Means-ends and consumer choices

A major problem with the mainstream framework of thinking is that people are presented as if a scale of preferences were hard-wired in their heads.
Regardless of anything else this scale remains the same all the time.
Valuations however, do not exist by themselves regardless of the things to be valued. On this Rothbard wrote,

There can be no valuation without things to be valued.1

Valuation is the outcome of the mind valuing things. It is a relation between the mind and things.
Purposeful action implies that people assess or evaluate various means at their disposal against their ends.

An individual’s ends set the standard for human valuations and thus choices. By choosing a particular end an individual also sets a standard of evaluating various means.
For instance, if my end is to provide a good education for my child, then I will explore various educational institutions and will grade them in accordance with my information regarding the quality of education that these institutions are providing.

Observe that the standard of grading these institutions is my end, which is to provide my child with a good education.
Or, for instance, if my intention is to buy a car then there is all sorts of cars available in the market, so I have to specify to myself the specific ends that the car will help me achieve.
I need to establish whether I plan to drive long distances or just a short distance from my home to the train station and then catch the train.

My final end will dictate how I will evaluate various cars. Perhaps I will conclude that for a short distance a second hand car will do the trick.
Since an individual’s ends determine the valuations of means and thus his choices, it follows that the same good will be valued differently by an individual as a result of changes in his ends.
At any point in time, people have an abundance of ends that they would like to achieve. What limits the attainment of various ends is the scarcity of means.
Hence, once more means become available, a greater number of ends, or goals, can be accommodated—i.e., people’s living standards will increase.

Another limitation on attaining various goals is the availability of suitable means.
Thus to quell my thirst in the desert, I require water. Any diamonds in my possession will be of no help in this regard.

1. Murray N. Rothbard, Towards a Reconstruction of Utility and Welfare Economics.


Book Review: Egalitarianism as a Revolt Against Nature, and Other Essays

The remarkable thing about being an aspiring Rothbardian, is that no matter how much Rothbard you read, the next virgin Rothbard book up on your reading list is always a superb surprise.

The twists and the turns on the route are remarkable; though they are almost always consistently within the same Rothbardian memory palace and universe of thought.

As a searcher for truth in a world of lying politicians, bureaucrats, and technocrats, many of us at first pursue an initial tentative pathway through the Dead Marshes of state propaganda, state education, and other self-justifying political lies, via the guiding ministrations of Hazlitt, Rand, Heinlein, Hayek, and Mises. Eventually, however, the inevitable high pass of Rothbard is reached; it can no longer be put off, or deviated from, despite what the Cato Institute says. But what to read first when faced by that mountainous bibliography? The Bow-Tied and Bespectacled One looks down upon you from heaven and sniggers. ‘Be my guest,’ he says. ‘Pick one, while I eat a ham sandwich with Michaelangelo.’

Obviously, if you’ve read Human Action, you have to go to its ‘sequel’, Man, Economy, and State. Though that seems a dauntingly mighty effort, particularly when the book arrives on the delivery truck, usually man-handled to your door by at least two burly delivery van drivers, who puff and pant their way up your drive, with their insignia cards being sucked into the gravitational mass of this immense Magnum Opus.

(Thank goodness for iBooks and digital delivery.)

And so the quest to ultimate Rothbardian status begins in earnest. Next up is For a New Liberty, alongside The Ethics of Liberty, which form a delightful complementary pair, all washed down with Power and Market.

At this point the aspiring Austrian may be temporarily satiated, and thus turn elsewhere for a little variety. Hoppe springs to mind, of course, and then Mises is revisited, particularly Socialism, Liberalism, Bureaucracy, Omnipotent Government, and The Anti-Capitalistic Mentality, this final one being a delightfully light snapshot of our modern socialistic world, in which music industry stars can go on MTV and speak such inane unchallenged drivel as, ‘I hate capitalism, but I love spending money.’

Despite the remarkable freshness of Mises, you soon hunger for more of the Master’s Apprentice, Rothbard.

