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Mises Institute, Mises Wire, January 15, 2020
and following, This is a multiple chapter (part) future book being posted on
line over time.
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Reviewer comment
This is a standard economics establishement discussion about the origins of
money with a Austrian School (libertarian) slant. Only chapters 1, 2, 4, and 5
have been published so far (Feb 2020). These are is well written for easy
reading and undestanding the theory, but the theory about the origins and
history of money is faulty. We can estimate from the chapter titles and the
author's descriptions of the remainder that these will be written on the basis
of Austrian School theories. The author states that he is an 'Austrian School'
economist but claims the book is 'a neutral presentation of historical facts
and an objective description'
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Chapter 1 - Introduction - 9 pgs. - Describes
the purpose of the book is 'to provde the intelligent layperson a concise yet
comprehensive overview of the theory, istory, and practice of money and
banking, with a focus on the United States.' He notes that he also discusses
some of the current controversies about money and banking. The remainder of the
introduction is a summary of the table of contents and description of each
chapter
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Part I: Theory and History
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Chapter 2. The Theory and Brief History of
Money and Banking -
The chapter desribes von Mises's theory about 'subjective value' of money. And
it includes Menger's theory of the origin of money and mentions Graber's
critique of the origin. (That is that the anthropoligst, David Graber, denies
that there is any real evidence that 'barter' was ever used for exvhange of
goods and services in primitive societies.) See for what I consider a valid explaination based on factual study
versus Menger's and most economists since Adam Smith's hypothetical theory. The
author continues with brief comment on banking. Most economics texts on the
history of money do shift to the history of banking after the creation of the
Bank of England.
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Chapter 3. A Brief History of the Gold
Standard with a Fucus on the United States
The chapter is the standard theory about the role of gold as money, claiming
that it has been 'the money of choice' in history, which it was NOT. It mixes
'money' and 'currency'. It confuses the relationship between gold and dollars
as to the 'value' of which as money is based on which.
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Chapter 4. The History and Structure of the
Federal Reserve System
In this chapter the author describes the historical origin of the Federal
Reserve System and the results of the several changes in the laws coverning its
operation since 1913. It is a basic description of its organizational
structure.
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Part II: The Mechanics
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Chapter 5. Standard Open Market Operations:
How the Fed and Commerical Banks 'Create Money'.
In this chapter the author is getting into fundamentals about the theories of
how the Fed and banking system create money - deposits and loans - definitions
of the several concept of what constitutes 'money' and contrasting
"Austrian School' theories.
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Chapter 6. Beyond the Fed: "Shadow
Banking" and the Global Market for Dollars
The author here defines what the term' shadow banking' means with various
examples. He continues with discussion of such topics and LIBOR, 'Eurodollars'
and the International Bank of Settlements. Of current relevance is his
discussion of the 'repro market'.
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Chapter 7. Central Banking Since the 2008
Financial Crisis
In this chapter the author describes the situation given in the title and then
what policies and actions the Fed and other banks took in their effort to save
the banking system.
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Part III: Applications
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Chapter 8. Ludwig Mises's "Circulation
Credit Theory of the Trade Cycle"
Here he explains the Austrian School theory about the 'business cycle' and
'boom and bust' in financial and credit markets. He discusses von Mises's
theory in The Theory of Money and Credit.
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Chapter 9. Monetary Inflation and Price
Inflation
In this chapter he discusses Friedman's ideas about money - money stock -
monetarist economic theory - hyperinflation - with historical examples.
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Chapter 10. The Inverted Yield Curve and
Recession
Here is discusses the popular economic theory about the relation between the
'inversion' of the curve in yield - that is the interest rates - of bonds of
different maturities and how this can be a 'good' tool for predicting future
events.
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Chapter 11. The Fed and the Housing Bubble
Bust
In this chapter he presents the Austrian School theory and claims it 'fits'
with empirical facts about the boom and bust in the US and world housing
market.
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Part IV: Challenges
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Chapter 12., Does Textbook Explanations Get
Money and Banking Backwards?
Here is returns to the establishment theory about money and banking - that is
the relation between deposits and loans - and claims it might be 'backwards'.
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Chapter 13. Crying Wolf on (Hyper)inflation ?
In this chapter he discusses the failure of the massive expansion of credit
money by the FED and banking system in response to the financial crisis of 2008
to generate significant inflation as many economists predicted.
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Chapter 14. The Keynesians on the Cause of
and Cure for Deprression
Here is compares and contrasts Keynesian and Austrian School theories about the
Great Depression and depressions in general. He mentions Keynes's ideas about
Say's Law.
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Chapter 15. The "Market
Monetarists" and NGDP Targeting
In this chapter he focuses on the conflict between monetarist and Keynesian
theories.
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Chapter 16. Bitcoin and Other
Cryptocurrencies
Finally, he addresses the new phenomena of 'bitcoin' and other
'cryptocurrencies' and are they or can they be 'money.
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