Just One Book

I am of the opinion that the main and final cause why the prince pretends to the power of altering the coinage is the profit or gain which he can get from it; it would otherwise be vain to make so many and so great changes.... Besides, the amount of the prince’s profit is necessarily that of the community’s loss.

~ Bishop Nicholas Oresme, 14th century

If there is only one book that I would recommend to anyone on the subject of economics, it is The Ethics of Money Production by Jörg Guido Hülsmann, professor at the University of Angers, France. The recommendation is made all the sweeter by the fact that the link takes the reader to a free pdf version of the book. But the work is of such import that one would likely want a hardcopy at hand. Despite a rather soporific title, the book tackles with sparkling clarity the most pressing economic issue of our time -- the nature, origin, use, and debasement of money. It includes a thorough history of coin debasement, credit money, banknotes and fractional-reserves, legal tender laws and business cycles. While there are myriad economic issues worthy of better understanding -- land controls, wages, regulations, subsidies and the like -- money lies at the heart of all modern economic systems. The manipulation of currency is the jugular of economic boom/bust cycles. Hülsmann takes a dull sounding topic and turns it into a page-turner.

There's probably not another economic subject on which there is more widespread misunderstanding. People throughout the developed world have been conditioned to the idea that money emanates from, and must therefore be controlled by, a central authority. Hülsmann shows how all media of exchange arise naturally out of social cooperation, and how through the process of social discovery a free monetary system regulates itself from inflation, deflation and unstable prices. Not that these phenomena wouldn't occur at all, but the natural market process renders them short-lived. It is only when an authority takes control of the production of money that sustained trouble arises.

What makes Hülsmann's analysis unique is that he addresses the issue from a moral and ethical standpoint. At root is the violation of the ninth commandment: "You shall not bear false witness against your neighbor." By inflating the currency in order to raise revenues and enrich both the government and its allies, the monetary authority lies to the users of money, and makes economic decisions more difficult as a result of tampered weights and measures (Proverbs 20:10, 23).

Economics not only deals with moral beings—human persons—but it also addresses a great number of questions that have direct moral relevance. In the present case, this concerns most notably the question of whether any social benefits can be derived from the political manipulation of the money supply, or the question of how inflation affects the moral and spiritual disposition of the population (p. 5).

I would boldly say this is the only book on economics a layperson needs. In developing his argument Hülsmann breezily carries the reader through the fundamentals of supply, demand, utility and interest (vs. usury). He also skillfully debunks all modern concerns over a lack of centralized control and oversight of money. That he does so in a calm and warm tone is a testament to Hülsmann's Christian faith and mastery of the subject.