So, now it’s the magnificent and monumental Conceived in Liberty, where you have to unlearn and revise much that you had formerly taken for granted in British and American history, seen through the hugely-detailed chromatic prism of individual motivation and perseverance in the face of enormous historical odds, which after 4,000 years finally created a society which threw off the Old Order of pharaohs, kings, warriors, and priests, much to the benefit of Europe, which had to adapt quickly to avoid losing all of its tax-paying population to the wonderful liberty of the New World.

(Oh what a shame it has proved that the Jeffersonian dream of America has become the Hamiltonian nightmare of the United States. For more on that, you need DiLorenzo and Woods, but I digress.)

Many who have followed this familiar literary trail from the elegant Manhattan apartment of Mises down to the more urbane Amsterdam Avenue home of Rothbard, past all the gilded creatures of that locale, will know that the next port of call has to be the most distilled Rothbard book of all.

This is the simply incredible Austrian Perspective on the History of Economic Thought, in which much becomes clear that was once hidden, buried, written out of thought, or gleefully atomised in the memory hole by ruling bandit gangs writ large and their priestly hordes of intellectual bodyguards who support these bandits and their parasitic Old Order predations upon the rest of us, in return for a dishonourable pew at the trough.

Have we therefore finished our quest?

Oh, there’s a long way to go yet, my friend. Perhaps we need a temporary diversion first however, through Hoppe’s mind-bending Democracy the God That Failed, his indispensable A Theory of Capitalism and Socialism, followed swiftly by the double-bagger of The Economics and Ethics of Private Property and The Myth of National Defense.

Perhaps after this colourful detour we’re ready for some more Rothbard? But where to go next? You may think you’re hardcore by now, but you’ve only scratched the first outer layer of that vast tottering pyramid of Rothbardian books, articles, videos, and speeches, which astonishingly sprang from the resolute and presumably much-battered typewriter of just one single man. spoil us for choice, of course, with their innumerable windows through to the soul and collected wisdom of Rothbard, with most of his books freely available to download, and every audio tape and video tape that can be harvested from a chaotic world up there on YouTube and discussed in depth at Mises University.

One feels like Neo in that final lamentable Matrix movie, where our martial arts hero is faced with a billion Agent Smiths; which one do you attack first?

Fortunately, to shorten your quest, I now know the next one you should read; Egalitarianism As a Revolt Against Nature. It was a long time in the finding, but I finally got there.

Where to begin? As Man, Economy, and State is to Human Action, so you might say that Egalitarianism As a Revolt Against Nature is to The Anti-Capitalistic Mentality, though much expanded when compared in size to that tiny work of Mises, with perhaps a little soupçon of Hayek’s Fatal Conceit thrown in for taste.

Although the History of Economic Thought is still hard to beat, and perhaps remains the pinnacle of Rothbard at his finest, I think Egalitarianism has to be right up there challenging for that coveted top spot.

This collection of essays opens in predictable enough fashion:

“For well over a century, the Left has generally been conceded to have morality, justice, and ‘idealism’ on its side; the Conservative opposition to the Left has largely been confined to the ‘impracticality’ of its ideals. A common view, for example, is that socialism is splendid ‘in theory,’ but that it cannot ‘work’ in practical life.”

Pure music to your eyes, of course, as an aspiring Rothbardian. But later in the next chapter, after the usual glorious bubbling stream of sparkling Rothbard, there’s this:

“Or rather, to be more precise, there were from the beginning two different strands within socialism: one was the right-wing, authoritarian strand, from Saint-Simon down, which glorified statism, hierarchy, and collectivism and which was thus a projection of conservatism trying to accept and dominate the new industrial civilization. The other was the left-wing, relatively libertarian strand, exemplified in their different ways by Marx and Bakunin, revolutionary and far more interested in achieving the libertarian goals of liberalism and socialism; but especially the smashing of the state apparatus to achieve the ‘withering away of the State’ and the ‘end of the exploitation of man by man.'”

The relatively libertarian strand? Of Karl Marx?!?


Well, that’s what the Cato Institute would say too, perhaps, but if you persevere it works. It fits. Like a pearly piece of grit in an oyster shell.

