Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown

Book description

The case for the inevitable failure of a paper money economy and what that means for the future

All paper money systems in history have ended in failure. Either they collapsed in chaos, or society returned to commodity money before that could happen. Drawing upon novel new research, Paper Money Collapse conclusively illustrates why paper money systems—those based on an elastic and constantly expanding supply of money as opposed to a system of commodity money of essentially fixed supply—are inherently unstable and why they must lead to economic disintegration.

These highly controversial conclusions clash with the present consensus, which holds that elastic state money is superior to inflexible commodity money (such as a gold standard), and that expanding money is harmless or even beneficial for as long as inflation stays low. Contradicting this, Paper Money Collapse shows that:

  • The present crisis is the unavoidable result of continuously expanding fiat money

  • The current policy of accelerated money production to "stimulate" the economy is counterproductive and could lead to a complete collapse of the monetary system

  • Why many in financial markets, in media, and in the policy establishment are unable (and often unwilling) to fully appreciate the underlying problems with elastic money

This compelling new book looks at the breakdown of modern economic theory and the fallacy of mathematical models. It is an analysis of the current financial crisis and shows in very stark terms that the solutions presented by paper money-enthusiasts around the world are misguided and inherently flawed.

Table of contents

  1. Cover Page
  2. Title Page
  3. Copyright
  4. Dedication
  5. Contents
  6. Foreword
  7. Acknowledgments
  8. Prologue: The Brave New World of Elastic Money
    1. Inelastic versus Elastic
    2. Background on the “Reasoning”
    3. New Infrastructures and Policies
    4. Why I Wrote This Book
    5. This Book's Setup
    6. A Note on Pronouns in the Text
  9. Part One: The Basics of Money
    1. Chapter 1: The Fundamentals of Money and Money Demand
      1. The Origin and Purpose of Money
      2. The Demand for Money
      3. The Functions of Money
      4. The Unique Position of the Paper Money Producer
      5. The Monetary Asset versus Other Goods
    2. Chapter 2: The Fundamentals of Fractional-Reserve Banking
      1. Money Supply without Money Demand
      2. Money as an Enhancer of Lending Activity
      3. The Origin and Basics of Fractional-Reserve Banking
      4. Relinquishing Ownership of Your Money to the Bank
      5. Misconceptions about Fractional-Reserve Banking
      6. The Stability of Fractional-Reserve Banking
      7. Fractional-Reserve Banks, the State, and the Economists
      8. The Desire for Elastic Money
      9. Summary
  10. Part Two: The Effects of Money Injections
    1. Chapter 3: Money Injections without Credit Markets
      1. Even, Instant, and Transparent Money Injection
      2. Even and Nontransparent Money Injection
      3. Uneven and Nontransparent Money Injection
    2. Chapter 4: Money Injections via Credit Markets
      1. Consumption, Saving, and Investing
      2. Interest
      3. Money Injection via the Loan Market
      4. The Process in More Detail
      5. Policy Implications of the Austrian Theory
      6. Summary
  11. Part Three: Fallacies about the Price Level and Price Level Stabilization
    1. Chapter 5: Common Misconceptions Regarding the Price Level
      1. The Price Level and Monetary Stability
      2. A Historical Perspective on Price Level Stability
      3. Why Would Commodity Money Be Unstable?
    2. Chapter 6: The Policy of Stabilization
      1. Problems with Price Index Stabilization
      2. Summary
  12. Part Four: History of Paper Money: A Legacy of Failure
    1. Chapter 7: A Brief History of State Paper Money
      1. Paper Money Experiments
      2. Summary
  13. Part Five: Beyond the Cycle: Paper Money Collapse
    1. Chapter 8: The Beneficiaries of the Paper Money System
      1. Paper Money and the Banks
      2. Paper Money and the State
      3. Paper Money and the Professional Economist
    2. Chapter 9: The Intellectual Superstructure of the Present System
      1. The Alternative View: Individualism and Laissez-Faire
      2. The Mainstream View: Collectivism and Interventionism
      3. The Political Appeal of Mainstream Macroeconomics
      4. The Myth That Everybody Benefits from “Stimulus”
      5. Monetarism as Monetary Interventionism
      6. The Pattern of Economic Deterioration
      7. The Savings Glut Theory and the Myth of Underconsumption
      8. Inflationism and International Policy Coordination
      9. Summary
    3. Chapter 10: Beyond the Cycle: Paper Money's Endgame
      1. The Size of the Dislocations
      2. The Nationalization of Money and Credit
      3. The Monetization of Debt
      4. Inflationary Meltdown
      5. Finding Perspective
      6. Future Considerations
      7. Summary
  14. Epilogue: A Return to Commodity Money
  15. Notes
    1. Prologue
    2. Chapter 1
    3. Chapter 2
    4. Chapter 3
    5. