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Showing reviews 1-5 of 49
 Dismantling the Fed November 16, 2009
Darby A. Taylor (Jacksonville, FL USA)
I thoroughly enjoyed Rothbard's comprehensive break down of our monetary system and the development of the Fed. As a current undergraduate student with no prior formal education in Economics at this level, I found the material to be easy to follow as well as easy to understand. With many citations to back up his arguments, I boast this book to be a quick and concise take on this matter. It's perfect to get a basic understanding for US Economics, Fractional-Reserve Banking, the Fed, and all the characters that came into play building this establishment.
Rothbard exposes the Fed October 8, 2009
W. B. Perry (GA)
Murray Rothbard is an historian, political philosopher, and economist of the highest caliber. Dr. Rothbard exposes the private banking interests and politicians that culminated at Jekkyl Island to draft the Federal Reserve Act. He accurately describes the Federal Reserve for what it is - a big counterfeiting operation. Rothbard explains briefly how the system works to create money out of thin air. He demonstrates the disastrous economic effects, and explains how the gov't uses the "money making machine" to finance big gov't programs and wars that the state would not be able to engage in if it weren't for the Fed. He explains the basic common sense principle of more money in circulation having the effect of weakening the dollars purchasing power. Finally Rothbard offers us his solution to ending the fed succesfully. This is a great book to read about the Fed along with others such as Ron Paul's new book "End the Fed". Also, G.Edward Griffin's "The Creature From Jekkyl Island" is a great book that fully chronicles the activities of the gang of criminals that formed the Fed.
The Fed and Us September 17, 2009
Richard Hoste
2 out of 2 found this review helpful
Near the end of Murray Rothbard's life he wrote The Case Against the Fed. His position was that government can not create wealth, it can only redistribute or steal. Also, the creation of the Fed was born from an unholy alliance between bankers and the state. Before explaining what the federal reserve does and going into its history I must explain some things about money.
Man first began by trading. Somebody would get a fish and give it to a fellow tribesman for a spear. Unfortunately, this was very inefficient. Say Jones has a television but needs a hat, a pet goldfish and some eggs of equal value. The odds of finding another person with a hat, goldfish and eggs that will trade them for a TV is very unlikely. But let's say that there is a divisible and almost universally desired commodity. In our example, it can be butter. Jones can trade his TV for a certain amount of butter, divide it up how he wishes and trade it to the egg vendor, hat dealer and pet store for what he needs. Some people may very well not have any use for butter themselves, but they will accept it knowing that they can trade it in the future to other producers who themselves will also realize the desirability of having the commodity. There is then a snowball effect, and butter becomes the generally accepted medium of exchange, or money.
Throughout history, gold and silver have usually emerged as the preferred mediums. They are easily divisible, difficult to counterfeit and have value in and of themselves. Now Jones can sell his TV for 20 gold coins, spend 5 on eggs, 5 on a hat and save the other 10.
The next part of the organic process is the emergence of warehouses to store money. Carrying your gold everywhere is very inconvenient. So Jones takes the 500 oz. of gold he's saved up and puts it into a warehouse, paying the owner a storage fee. The warehouse gives him a receipt with which he can claim his money. Now if the business is reputable the receipt can function as money. If Jones wants to buy a cow for 100 oz, he doesn't have to go back to his warehouse to get the payment; he can just give the receipt for the 100 oz. to Smith who can then either claim the gold himself or use the paper in a future transaction.
That's all fine and good. To see where things go wrong, say that I open up the Hoste Money Storage Facility (the examples used come from Rothbard's book but with the names and goods changed). So far I'm storing 1,000 oz. in gold and have receipts out in circulation for exactly that amount. But I then realize something. Almost nobody is ever actually coming in to claim their gold. People are happy passing around my notes. There's nothing stopping me from printing another 1,000 oz. worth of receipts. I can't go spend it on mansions and yachts or people may get suspicious. Instead I lend my receipts out and profit off the interest. This is called fractional reserve banking. Rothbard believed that it should be treated as fraud
Now I have 1,000 oz. of gold in my warehouse but receipts in circulation for 2,000 oz. If my receipts are the only things used as money in circulation the price of all goods will double. By printing receipts backed up by nothing for 1,000 oz. of gold I didn't increase the amount of goods or services in the world. The end result is that there is simply twice as much money chasing the same amount of things. So a poor sap whose life savings totaled 20 oz. of gold has seen the value of it halved (if he has it in Hoste Money Storage Facility receipt form. If he kept in gold, or redeemed his HMSF receipt for the 20 oz. his savings would have the same value).
In addition to being equivalent to counterfeiting and thus stealing, this is a very unstable system. If people start to suspect that Hoste is a fraud and can't really redeem all his receipts there will be a run on my warehouse/bank. After all my gold is gone, anybody still holding the worthless paper I printed is out of luck.