And these pearls just keep being strewn throughout the book, explaining how socialism was the wrong answer to the right question of challenging the Old Order, and how this wrong answer has metastasised into the horrific creatures of IMF austerity and world global government that we see gathering around us today, as vampire squid elites keep foisting their socialist paper fiat nonsense upon us, to try to drag us back a few thousand years to some kind of horrific murderous New World Order (read, Old Order) and a borderless global Romanesque Empire.

Soon we will all realise that one of the important sub-definitions of money, perhaps the most important one of all, is that money should be a store of value, and that therefore printed-from-the-Brow-of-Zeus socialised ‘currencies’ are simply not money, but are more akin to Soviet ration tickets. When that shoe eventually drops, the Old Order may try one last throw of the dice with their IMF SDR gambit or their usual joker card, a global world war.

However, these efforts will also fail, claims Rothbard.

The revolutions of the last few hundred years, particularly the Industrial Revolution, have made the world too complex for the Old Order to rule over in the manner to which it aspires. Yes, it can rule agrarian non-industrialised societies, as it did with the Inca Empire, the Roman Empire, and the Athenian-dominated Delian League — though you’ll notice that none of these once-mighty edifices lasted — however the world’s population will no longer stand for such serfdom and penury, even if it currently tolerates a pelf-extraction rate of forty or fifty percent. The ratchet of liberty has clicked, and there’s no turning back the mass-industrial technological clock, says Rothbard.

Even if we claim to be socialists, and allow the state to continually extract a pelf ‘protection’ tax rate from us of forty percent, or more, we will only tolerate a society in which we can have our iPhones, iPads, and MacBooks, along with foreign travel, exotic food, windsurfing opportunities, the potential of an exciting career, and most of all some fun in our lives, rather than the endless unendurable austerity, tedium, and deference, of terminal servitude to a ruling criminal oligopoly and its supportive caste of privileged bureaucratic and priestly technocratic tax eaters.

All of what we want as modern people can only be delivered via complex industrial society, tied together with trillions of streams of disparate information held within the minds of billions of individuals. Complex industrial society, and these myriad communication pathways, can only be achieved through freedom and the final elimination of the Old Order, a fate which Rothbard brands as inevitable, in a seemingly deliberate and playful historicist swipe at Marx, the libertarian.

Witness the Soviet Union. The socialists made the terrible still-unacknowledged mistake of using Old Order methods to generate paradoxical freedom from the despised Old Order societal structure; for instance, by replacing the hated Okhrana secret police of the Tsar with the hated NKVD secret police of Stalin.

The world’s socialists were still shocked, nevertheless, when the Berlin Wall came down, despite their ideological brethren having inflicted this mass-murdering criminal regime upon the people of Russia and other countries, with one Soviet agent, Vasili Blokhin, being personally responsible, one bullet at a time, for the murder of of 7,000 Poles in one protracted session, and perhaps tens of thousands of other innocent victims over his career, all of them shot by Blokhin in the back of the neck, for which Stalin awarded this Soviet hero both the Order of the Badge of Honor and the Order of the Red Banner.

At last, despite a cover-up which had lasted many decades, aided and abetted by western governments, the socialist system was eventually seen by one and all to have failed, thus forcing many western socialists into the green socialist movement to escape from having to defend the busted flush of the laughable economic merits of red socialism, which found it impossible to even marry a right shoe together with a left shoe, without first threatening to kill someone.

And let’s not mention the laces. Those were last seen on a train to Murmansk, along with all of those one-ton nails and giant cubes of window glass.

What was best, however, was that this monstrous grey socialist dead-hand construct had been overthrown by ordinary people, as Rothbard had predicted it would be, in a relatively bloodless collapse.

This hated political construct had previously sent tens of millions of these ordinary people to die in its mindless socialist Gulag, a number far outweighing the murderous national socialist, Adolf Hitler. And yet still we see inane music industry stars wearing T-shirts branded with scarlet hammers, stars, and sickles.

The only thing the Soviet Union was perhaps good at was killing ordinary people, exporting Kalashnikovs, and producing vodka; such glory for socialism and the socialists.

However, look at Russia now, even under the former KGB general, Putin? Look what a little freedom did. For example, who would have believed 40 years ago that Max Keiser would now be broadcasting hard money truths from Moscow, while the Chairman of the Federal Reserve would be broadcasting soft money lies from Washington? Or that Russia may itself be contemplating a hard gold rouble, of which we hear constant unsubstantiated whispers, while the west descends into a sea of political paper currency?

