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Ethics of Money Production

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The first full study of a critically important issue today: the ethics of money production.
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This pioneering work by Jörg Guido Hülsmann, professor of economics at the University of Angers in France and the author of Mises: The Last Knight of Liberalism, is the first full study of a critically important issue today: the ethics of money production.

There is a reason that this book has been translated to Chinese, German, Spanish, Czech, and there are many more on the way. This book hits the intellectual sweet spot, speaking to the issues that are driving economic events right now. We MUST deal with the money problem in a principled way, else we never get back on the course of sustainable prosperity.

By "money production," the author is speaking not in the colloquial sense of the phrase "making money," but rather the actual production of money as a commodity in the whole economic life. The choice of the money we use in exchange is not something that needs to be established and fixed by government.

In fact, his thesis is that a government monopoly on money production and management has no ethical or economic grounding at all. Legal tender laws, bailout guarantees, tax-backed deposit insurance, and the entire apparatus that sustains national monetary systems, has been wholly unjustified. Money, he argues, should be a privately produced good like any other, such as clothing or food.

In arguing this way, he is disputing centuries of assumptions about money for which an argument is rarely offered. People just assume that government or central banks operating under government control should manage money. Hulsmann explores monetary thought from the ancient world through the Middle Ages to modern times to show that the monopolists are wrong. There is a strong case in both economic and ethical terms for the idea that money production should be wholly private.

He takes on the "stabilization" advocates to show that government management doesn't lead to stability but to inflation and instability. He goes further to argue against even the theoretical case for stabilization, to say that money's value should be governed by the market, and that the costs associated with private production are actually an advantage. He chronicles the decline of money once nationalized, from legally sanctioned counterfeiting to the creation of paper money all the way to hyperinflation. In his normative analysis, the author depends heavily on the monetary writings of 14th-century Bishop Nicolas Oresme, whose monetary writings have been overlooked even by historians of economic thought. He makes a strong case that "paper money has never been introduced through voluntary cooperation. In all known cases it has been introduced through coercion and compulsion, sometimes with the threat of the death penalty. . . . Paper money by its very nature involves the violation of property rights through monopoly and legal-tender privileges."

The book is also eerily prophetic of our times:

Consider the current U.S. real-estate boom. Many Americans are utterly convinced that American real estate is the one sure bet in economic life. No matter what happens on the stock market or in other strata of the economy, real estate will rise. They believe themselves to have found a bonanza, and the historical figures confirm this. Of course this belief is an illusion, but the characteristic feature of a boom is precisely that people throw any critical considerations overboard. They do not realize that their money producer—the Fed—has possibly already entered the early stages of hyperinflation, and that the only reason why this has been largely invisible was that most of the new money has been exported outside of the U.S . . . Because a paper-money producer can bail out virtually anybody, the citizens become reckless in their speculations; they count on him to bail them out, especially when many other people do the same thing. To fight such behavior effectively, one must abolish paper money. Regulations merely drive the reckless behavior into new channels.

Hulsmann has provided not only a primer in understanding our times, but a dramatic extension of the work of Menger, Mises, Hayek, Rothbard, and others to map out an economically radical and ethically challenging case for the complete separation of money and state, and a case for the privatization of money production. It is a sweeping and learned treatise that is rigorous, scholarly, and radical.



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Table of Contents

  • Preface
  • Introduction
    • Money Production and Justice
    • Remarks about Relevant Literature
  • Part 1: The Natural Production of Money
    • Monies
    • The Division of Labor without Money
    • The Origin and Nature of Money
    • Natural Monies
    • Credit Money
    • Paper Money and the Free Market
    • Electronic Money
    • Money Certificates
    • Certificates Physically Integrated with Money
    • Certificates Physically Disconnected from Money
    • Money within the Market Process
    • Money Production and Prices
    • Scope and Limits of Money Production.
    • Distribution Effects
    • The Ethics of Producing Money
    • The Ethics of Using Money
    • Utilitarian Considerations on the Production of Money
    • The Sufficiency of Natural Money Production
    • Economic Growth and the Money Supply
    • Hoarding
    • Fighting Deflation
    • Sticky Prices
    • The Economics of Cheap Money
    • Monetary Stability
    • The Costs of Commodity Money
  • Part 2: Inflation
    • General Considerations on Inflation
    • The Origin and Nature of Inflation
    • The Forms of Inflation
    • Private Inflation: Counterfeiting Money Certificates
    • Debasement
    • Fractional-Reserve Certificates
    • Three Origins of Fractional-Reserve Banking
    • Indirect Benefits of Counterfeiting in a Free Society .
    • The Ethics of Counterfeiting
    • Enters the State: Fiat Inflation through Legal Privileges
    • Treacherous Clerks
    • Fiat Money and Fiat Money Certificates
    • Fiat Inflation and Fiat Deflation
    • Legalized Falsifications
    • Legalizing Debasement and Fractional Reserves
    • The Ethics of Legalizing Falsifications
    • Legal Monopolies
    • Economic Monopolies versus Legal Monopolies
    • Monopoly Bullion
    • Monopoly Certificates
    • The Ethics of Monetary Monopoly
    • Legal-Tender Laws
    • Fiat Equivalence and Gresham’s Law
    • Bimetallism
    • Legal-Tender Privileges for Money Certificates
    • Legal-Tender Privileges for Credit Money
    • Business Cycles
    • Moral Hazard, Cartelization, and Central Banks
    • Monopoly Legal Tender
    • The Ethics of Legal Tender
    • Legalized Suspensions of Payments
    • The Social Function of Bankruptcy
    • The Economics of Legalized Suspensions
    • The Ethics of Legalized Suspensions
    • Paper Money
    • The Origins and Nature of Paper Money
    • Reverse Transubstantiations
    • The Limits of Paper Money
    • Moral Hazard and Public Debts
    • Moral Hazard, Hyperinflation, and Regulation
    • The Ethics of Paper Money
    • The Cultural and Spiritual Legacy of Fiat Inflation
    • Inflation Habits
    • Hyper-Centralized Government
    • Fiat Inflation and War
    • Inflation and Tyranny
    • Race to the Bottom in Monetary Organization
    • Business under Fiat Inflation
    • The Debt Yoke
    • Some Spiritual Casualties of Fiat Inflation
    • Suffocating the Flame
  • Part 3: Monetary Order and Monetary Systems
    • Monetary Order
    • The Natural Order of Money Production
    • Cartels of Credit-Money Producers
    • Fiat Monetary Systems in the Realm of the Nation-State
    • Toward National Paper-Money Producers: European Experiences
    • Toward National Paper-Money Producers: American Experiences
    • The Problem of the Foreign Exchanges
    • International Banking Systems, 1871–1971
    • The Classical Gold Standard
    • The Gold-Exchange Standard
    • The System of Bretton Woods
    • Appendix: IMF and World Bank after Bretton Woods
    • International Paper-Money Systems, 1971– ?
    • The Emergence of Paper-Money Standards
    • Paper-Money Merger: The Case of the Euro
    • The Dynamics of Multiple Paper-Money Standards
    • Dead End of the World Paper-Money Union
  • Conclusion
    • Two Concepts of Capitalism
    • Monetary Reform
    • References
    • Index of Names
    • Index of Subjects
ISBN 9781610166812
eISBN 9781610164528
Publisher Ludwig von Mises Institute
Publication Date 2008
Binding PB
Page Length 292
Dimensions 6x9

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