Monetary Theory

Richard Cantillon, whom Austrians consider to be the real father of modern economics, noted that new money creation has uneven effects. Jonathan Newman demonstrates how those effects take place.

While mainstream economists and statisticians speak of the “price level,” Austrian economists know better. Using price levels to explain inflation obscures what really happens when monetary authorities explain the supply of money.

If one looks at the catastrophic consequences of the great paper-money inflations, one must admit that the cost of making and holding gold is the minor evil. It would be futile to retort that these catastrophes were brought about because the regime merely used fiat money improperly. 

According to mainstream economists, the expectation of inflation leads to higher prices. That is impossible, however, because actual inflation involves real increases in the money supply.

According to mainstream economists, the expectation of inflation leads to higher prices. That is impossible, however, because actual inflation involves real increases in the money supply.

Recorded at the Mises Circle in Fort Myers, Florida, 4 November 2023.

Recorded at the Mises Circle in Fort Myers, Florida, 4 November 2023. Includes audience question and answer period.

Recorded at the Mises Circle in Fort Myers, Florida, 4 November 2023.

Monetary authorities and monetary economists try to define money without understanding what money really is: a medium of exchange.

Sponsored by Wilfried and Barbara Puscher.