1. Lecture 3: Rothbard on Money
Money and Banking - Dr. D. Foster

2. Money and Banking - Dr. D. Foster
Rothbard on Money
Money is different than coal …
What is true if the supply of coal rises?
What is true if the supply of money rises?
Is there a right amount of money?
What if the money supply doubled?
Are there economic interests “agitating” for a decline in the money supply?
Is it wasteful to mine for gold and silver?
What is the significance of a commodity as money?
Money and Banking - Dr. D. Foster

3. Money and Banking - Dr. D. Foster
Rothbard on Money
What about counterfeiting money?
Harms those with “real” money.
Hard to do with commodity like gold.
Easy to do with paper/fiat money.
And, if the government has a monopoly?
What has the government done to our money?
We’ve forgotten that the name meant a weight.
Gov’t force through “legal tender” laws.
Now, gov’t can finance spending without raising taxes or borrowing funds!
Money and Banking - Dr. D. Foster

4. Money and Banking - Dr. D. Foster
The end of gold truth
The suspension of “specie redemption.”
For U.S. – Revolutionary War, War of 1812, Civil War.
Gold coins in the U.S. circulated until 1933.
Afterwards, penalties included jail time & a fine up to $10,000.
Gold contracts (or, clauses) ruled null & void.
Individuals’ wealth is now more at risk to inflation.
What direct benefit does the government get from this?
Can a country on a gold standard experience hyperinflation?
Money and Banking - Dr. D. Foster

5. Need a National Currency?
Dollarization - Use another country’s currency as your medium of exchange.
Why would a country do this?
Currency board - the national currency is backed by an equal amount of a foreign currency.
What happens in a country that does this if the foreign country inflates their money supply?
Currency union - A group of countries adopt a common currency.
What direct benefit does the government get from this? 5

6. Lecture 3: Rothbard on Money
Money and Banking - Dr. D. Foster