The Mystery of Banking
by Murray Rothbard

The only book that explains banking. The first part is the general theory of banks. The second part is the history of banking in England, Scotland, and the USA. For a while as I was reading, I understood it all. Unfortunately, it is fading fast. The theory part goes in baby steps and requires no previous economics knowledge. The history part is interesting, but goes at a much faster pace and presumes "thorough grasp of the first part and an ability to quickly grasp new banking concepts. I will have to read this book again.

The conclusion was surprising. He recommends equating the dollar to a fixed amount of gold (like a unit of measure) so that all federal reserve notes could be redeemed for this amount. He admits that this amounts to a gift to the banks, but he thinks it would be the least disruptive way to bring in sound money and eliminate the business cycle. He adopts a"forgive and forget" policy toward the banks, very uncharacteristic of him. I wonder how he would argue against those who oppose giving the gold in Fort Knox to the banks? How can he expect everyone to go along with his plan? Who has the right to decide what to do with the gold in the Federal vaults? Despite these open questions, I think this is a great book. Murray presents the theory as clearly as possible, and his analysis has moral and historical dimensions that make it original and profound.

Year Read: 1984

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