Perhaps if Daniel Craig remakes Goldfinger as James Bond, the pivotal scene with Oddjob will be set in the Russian State Depository for Precious Metals and Gems rather than Fort Knox, to complete the monetary inversion, with perhaps a return for Xenia Onatopp instead of Pussy Galore?

And look what a little freedom did for China, which may itself be contemplating a gold or silver yuan, almost in a pastiche of Henry Hazlitt’s novel, Time Will Run Back, a book almost quite literally ahead of its time.

This unwinding of socialism will continue, says Rothbard, until it truly does wither away, to fulfil the misguided dream of Bakunin and Marx.

Naturally enough, Rothbard predicted communism’s fall, in 1974, in the pages of his startling collection of energetic essays, barely contained within Egalitarianism:

“For only liberty, only a free market, can organize and maintain an industrial system, and the more that population expands and explodes, the more necessary is the unfettered working of such an industrial economy. Laissez-faire and the free market become more and more evidently necessary as an industrial system develops; radical deviations cause breakdowns and economic crises. This crisis of statism becomes particularly dramatic and acute in a fully socialist society; and hence the inevitable breakdown of statism has first become strikingly apparent in the countries of the socialist (that is, communist) camp. For socialism confronts its inner contradiction most starkly. Desperately, it tries to fulfill its proclaimed goals of industrial growth, higher standards of living for the masses, and eventual withering away of the State and is increasingly unable to do so with its collectivist means. Hence the inevitable breakdown of socialism.”

Overall, it is Rothbard’s unquenchable optimism which marks him out. Although as pessimistic as the best of us, in the short-run, when discussing Boobus Americanus or Boobus Anglicus, he is absolutely certain of the long-run outcome of our global societal fate, and that is a future of honest money, peace, freedom, prosperity, and the death of the Old Order, much though the tax-eating beneficiaries of that Old Order will kick and scream at the rest of us, on their way down and out, before we make them earn a living rather than continuously feasting upon the rest of us.

In the end, the productive will slough off the unproductive, and the Old Order will die, says Rothbard.

And so it goes on, with essay after glorious essay exploring all forms of egalitarianism and smashing them all with typical twinkling Rothbardian glee.

It is a rip-roaring masterpiece of a book, and one I’m sure Mises himself would have loved.

For all aspiring Rothbardians, it is also an essential weapon in your intellectual armoury and it will be a boost to your morale if you’re struggling to maintain a grip on your sanity in this currently insane world of hilarious Keynesian nincompoops.

Download it right now.


A late one for the weekend: Money From Nothing

The Internet is becoming a real problem for the world’s propagators of printed paper money, because from its modern western invention in Massachusetts, in 1690 — which is best detailed in Murray Rothbard’s History of Money and Banking in the United States — the states of the world have successfully led an enormous complex propaganda mission to convince us that paper money is one of the greatest inventions of all time, on a par with fire, the wheel, and writing.

However, that continuing propaganda mission to prop up endlessly printed money is beginning to run into the sand.

Too many people are learning the truth behind paper money, in that it is the means via which the state continually robs us for its own selfish purposes, without us realising that it is doing so.

Unfortunately for these paper-money states, that last bit about us not realising this is becoming less true by the day, mainly because of the Internet, as demonstrated, amongst many other examples, by the interesting YouTube below.

Strangely, and in one sense only, I agree with these states that unbacked fiat paper money — which can be printed without limit — is a great negative invention. In the same way that nuclear weapons, weaponised anthrax, and nerve gas are great negative inventions.

Let us hope that the great positive invention of the Internet finally puts unbacked fiat paper money into the same generally-perceived category as all of these other terrible statist great negative inventions, rather than being perceived much longer by anyone as being something positive (except by the states that benefit so much from it).


The Mystery of Banking

If What Has The Government Done To Our Money? is an hors d’oeuvre, then The Mystery of Banking is the main appetiser in our quest to understand how the current financial global crisis arose.  Far meatier than its predecessor, The Mystery of Banking paints the Mona Lisa’s face, where the earlier book simply sketches out the smile.

