The Mystery of Banking (LvMI) |  | Author: Murray N. Rothbard
Publisher: Ludwig von Mises Institute
Category: eBooks
In Stock
Rating:  12 reviews
Sales Rank: 16,351
Format: Kindle Book
Media: Kindle Edition
ASIN: B003NSC62G
Publication Date: May 23, 2010
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Product Description
Talk about great timing! Rothbard's extraordinary book unravels the mystery of banking: what is legitimate enterprise and what is a government-backed shell game that can't last? His explanation is clear enough for anyone to follow and yet precise and rigorous enough to be the best textbook for college classes on the topic. This is because its expository clarity — in its history and theory — is essentially unrivaled.
Most notably, he uses the T-account method of explaining the relationship between deposits and loans, showing the inherent instability of fractional-reserve banking and how it sets the stage for centralization, inflation, and the boom-bust cycle.
But there is more here. It is an explanation of money's origins and its meaning in the free market. The abstract theory is here but always with real application in history and in modern banking practice. Never does a paragraph go by without an example drawn from his massive knowledge of the subject.
Even further, he explains the integration between microeconomics and the business cycle. As Douglas French writes in the introduction, "Although first published 25 years ago, Murray Rothbard's The Mystery of Banking continues to be the only book that clearly and concisely explains the modern fractional reserve banking system, its origins, and its devastating effects on the lives of every man, woman, and child. It is especially appropriate in a year that will see: a surge in bank failures, central banks around the globe bailing out failed commercial and investment banks, double-digit inflation rates in many parts of the world and hyperinflation completely destroying Zimbabwe s economy, that a new edition of Rothbard's classic work be republished and made available through the efforts of Lew Rockwell and the staff at the Ludwig von Mises Institute. Priced affordably for students and laymen interested in the vagaries of banking and how inflation and business cycles are created."
Further, Joseph Salerno explains in the foreword, "The Mystery of Banking is perhaps the least appreciated work among Murray Rothbard's prodigious body of output. This is a shame because it is a model of how to apply sound economic theory, dispassionately and objectively, to the origins and development of real-world institutions and to assess their consequences. It is institutional economics at its best. In this book, the institution under scrutiny is central banking as historically embodied in the Federal Reserve System — the Fed for short — the central bank of the United States.
"Rothbard s presentation of the basic principles of money-and-banking theory in the first eleven chapters of the book guides the reader in unraveling the mystery of how the central bank operates to create money through the fractional-reserve banking system and how this leads to inflation of the money supply and a rise in overall prices in the economy. But he does not stop there. In the subsequent five chapters he resolves the historical mystery of how an inherently inflationary institution like central banking, which is destructive of the value of money and, in the extreme case of hyperinflation, of money itself, came into being and was accepted as essential to the operation of the market economy."
Incredibly, both authors correctly anticipate the current crisis — and Rothbard explains it all and shows the way out. This is certainly the book for today, more essential than ever before.
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Showing reviews 1-5 of 12
 The Mystery of Banking Revealed December 29, 2002
Jeff
46 out of 47 found this review helpful
I just finished reading this book and found that it filled in many inconsistencies that I have noted in my mainstream economic study. The author explains clearly and concisely the origins of and money and its importance to any economic system. He proceeds to describe the evolution of banking to its current inflationary state. He clearly shows that this inflationary states results from a combination of fractional reserve banking, the government's grant of monopoly powers through a cental bank (the U.S. Federal Reserve in the case of the U.S.), and the central banks open market operations to manipulate bank reserves (e.g., monetizing debt). Finally, Rothbard makes it clear that the banking industry's inflationary policies are beneficial to the banking industry itself and leave the reader no doubt that this industry has a vested interest in the status-quo.
Interesting and Revealing August 12, 2001
38 out of 38 found this review helpful
I found this book to be the most interesting and revealing book I have ever read about the banking system and the Federal Reserve. Rothbard has a very different perspective than most conventional economists, but his explanations are very clear and compelling. He explains how fractional reserve banking makes banks inherently prone to bankruptcy, how the Federal Reserve and other central banks create inflation, and how money has evolved and been debased. Gene Epstein, the Barron's columnist, recently recommended The Mystery of Banking as the best book to read for anyone interested in understanding how our banking system works.
Clear and Concise April 12, 2006
Michael Tozer (Bloomingdale, IL United States)
22 out of 23 found this review helpful
Murray Rothbard writes clearly and yet with a technician's precise knowledge of the operation of money and banking. This book should be read by any who truly desire to understand these important aspects of the ecoonomy. And, oh, by the way, you don't really have to fork over $98 bucks for this important book. Resourceful readers can locate it for free online. Who says there's no such thing as a free lunch?
Brilliant! A must read for all, given the current financial crisis. October 10, 2008
DAA
6 out of 6 found this review helpful
In a brilliant and interesting manner, Murray starts off with some basic economic science concepts, which he then proceeds into explaining the theory of operation behind this monster that is now revealing itself to all of us in great confusion. This book was written in the early 80's and I bet anyone who had read this book back then is not surprised by the current financial crisis.
Some of the main questions he explores are: What is money? What is the money supply and how much of it do we really need? How do modern commercial banks work? What is the purpose of the central bank and how does it operate? And how did all of this evolve into the current system that we have today, which itself was only possible with the power of government. Murray also explains the nature of the business cycle(boom and bust), and how the business cycle is a direct result of the inherent nature of the banking system, and not the result of free markets or capitalism like everyone assumes. Murray filters out all of the financial and economic jargon used in the media that only confuse the wide public, as well as many economists themselves.
I think most readers will be shocked to learn how a modern bank works and will immediately feel the urge and need to spread the information to others. I think many bankers themselves will be shocked to learn how the broad theory of operation itself is actually hidden from the common bank employee. In the context of the current financial turmoil, the reader will immediately grasp the vast ignorance among the public, politicians, and many so called experts. This is simply a must read for the ordinary person, the banker, as well for the professional economist.
The Single Most Imporant Book In Economics July 16, 2009
Bill Julian (New York, NY USA)
6 out of 6 found this review helpful
The state can tax you now, or borrow and tax your children, or it can inflate the money supply, use the new money first and rob you of the purchasing power of your savings. The third alternative is a favorite of the state. This book makes it plain that there has always been an unholy alliance between banks and the state. The events of 2008 were nothing new, and the piddly legislation that congress is bantering about doesn't even come close to "making sure this won't happen again." On the contrary, it is almost a certainty that it will happen again and again until we return to sound money and banking.
Showing reviews 1-5 of 12
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