This document summarizes key points from Chapter 12 of Man, Economy, and State regarding money, monopoly, and market intervention. It discusses six topics: (1) inflation defined as issuing money beyond specie increases, (2) inflation caused by commercial banks through fractional reserve lending, (3) the Austrian business cycle theory wherein banks create booms and inevitable busts, (4) capital consumption exacerbated during inflationary booms, (5) the effects of government debt financing through inflation or public borrowing, and (6) externalities related to monetary intervention.
Money, Monopoly, and Market Intervention, Lecture 8 with Robert Murphy - Mises Academy
1. Money, Monopoly &
Market Intervention
Robert P. Murphy
Mises Academy
November 23, 2011
Lecture 8: 3rd
Third of Chapter 12 of
Man, Economy, and State
2. 3rd
Third of
Chapter 12 of MES
1. Inflation
2. Inflation by Banks
3. Austrian Biz Cycle
IV. Capital Consumption
V. Government Debt
VI. Externalities
3. I. Inflation
Rothbard defines as “the process of issuing
money, beyond any increase in the stock of
specie.”
●Means business cycle on free market
(with 100% reserves) impossible.
●Not quite Mises’ definition in TOMC:
Increase in quantity of money that
outstrips increase in demand to hold
money.
4. II. Inflation by Banks
Commercial banks, not merely central bank,
that cause inflation and hence biz cycle.
Banks create money in act of lending
(with less than 100% reserves), and earn
interest on this new money.
Central banks break down market’s
natural barriers to low-reserve banking.