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The Theory of Money and Credit

Ludwig von Mises

Publication Year: 2012

Ludwig von Mises was the leading exponent of the Austrian School of economics throughout most of the twentieth century. He has long been regarded as a most knowledgeable and respected economist, even though his teachings were generally outside the mainstream. He wrote twenty-five books and hundreds of articles on human action, free markets, and political economy.

When Ludwig von Mises wrote The Theory of Money and Credit in 1912 at the age of thirty-one, the world of economic thought was full of contending monetary theories, none of which could be considered truly united, in the sense of being at once securely founded on economic reality and also properly incorporated into an analysis of the entire economic system.

This landmark book changed that for good. The Theory of Money and Credit integrated monetary theory into the main body of economic analysis for the first time, providing fresh, new insights into the nature of money and its role in the economy and bringing Mises into the front rank of European economists.

The Theory of Money and Credit also presented a new monetary theory of the trade cycle, which, under further development by Mises's student Nobel Laureate F. A. Hayek, came to challenge all previous trade-cycle theories.

Published by: Liberty Fund

Title Page, Copyright

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Table of Contents

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pp. 7-12

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Foreword

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pp. 13-16

Ludwig von Mises' The Theory of Money and Credit is, quite simply, one of the outstanding contributions to economic thought in the twentieth century. It came as the culmination and fulfillment of the "Austrian School" of economics, and yet, in so doing, founded a new school of thought...

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Preface to the New Edition

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pp. 17-18

Forty years have passed since the first German-language edition of this volume was published. In the course of these four decades the world has gone through many disasters and catastrophes. The policies that brought about these unfortunate events have also affected the nations' currency systems...

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Introduction

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pp. 19-22

Of all branches of economic science, that part which relates to money and credit has probably the longest history and the most extensive literature. The elementary truths of the Quantity Theory were established at a time when speculation on other types...

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Preface to the English Edition

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pp. 23-32

The outward guise assumed by the questions with which banking and currency policy is concerned changes from month to month and from year to year. Amid this flux, the theoretical apparatus which enables us to deal with these questions remains unaltered....

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Preface to the Second German Edition

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pp. 33-36

When the first edition of this book was published twelve years ago, the nations and their governments were just preparing for the tragic enterprise of the Great War. They were preparing, not merely by piling up arms and munitions in their arsenals, but much...

The Theory of Money and Credit

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pp. 37-38

Part One. The Nature of Money

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pp. 39-40

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Chapter 1. The Function of Money

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pp. 41-50

Where the free exchange of goods and services is unknown, money is not wanted. In a state of society in which the division of labor was a purely domestic matter and production and consumption were consummated within the single household it...

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Chapter 2. On the Measurement of Value

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pp. 51-62

Nthough it is usual to speak of money as a measure of value and prices, the notion is entirely fallacious. So long as the subjective theory of value is accepted, this question of measurement cannot arise. In the older political economy, the search for a principle governing...

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Chapter 3. The Various Kinds of Money

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pp. 63-82

When an indirect exchange is transacted with the aid of money, it is not necessary for the money to change hands physically; a perfectly secure claim to an equivalent sum, payable on demand, may be transferred instead of the actual coins. In this by itself there...

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Chapter 4. Money and the State

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pp. 83-94

The position of the state in the market differs in no way from that of any other parties to commercial transactions. Like these others, the state exchanges commodities and money on terms which are governed by the laws of price. It exercises its sovereign rights...

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Chapter 5. Money as an Economic Good

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pp. 95-108

It is usual to divide economic goods into the two classes of those which satisfy human needs directly and those which only satisfy them indirectly: that is, consumption goods, or goods of the first order; and production goods, or goods of higher orders. 1 The attempt...

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Chapter 6. The Enemies of Money

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pp. 109-114

It has been shown that under certain conditions, which occur the more frequently as division of labor and the differentiation of wants are extended, indirect exchange becomes inevitable; and that the evolution of indirect exchange gradually leads to the employment of a few particular commodities...

Part Two. The Value of Money

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pp. 115-116

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Chapter 7. The Concept of the Value of Money

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pp. 117-128

The central element in the economic problem of money is the objective exchange value of money, popularly called its purchasing power. This is the necessary starting point of all discussion; for it is only in connection with its objective exchange value that...

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Chapter 8. The Determinants of the Objective Exchange Value of Money, or Purchasing Power, of Money

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pp. 129-194

According to modern value theory, price is the resultant of the interaction in the market of subjective valuations of commodities and price goods. From beginning to end, it is the product of subjective valuations. Goods are valued by the individuals exchanging...

