Murray Rothbard wrote:
Few economic subjects are more tangled, more confused than money.
Wrangles abound over “tight money” vs. “easy
money,” over the roles of the Federal Reserve System and the
Treasury, over various versions of the gold standard, etc. Should
the government pump money into the economy or siphon it out?
Which branch of the government? Should it encourage credit or
restrain it? Should it return to the gold standard? If so, at
what rate? These and countless other questions multiply,
seemingly without end.
Perhaps the Babel of views on the money question stems from man’s
propensity to be “realistic,” i.e., to study only
immediate political and economic problems. If we immerse
ourselves wholly in day-to-day affairs, we cease making
fundamental distinctions, or asking the really basic questions.
Soon, basic issues are forgotten, and aimless drift is
substituted for firm adherence to principle. Often we need to
gain perspective, to stand aside from our everyday affairs in
order to understand them more fully. This is particularly true in
our economy, where interrelations are so intricate that we must
isolate a few important factors, analyze them, and then trace
their operations in the complex world. This was the point of
“Crusoe economics,” a favorite device of classical
economic theory. Analysis of Crusoe and Friday on a desert
island, much abused by critics as irrelevant to today’s world,
actually performed the very useful function of spotlighting the
basic axioms of human action.
Of all the economic problems, money is possibly the most tangled,
and perhaps where we most need perspective. Money, moreover, is
the economic area most encrusted and entangled with centuries of
government meddling. Many peopleâ€”many economistsâ€”usually
devoted to the free market stop short at money. Money, they
insist, is different; it must be supplied by government and
regulated by government. They never think of state control of
money as interference in the free market; a free market in money
is unthinkable to them. Governments must mint coins, issue paper,
define “legal tender,” create central banks, pump money
in and out, “stabilize the price level,” etc.
Historically, money was one of the first things controlled by
government, and the free market “revolution” of the
eighteenth and nineteenth centuries made very little dent in the
monetary sphere. So it is high time that we turn fundamental
attention to the life-blood of our economyâ€”money.
Let us first ask ourselves the question: Can money be
organized under the freedom principle? Can we have a free market
in money as well as in other goods and services? What would be
the shape of such a market? And what are the effects of various
governmental controls? If we favor the free market in other
directions, if we wish to eliminate government invasion of person
and property, we have no more important task than to explore the
ways and means of a free market in money.
The latest print edition of the book — including a detailed reform proposal, ‘The Case for a 100 Percent Gold Dollar’ — is available in the Mises Store.