There are some who say that Murray N. Rothbard’s greatest work is Man, Economy, and State, which some hail as the successor to Human Action.  Others say that the mantle of his greatest work lies with The Ethics of Liberty, the pulsating heart of the American libertarian movement.  Yet more people declare that it must be Conceived in Liberty, the stunning four-volume series describing the genesis of the American revolution.

Everyone, of course, is right.  Because all choices are subjective.  However, if I were to be forced to become a Robinson Crusoe and made to occupy a desert island, with hopefully an inexhaustible supply of Gin & Tonic, and only allowed by some great Dictator in the sky to take just one Rothbard masterpiece to the island, then it would have to be The Mystery of Banking, in the same sense that if given the choice of whether to take Beethoven or Mozart, I would have to take Mozart, because although Beethoven is much deeper than our Salzburgian hero, Mozart carries a good tune which I could whistle on the beach.  (Though I might also be tempted by The History of Economic Thought, but that’s a different thread in a different story.)

The Mystery of Banking has become an underground classic, with dog-eared copies of the book recently fetching hundreds of dollars on Amazon before the Mises Institute re-published a new edition, also making available a lovingly-produced PDF of the book online.  (There is also a stunning version available on Scribd.)

The book has gained a hard-core underground following because it is simply amazing in the sense that it maps out the incredibly dense maze of fractional reserve banking, the Aladdin’s nest of myth and fantasy which since the Florentine banking domination of the Medici clan, has taken the western world to the brink of absolute financial collapse more times than Madonna has re-engineered her underwear.  Man, Economy, and State and Conceived in Liberty are perhaps the greater works, due to their sheer undiluted mass, but pound for pound, The Mystery of Banking packs a far more devastating power-to-weight ratio as a water-slashing racing boat skating between high-momentum supertankers.

From its opening, with its dedication to three hard money champions — Thomas Jefferson, Charles Holt Campbell, and Ludwig von Mises — The Mystery of Banking is a remorseless Austrian dissection of what lies at the heart of the western world’s financial system; which some might say is “absolutely nothing at all” and which others might say is “fractional reserve banking”. (Or do I repeat myself?)

Professor Rothbard spends the first hundred pages of his incisive book describing money, its origins out of barter, its purposes, its uses, and its evolution, eventually leading towards the creation of loan banking and free banking from the late medieval period onwards.

Rothbard then describes a more developed world in which twenty dollars became a fixed weight of gold just under one ounce, and how the mathematical genius Isaac Newton defined the pound as a fixed weight of gold just under a quarter of an ounce.  (From these fixed weights and their stable exchange rate, the division of labour between the two currency areas can thus be easily integrated into a single wealth-creating whole.)

Although Man, Economy, and State remains the more powerful book, The Mystery of Banking is far more dangerous to the establishment, because it blows the gaffe on their monopoly of money management and reveals who always benefits first from their nefarious practices of printing money directly from thin air (i.e. the government and its friends) and who pays for this benefit (i.e. everyone else).

Although this is obvious to all when a private counterfeiter spends his ill-gotten “money” in local stores, government has wrapped so many emerald-coloured curtains around the alchemy of their nationalisation of the money supply, that this wealth transference effect is much harder to discern with government-regulated fractional reserve banking.

Rothbard shreds these curtains, making it clear how the government always benefits first and why they are motivated to do it — even given an ability to tax — and how they have escaped detection for so long, with otherwise intelligent economic commentators in recent times demanding that governments engage in quantitative easing, to “help” the rest of us, which is like a householder demanding that a burglar steal his possessions in order to help with his insurance claim.

Rothbard blows away the rulers of the emerald city through clear analogy and example, such as beaming down the Angel Gabriel from heaven to double the supply of money in everyone’s pockets overnight, before examining the results of such an action in the morning, thus revealing that any supply of money is equally optimal; this leads to some startling implications.

However, this is just one example. There are many others like it, in the book.

