The Theory of Money and Credit

It is not a light or easy read. You must take your time and read carefully, sometimes re-reading sections. It is worth every bit of frustration when you finally start to get it. You might also be interested in a collection of letters exchanged between himself and Keynes. I do not yet have a copy.Many people who declare themselves keynesians have never read Keynes. That is why I read Von Mises. I had heard things about his work that sounded good, but I hadn't read it. I didn't want to be ignorant of something I claimed to support.Von Mises covers a lot of ground. There are sections dealing with the origin of money as a trade good, and how the value of things is based on relative emotional investment which drives the market price by the interactions of many individuals. An apple has a price not because of its intrinsic worth, but because of how it is desired - an emotional reaction. There can certainly be rational reasons for something to be desirable. An apple has nutritional value/food energy. The free market converts emotional valuations into a common metric ($), but prices change with shifting emotions. The nutritional content of an apple does not change with the presence or absence of alternatives, but if peaches or plums are available as well that can affect the desirability of the apples. There is a great deal more (some of it tedious) but I encourage you to stay with it.His writing on the evils of inflation is particularly riveting. The section on the political argument in favor of inflation was EPIC!!He died years ago, yet when he writes about politics some of what he writes seems quite on target and relevant to today. You may have to remind yourself that he died in 1973 - far too long ago to be taking potshots at politicians today who were still in diapers when he died.His school of thought survived being out of favor and gained currency by the measurement that matters: He was right. The predictions made by using his methods of analyzing economic data were accurate.Keynes and Von Mises major point of contention was over who had the special case and who had the general theory. Keynes tended not to take human nature into account, his theories were based on perfectly rational actors without self interest or emotion. Von Mises based his work on human nature and the fact that everyone is looking out for their own interests. For example: Keynes thought cyclical spending and saving on the part of government would soften the ups and downs of the economy; He neglected the fact that politicians would find it hard to stop spending once the good times did arrive. Theory and the reality of it's application are far from identical.The idea of government spending to compensate for a poor economy also disregards a key fact: It is easier to see where business is having trouble than to guess where the next new thing is going to be. If the sales of buggy whips drop off should the State intervene to support businesses associated with the transport of goods by means of horses and mules within the country? It is easier for businesses to persuade politicians to support their faltering businesses with tax money than to persuade unwilling customers to buy their products/services anyway, or persuade a bank to loan money to a business that seems on the road to bankruptcy. Are you being sent a bill for products/services not wanted, not purchased, and not in hand?Summary: It is for people who are willing to pay a small price in time and effort to gain understanding of the real world as it affects them. It is not for readers who refuse to pick up anything more difficult than a dime store novel or the tabloids.I also recommend the books Human Action and Liberalism by Von Mises as well. There is an audio recording of the first chapter or so of Human Action on YouTube if you want a preview.