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Chapter 9. The Problem of the Existence of Local Differences in the Objective Exchange Value of Money

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pp. 195-204

Let us at first ignore the possibility of various kinds of money being employed side by side, and assume that in a given district one kind of money serves exclusively as the common medium of...

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Chapter 10. The Exchange Ration Between Money of Different Kinds

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pp. 205-214

The existence of an exchange ratio between two sorts of money is dependent upon both being used side by side, at the same time, by the same economic agents, as common media of exchange. We could perhaps conceive of two economic areas, not connected...

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Chapter 11. The Problem of Measuring the Objective Exchange Value of Money and Variations in It

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pp. 215-224

The problem of measuring the objective exchange value of money and its variations has attracted much more attention than its significance warrants. If all the columns of figures and tables and curves that have been prepared in this connection could perform...

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Chapter 12. The Social Consequences of Variations in the Objective Exchange Value of Money

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pp. 225-246

Variations in the objective exchange value of money evoke displacements in the distribution of income and property, on the one hand because individuals are apt to overlook the variability of the value of money, and on the other hand because variations in the...

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Chapter 13. Monetary Policy

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pp. 247-274

The economic consequences of fluctuations in the objective exchange value of money have such important bearings on the life of the community and of the individual that as soon as the state had abandoned the attempt to exploit for fiscal ends its authority in...

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Chapter 14. The Monetary Policy of Etatism

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pp. 275-290

Etatism, as a theory, is the doctrine of the omnipotence of the state, and, as a policy, the attempt to regulate all mundane affairs by authoritative commandment and prohibition. The ideal society of etatism is a particular sort of socialistic community; it is usual in...

Part Three. Money and Banking

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pp. 291-292

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Chapter 15. The Business of Banking

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pp. 293-310

The business of banking falls into two distinct branches: the negotiation of credit through the loan of other people's money and the granting of credit through the issue of fiduciary media, that is, notes and bank balances that are not covered by money. Both branches of...

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Chapter 16. The Evolution of Fiduciary Media

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pp. 311-330

Thus fiduciary media are claims to the payment of a given sum on demand, which are not covered by a fund of money, and whose legal and technical characteristics make them suitable for tender and acceptance instead of money in fulfillment of obligations...

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Chapter 17. Fiduciary Media and the Demand for Money

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pp. 331-354

The development of the clearing system, especially the extension of the clearinghouse proper, reduces the demand for money in the broader sense: part of the exchanges made with the help of money can be carried through without the actual physical circulation...

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Chapter 18. The Redemption of Fiduciary Media

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pp. 355-376

There is nothing remarkable in the fact that money substitutes, as completely liquid claims to money against persons whose capacity to pay is beyond all doubt, have a value as great as the sums of money to which they refer. Admittedly, the question does...

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Chapter 19. Money, Credit, and Interest

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pp. 377-404

It is the object of this chapter to investigate the connection between the amount of money in circulation and the level of the rate of interest. It has already been shown that variations in the proportion between the quantity of money and the demand for money influence...

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Chapter 20. Problems of Credit Policy

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pp. 405-450

Since the time of the Currency School, the policy adopted by the governments of Europe and America with regard to the issue of fiduciary media has been guided, on the whole, by the idea that it is necessary to impose some sort of restriction upon the banks in...

Part Four. Monetary Reconstruction

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pp. 451-452

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Chapter 21. The Principle of Sound Money

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pp. 453-470

The principle of sound money that guided nineteenth-century monetary doctrines and policies was a product of classical political economy. It was an essential part of the liberal program as...

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Chapter 22. Contemporary Currency Systems

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pp. 471-476

The mark of all the varieties of the gold standard and the goldexchange standard as they existed on the eve of World War I was the gold parity of the country's monetary unit, precisely determined by a duly promulgated law. It was understood that this parity would...

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Chapter 23. The Return to Sound Money

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pp. 477-502

The people of all countries agree that the present state of monetary affairs is unsatisfactory and that a change is highly desirable. However, ideas about the kind of reform needed and about the goal to be aimed at differ widely. There is some confused talk...

Appendix A. On the Classification of Monetary Theories

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pp. 503-524

Appendix B. Translator's Note on the Translation of Certain Technical Terms

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pp. 525-526

Index

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pp. 527-538

Biographical Note

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pp. 539-540

Note on Silver Demereteia

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pp. 541-543

Publication Information

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p. 544-544


E-ISBN-13: 9781614878421
E-ISBN-10: 1614878420
Print-ISBN-13: 9780913966716

Page Count: 544
Publication Year: 2012

Edition: None