Having carefully used historical precedent to reveal the history of money, in the second half of the book, Rothbard then gradually un-weaves the most insidious double-blind deception in history, which is the rise of central banking and the creeping nationalisation of the banking industry, to follow the nationalisation of money. Starting in England, and then spreading like a virus to the rest of the world, Rothbard lifts stone after stone in his unrelenting mission to expose the light-shy creatures underlying central banking, allowing none of these segmented arthropods to escape back into the darkness and the slime before he scores them with his acidic pen.

The final section of the book examines a Rothbardian seven-part plan, in the Cobden and Bright tradition, to return us all to a hard money standard.  The annotated highlights of this plan are:

  • Redefining money to be a fixed weight of gold
  • Government gold deposits to be returned to their rightful owners, i.e. the holders of government paper money
  • Central banks to be abolished
  • Fractional reserve banking to be replaced by 100% gold reserve banking for all demand deposits
  • Banks to become free to issue their own gold-certificate cash notes
  • The complete de-nationalisation of money and the removal of government guarantees on bank accounts, to re-introduce the ‘healthy gale’ of bank runs back into the banking industry — one of Rothbard’s alleged favourite movie scenes is the collapse of the bank of Danglars in The Count of Monte Cristo!
  • The abolition of government-mints to be replaced once again by the private minting of gold money

For all true followers of hard money, The Mystery of Banking is thus an essential element on the pathway to understanding how and why we can achieve the goal of honest money, which even the former alchemist Isaac Newton knew was impossible to manipulate over the long term.  Let us also hope that if the Rothbardian plan outlined above comes to pass, that the new international name for the fixed weight of gold will be “The Rothbard”, in memory of this hero of hard money, whether this is one gramme, 10 grammes, or a good old-fashioned one Troy-ounce of gold.


What Has The Government Done To Our Money?

A few weeks ago, eagle-eyed readers of the Cobden Centre will have spotted that the doyen of the UK Hedge Fund industry, Hugh Hendry of Eclectica Asset Management, was reading Jesús Huerta de Soto’s epic magnum opus, Money, Bank Credit, and Economic Cycles, a mighty publication deeply embedded within the firmament of the Austrian School.

If you want to check out Hugh Hendry’s reading preferences for yourself, UK residents can watch the BBC Newsnight piece entitled A Day in the Life of a Financial Speculator. At five minutes and forty seconds, you’ll see a brief clip of the book in question.

The clear lesson of the Newsnight report is that if you want to possess the economic understanding of a leading Hedge Fund operator, then you need to read this magnificent book. However, this recommendation comes with a caveat; because Money, Bank Credit, and Economic Cycles is a very Big book. It needs to be, because it covers in fluid detail the precise history of the entire financial system of the western world for the last two thousand years, from Roman contract law all the way through to the present day. Although it is as small as it can possibly be, it is therefore a necessarily large work requiring a firm commitment from its readers before they begin their mighty voyages through its enlightening pages.

This then is the bible of economic understanding towards which we are headed. Braver souls may feel like leaping straight into the task, and good luck to you if you do. However, before we attempt this daunting pinnacle, some of us may need to establish a lower base camp and a series of lesser targets, to help us on our way towards the summit. I have therefore mapped out a possible route for you. This route map is designed for those who perceive that the current global financial world is a series of disasters waiting to happen and for those who sense that the last 40 years of economic development in the western world has been a crumbling papier-mâché edifice built upon a soft foundation of fiat currency sand.

Having prepared yourself for this task with either Economics in One Lesson or Economics for Real People, as a basic training programme in ropes and crampons, this superb ladder of books can take us straight into Money, Bank Credit, and Economic Cycles, and from there into a world in which it all starts making sense:

  • What Has The Government Done To Our Money (Rothbard)
  • The Mystery of Banking (Rothbard)
  • Early Speculative Bubbles (French)
  • Meltdown (Woods)
  • Money, Bank Credit, and Economic Cycles (de Soto)

We begin first with Murray N. Rothbard’s What Has The Government Done To Our Money?.

In the classic David Gordon joke, the world’s shortest book is perhaps Your Duties to Other People, by Ayn Rand. Murray Rothbard’s classic on money is slightly longer than that, but it is still a very quick read.

