Gary North: Mises on Money
Posted by Orrin Woodward on January 30, 2014
Gary North may be the best synthesizer of Ludwig Von Mises‘s philosophy of money and banking. In fact, I believe Mr. North is one of the best minds when it comes to Biblical principles and economic matters period. I have read over ten of his books and he always stretches my thinking in economic and Biblical concepts and how they relate. Few people think as clearly, logically, and cogently as North does which is why I am sharing this portion of his insightful book called Mises on Money. I finished the book while flying into St. Louis on Tuesday. Anyone wanting to know what government and the central banks are doing to our money need to read this book!
LIFE Leadership is pressing onward to one million people who are reading, leading, and sharing truth learned with others. The LIFE Leadership Forums are up for members of the community to share what they are learning with others. I am so pumped for our February major in Columbus!
Sincerely,
Mises on Money by Gary North
Mises offered a theory of money that was self-consciously based on a theory of individual decision-making. He offered no grand scheme for political reform. He offered only one policy: shrink the State. Mises presented a comprehensive theory of money which rested on only two legal pillars, both of which have been undermined by modern law: (1) the enforcement of contracts by the civil government; (2) the right of peaceful, non-fraudulent voluntary exchange. His monetary theory was a consistent extension of his theory of the free market. He did not rely on a theory of State regulation of the monetary system, any more than he relied on a theory of State regulation of any other sphere of the economy.
He denied the need for such regulation. He showed why such regulation is counter-productive for a society. He recommended only one monetary policy: the State’s enforcement of voluntary contracts. That was his recommended economic policy in general. This minimalist theory of civil government makes his theory of money unique in the history of academic economic thought. Mises’s answer to the question, “What kind of money should we have?” was simple: “whatever individuals voluntarily choose to use.” He wanted the State to get out of the money business. This included the State’s monopolistic agent, the central bank. He offered a comprehensive theory of money that demonstrated that the State does not need to be in the money business in order for a free market social order to prosper.
The money system, as is true of the other subdivisions in a free market economy, is part of a self-adjusting, self-correcting system of dual sanctions. These dual sanctions are profit and loss. Money is market-generated. It is also market-regulated. It is a product of consumer sovereignty, not State sovereignty. The State is always an interloper in monetary affairs. The State reduces market freedom and efficiency. The State makes things worse from the point of view of long-term economic stability. So does the State’s now-independent step-child, central banking. This theory of endogenous money is unique to Mises and his followers. No other school of economic opinion accepts it. Every other school appeals to the State, as an exogenous coercive power, to regulate the money supply and create enough new fiat or credit money to keep the free market operational at nearly full employment with nearly stable prices. Every other theory of money invokes the use of the State’s monopolistic power to supply the optimum quantity of money.
No matter how often some non-Austrian School economist says that he is in favor of the free market, when it comes to his theory of money, he always says, “I believe in the free market, but. . . .” As Leonard Read wrote in 1970, we are sinking in a sea of buts. When they are not outright collectivists, non-Austrian School economists are defenders of the so-called mixed economy: economic direction to the free market provided by State officials, on pain of punishment. This position is clearest in their universal promotion of non-market, State-regulated, central-bank money. Mises denied that there can be a mixed economy. There are only State directives that affect market operations, in most cases negatively. (Rothbard substituted, “in all cases negatively.”)
Mises’s theory of money offers hope. The public is in charge, not central bankers. The public will decide what money it prefers and how it will be used. The free market is economically sovereign, not the State.
17 Responses to “Gary North: Mises on Money”
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Randy Robson said
Amen!
David Fidler said
Awesome, more books I’ve got to get and read, adding to my ever growing stack. 😉
robert wilcox said
Thank you Orrin for another lesson on economics! Look forward to more thank you for taking the time to share with us!!!!
Elizabeth Sieracki said
Insightful!! Thank you for sharing. I’ve learned more through you and the LIFE information on economics than I ever did in my college courses on the subject.
Maura Galliani said
I don’t know where else the average American can get the info that LIFE Leadership is sharing. See you in Columbus, Orrin! 🙂
Olivier Jean-Baptiste said
Thanks Orrin
I recently read Honest Money for Gary North and I was enlightened to discover the Biblical foundation with regards to money and banking. It is good to find Austrian economists that call on Biblical truth for additional validation. One area of discomfort that I have with Rothbard is his view regarding the Great Awakening leaders such as Jonathan Edwards and George Whitefield.
Olivier.
Orrin Woodward said
Olivier, outside of the Bible, none of the other books are infallible so each of us must read while seeking to understand the world-view of the author. Rothbard was agnostic and his writings reflect that. However, since all of us are made in God’s image, even when we don’t acknowledge it, there are many great thoughts and concepts that come from non-Christians. thanks, Orrin
Olivier Jean-Baptiste said
Orrin
I agree with that . Critical thinking is the key. This also applies to Christian writers as well for even if one theology can be correct there may be various aspect of life about which one needs an improved understanding or simply a total make over. The Holy Spirit works in way that are beyond our understanding for the most part and many were used and utilized unknowingly for God’s purpose.
Thanks for your commitment to share the truth with us all.
Olivier
Clint Fix said
Thanks for posting this! Economics is one of my favorite areas of study. I’ll have to pick up a copy of this book!
Adding the option to get a book along with the Freedom subscription would be awesome!
Elaine Mallios said
So true. The state is an inhibitor of the free market. Yes it is “an exogenous coersive power”. Both the state and the banks vieing for the lead in manipulation.
Richard Kroll Jr. said
Orrin, I have to admit, that before being involved with LIFE Leadership, I had very little interest in Economics (my micro and macro economic classes in college did me in!), and I never heard of Endogenous Versus Exogenous Money theories until just now…
It is becoming glaringly obvious that the more that government is involved in the affairs of the people, the less prosperity, freedom and happiness we have.
Thank you for providing this kind of information, so that we, the people, can understand that things can be returned to a place with opportunities that this great country once enjoyed!
Renee Oettinger said
Thank you for reading his book and sharing it with us. I have tapped into Gary North’s information and believe it is a great reinforcement of the right principles I am learning through LIFE Leadership.
CJ Calvert said
Orrin, you are the history and economics teacher I believe we all wished we would have had back in school. Thank you for being such a passionate scholar and educator.
Johnathan Yoder said
Thanks Orrin! We hear so many people nowadays talking about the need for State help in the financial sector its scary.
Shaun Bushey said
Amen Orrin! Von Mises’s Economic theory works whenever applied throughout history. The opposite can be said for the Keynesian hypothesis. The obvious question remains, if Keynesian economics has a 100% failure rate whenever and wherever it’s used, why use it?
I think the answer is far more simple than people would believe if they would only take the time to look.
Easton Kelsey said
Let’s privatize money!
Ammon Nelson said
As has been said above, thank you for your continuing leadership and for setting the example of learning.
Just some thoughts that I had while reading the excerpt from North’s book, that I would like to put out there:
This excerpt causes me to wonder if there isn’t a way to use market forces to replace government intervention in the marketplace especially in the creation and regulation of a money supply. I haven’t put enough thought into it yet, so I don’t know if this is off base or not, but it appears to me government is just one of the many players in the marketplace of services. Government provides the service of being the check on the use of force – a necessary service to avoid chaos and anarchy. Since the market is capable of creating and regulating an endogenous money system, does it require that government be removed from the marketplace in order to create it? Couldn’t a money/medium of exchange system be created endogenously to use market forces to remove government mandated money from the system – i.e. some sort of privatized medium of exchange that falls outside the current reach of government intervention (not that they couldn’t easily extend their reach)?