Why wasn't fractional reserve banking outlawed from the start? After all, if you put a chair in my warehouse I can't legally give you one that is different but just as good when you come to claim it. Nor can I print tickets for chairs or televisions which I don't have. To make a long story short, the money changers have always had better lobbyists than regular warehouse owners.
The bankers have another problem. In our example thus far there has only been one bank in existence. In the real world there will be many who compete. Imagine Jones is a client at HMSF and trades one of his notes to Smith, a customer at Bayside Banking. The latter will immediately come to HMSF to get his gold. And whenever Jones gets a Bayside note, he'll do the same. The last thing that bankers want is people to actually redeem the notes that they print. The less customers do that, the better. Banks may agree to take each other's notes for the convenience of all involved. But say Hoste is printing money faster than anybody else. It may seem to be in my interest to do so, but other banks may start demanding redemption for my notes in gold and I would go under. Although it would be in the interest of all banks to work together expanding at the same rate, there will always be cheaters. But say there was a force that compelled everybody in the industry to synchronize their expansions. Enter the Fed.
When government creates its notes out of thin air the effects aren't as noticeable as taxation. Unfortunately for the citizen, they're just as real. This increase in prices that results from government printing money is what's known as inflation. It makes a fool out of anybody who saves their earnings.
The malign impact of the fed isn't felt equally throughout society. When government prints money, the people and firms it buys from get the cash before prices rise. After all, it takes time for the money to circulate and the inflationary effects to be felt. The next to benefit are the next people to get the new money, and so on, all to the detriment to the rest of the world. In contrast, under a gold standard a dollar is worth say, 1/100th an ounce of gold (the exact amount doesn't matter and would be decided by supply and demand: both of paper bills and gold itself. Even an arbitrary price of gold could serve as the basis for a gold standard, although that would be a less purely laissez-faire system). The exact amount isn't important so long as no one is allowed to legally counterfeit. With hard currency the supply of money is stable (the gold presently being mined is small compared to the stock of the metal in existence) and as long as business efficiency increases the cost of living actually decreases. We are so used to rising prices (a dollar is worth less today than it was 50 or even 5 years ago) that this seems hard to believe. But there is nothing inevitable about inflation.
Rothbard spends a lot of time talking about how the Central Bank came to be. Populist politicians long and hard struggled against it. Debates about central banking were central to American politics for most of the Republic's history.
Rothbard warns us against being uncomfortable taking positions that are outside the mainstream. To believe that the Fed is unjust, all we need is to use our common sense and understand that bankers and state officials are just as self-interested and corrupt as your average citizen.
Nothing will change until the ruling class is exposed as the gang of thieves that it is. Murray Rothbard was a true crusader for justice and liberty. In our current era we can thank Dr. Ron Paul for bringing this issue to national attention. Intelligent and honorable men are too few.
An Outstanding Work on What Money is, its function, who controls it, and How they do It August 12, 2009
Chung Dynasty
1 out of 1 found this review helpful
In this short but effective book, Rothbard explains in a plain English
what money is, its function, who controls it, and how they do it.
People tend to be well versed in its function, but tend to forget what it
really is and who controls it. And surprisingly, they don't give much or
enough attention on what should be considered the single most important
policy affecting everyday commerce and other policies.
I learned about fractional reserve banking in freshman economics course,
but in a misleading way. This little book explains how it really works
in a much better way. As Ford noted in one of his quotes, if people
really understood exactly how our nation's banking system works, there
would really be a revolution by tomorrow.
What is federal reserve or a central bank, how was it created, and who controls it,
what effect does controlling money supply has on a nation's commerce, economy,
and distribution of wealth and ultimately distribution of power and control?
All of these questions should be asked with serious and sober mindset and
it will become clear that mankind is facing one of the greatest threats in
his history. For every problem concerning environment, health, education,
foreign policy, fiscal policy, and others, you cannot tackle them effectively
without reforming the curent monetary policy or doing away with it completely.
An outstanding piece of work as always from Prof. Rothbard. From an economics major
student who has contemplated about ways for maximizing surpluses of this nation and
the world, I can honestly say that a free society with limited central and authoritative
power and empowers each individual to achieve his maximum potential is the way to go.
Clear, Concise, and Factually revealing July 22, 2009
JJ
This book is excellent as it clearly describes and puts into perspective the federal reserve system. Rothbard uses clear examples that are easy to understand for the laymen, it isn't written in overly complex language like most pro-federal reserve books. One believes the purpose of this complexity is to deter anybody seeking information away from this entity, because if they were to understand it's actual purpose there would be revolution tomorrow. Do yourself a favor and read the book because it is short in length and will help you form a solid fundamental understanding.
Showing reviews 1-5 of 49
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