Broken down into three main sections, What Has The Government Done To Our Money? is a breathless Blitzkrieg of the story of money, from its inception in the free market as a precious metal medium of exchange, right through to its usurpation and debasement by government and its eventual replacement by paper fiat currency, endlessly printed by the world’s central banks to give us all of the malinvestment distortions of the present age, along with all of their associated bursting financial bubbles:

  • Money in a Free Society
  • Government Meddling With Money
  • The Monetary Breakdown of the West

As the hardest of hard-money men, Rothbard is unrelenting and unequivocal in his criticism of those who took us from a solid money system based upon gold or silver, towards a fractional reserve system based upon paper, though he is forensic in his analysis of how they did it, taking centuries in the process to accomplish this unfeasible goal. However, he tells the story with a twinkle in his eye and his scalpel-like prose flows like a hand through silken water.

Unfortunately, Rothbard died in 1995, but he would have loved to have been around today to tackle head-on all of the Keynesians who are currently blighting our economic futures. Alas, all of the distortions he describes and predicts in his book are visible all around us today, with zero percent central bank lending, massive government borrowing, and incipient and possibly rampant stagflation waiting to gobble us up around the corner, if hyper-depression and hyper-inflation fail to get us first.

Freely available at the Mises Institute, to share the beginnings of Rothbard’s understanding this slim introductory book on the story of money is a sure-footed stepping stone for all aspiring students of Austrian Economics.


Economics for Real People

While Economics in One Lesson is almost the definitive starting point for those new to the Austrian School, after you have finished reading it there still remain many mysterious doors in front of you in a maze of subjective choice, all of them tempting you towards the next port of call in your quest to shake off the nostrums of Keynesian economics.

There are perhaps two major pathways to explore in this maze. The first is to acquire an Austrian-style understanding of what is currently happening in the financial markets and the global economy. To do this, we must first understand how the international central banking system works, which is based upon fractional reserves; So what is fractional reserve banking? When did it start? Why did it start? Who started it? How does it work? And where will it take us?

As Churchill said of the old Soviet Union, fractional reserve banking is a riddle wrapped in a mystery inside an enigma. Therefore, to see inside it we need to be guided into this enigmatic riddle by a man wearing X-Ray glasses. This bespectacled man is Murray Rothbard, and the book in which he makes it all sharply clear as day is The Mystery of Banking (which is freely available as a beautifully produced Scribd book).

But before we head off gleefully down this pathway, you might want to consider tackling the second major pathway instead, which is the road to understanding what has been happening in the financial markets and the global economy for the past several hundred years (or even for the past few thousand years, since financial markets were first created in Sumeria, Egypt, Meso-America, and China, and possibly before even that in the Stone Age).

The first major milepost on this second road is the book Human Action, by Ludwig von Mises, perhaps the outstanding publication of the entire Austrian School, since 1870 onwards.

However, Human Action is a forbidding book which can easily scare off the faint of heart. To warm yourself up for it, you might consider a much lighter book instead, which is Economics for Real People (PDF), by Gene Callahan, who has broken his book down into four major parts, all of which make Human Action much easier to access afterwards:

  • The Science of Human Action
  • The Market Process
  • Interference with the Market
  • Social Justice, Rightly Understood

Mr Callahan’s book is a sort of half-way house between Economics in One Lesson and Human Action, and at just over 300 pages is meaty enough to give you something to get your teeth into, but short enough to give you time to breathe in and out while you’re reading it.

In the meantime, before deciding which one of the two parallel pathways to go down first, while completing Economics in One Lesson, you might want to watch a series of videos put together by The Mises Institute, each of them covering a single chapter of Hazlitt’s classic introduction to the Austrian School:

  • Video 1: The Lesson
  • Video 2: The Broken Window
  • Video 3: Public Works Mean Taxes
  • Video 4: Credit Diverts Production
  • Video 5: The Curse of Machinery
  • Video 6: Disbanding Troops and Bureaucrats
  • Video 7: Who’s Protected by Tariffs?
  • Video 8: “Parity” Prices
  • Video 9: How the Price System Works
  • Video 10: Minimum Wage Laws
  • Video 11: The Function of Profits
  • Video 12: The Assault on Saving

These videos are all available via a misesmedia playlist.

See also

Our primer.