Summary
Murray Rothbard’s “What Has Government Done to Our Money” argues that sound money and free market principles are essential for a libertarian society, as government intervention distorts the economy and undermines the natural evolution of money.
Money and Free Market
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Free exchange forms the basis of society, with money naturally emerging in the free market to facilitate trades and make individuals better off, without government involvement.
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Banking is crucial for capitalism, enabling money transfer through warehouse receipts or deposits, but fractional reserve banking can inflate the money supply, which a free society can limit via competition and law.
Government Intervention and Economic Consequences
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The inflationary process caused by government intervention leads to the business cycle, crack-up boom, and hyperinflation, potentially causing disastrous economic and ideological effects on society.
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Rothbard refutes myths that money’s purchasing power must be perfectly stable or that only one type of money can circulate, as these stem from an engineering mindset imposed on the economy, potentially leading to chaos or crisis.
Importance of Sound Money and Limited Government
- Understanding government intervention in money and banking strengthens the case for sound money and limited government, clarifying their necessity beyond obvious inefficiencies and bolstering arguments against statism and socialism.