I was a teenager sitting down with pen and paper and trying to figure out how money came about. (Doubtlessly I was avoiding doing some other, ostensibly more important activity, like English course work on Shakespeare or Levi's jeans commercials or something like that). To cut to the end, I couldn't do it, I couldn't figure out a fair way that a central government could inject 'money', some token of exchange backed by nothing, into a barter system, which is the way I assumed money had come about.

I didn't think about it much more and years went by before I stumbled onto a copy of Murray Rothbard's 'The Mystery of Banking'. Within the first fifteen pages or so, this book eloquently explains the history of money, how it cannot be created by decree but rather must evolve out of a barter system, absent of government involvement. Rothbard goes on to explain that in spite of the near ubiquitous contempt in which bankers are held today, theirs is at least in principal a noble profession corrupted by a nefarious relationship with governments.

Money is a concept so intimately entangled with government that it's hard to conceive of how the two are really quite separate. Murray Rothbard's book cuts through the unnecessary complexity to reveal that understanding money is really quite a simple affair, yet a necessary one if we're ever going to stop being victims of financial piracy!

'The Mystery of Banking' available free at the Mises institute:

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