If your a person who really wants to understand money, and wants to have a very broad view, three books I would recommend. Secrets of the Temple how the Federal Reserve runs the country-William Greider. A monetary History of the United States-Milton Friedman, and of course this book. Although each of these books has a different philosophy, each of them is meticulously written and well thought out. What makes this book different, is Ludwig is a strict gold standard advocate. In the case of fiat money vs gold, Ludwig would argue, that with Fiat money, which loses its value, those savers will demand a higher rate of interest, or will simply spend more of their money on anything of value. When inflation was 15% to 20% in the 1970s, and the interest rate was 5%, people spent their money on anything that would last, making inflation worse.He also carries forth a very strong argument for a gold standard in the era of 1873 to 1890. This was when the farmers were losing their land to the strictness of the gold standard. According to William Greider in his previously mentioned book, no new gold was discovered in this era, which made it very difficult on the farmers, they wanted to be able to pay their debt in silver at a fixed price. Ludwig argues that a fixed price for silver cannot work, only a market price can work. If an ounce of gold is worth 30 of silver, and the government fixes it at 15.5, people will pay their debt with one, the cheapest way to pay their debt and accumulate the other. As Gresham would say bad money drives good out.These are just two of the Hallmarks, of this book. Ludwig is very detailed in his work. A third hallmark would be his central theory. The monetary policy of a nation is affected by its objective exchange value, and its subjective exchange value. Objective exchange value is referring to the actual value of the actual money. If a dollar means an exchange of an ounce of silver, the objective value is the value of the actual metal itself-supply. The subjective value is the way demand is affected. Suppose everybody gets a pay rise of $50 a week. If nobody spends more money, prices won't go up, savings will go up. On the other hand when people do spend that extra money prices will go up.Another part of subjective value, is the marginal utility part of it. Your first ice cream for the week has more value than the 2nd ice cream. So if you get a pay rise, instead of buying ice cream, you may decide to spend it on a new computer game.The 5th hallmark is that he understands every kind of form of money. Gold is actualy money, but people used token money, to exchange for that gold. And he talks about every other form of money, like promissory notes. Ludwig is an expert.Having said this, Milton Friedman and William Greider are also experts. During the period of 1873 to 1890, only rich people had money, and lent at a high rate of interest. Gold was going up in value as their was a shortage. So you had prices going up, at a high rate of interest. William Greider has pointed this out. To this Milton Friedman would say, a 4% increase in the money supply would fix it.So this means its a very good book on money, but their are others that are also very good and have a different view. I also found that you really, really had to concentrate to read it. Which is what I found with Greider's book. I've also read some of Milton's book, also found it hard to read. So again this is for those who really want to understand money, which is why I read simpler books written by Milton. Finally to avoid any confusion Ludwig is in favour of silver as money, provided the value is set at its market value.

This is a transformative work by von Mises. In the short time since I began reading I have come to a deeper understanding and appreciate the function and nature of money.This is NOT light reading, but all the same it is fascinating. I found myself wanting to be back in school again, for no other reason than to have a professor and classmates to explore these ideas with, and to better develop my own understanding of the subject.I have only two complaints, neither of which might really qualify as a complaint, since the original was written in German these is to be expected: first, most of the citations refer to the original German works. This makes it difficult for the English reader to cross-check citations and expand the reading list. However, thanks to the magic of Amazon, many of the cited authors are available in English. Second, von Mises assumes a very high level of understanding from his readers. Many of his ideas are built upon the work of others, and generally I found the background explanation a bit lacking (hence my want for a classroom environment). In all fairness, this book is so weighty that if he had ventured to give appropriate background for each element of support, the publishers might have been compelled to split the work into multiple volumes. The author rightly expects his readers to achieve a deep understanding of each supporting subject and and to research its origins on their own.

:) Great book and it came fast :)

o livro é excelente, principalmente considerando o autor, a versão kindle tem os benefícios e malefícios do kindle... no caso de ser eletrônico se fosse possível escolheria um pdf para facilitar as ferramentas de leitura.

Wel Wien and concise, recommended for anyone interested in the subject matter.

Purchased as a gift. All arrived on time and as described. Good introduction to an interesting area of study.

Le livre de Ludwig von Mises "La théorie de la monnaie et du crédit" de 1912 a inauguré la théorie monétaire de l'Ecole Autrichienne d'économie après les travaux de Carl Menger.C'est un grand renouvellement de l'analyse monétaire à portée considérable pour la période moderne, face aux questions de stabilité monétaire que l'on retrouve notamment dans l'oeuvre de Hayek. L'interprétation de Mises concerne la monnaie nationale et internationale, avec un plaidoyer pour l'étalon-or, repris par la suite par son disciple Murray Rothbard.Livre fondamental pour l'étude la nature de la monnaie, sa place dans l'économie, son rôle dans les cycles et les crises (Voir aussi de l'auteur: "L'action humaine"). Très important pour comprendre les désordres monétaires du XXème siècle et au-delà.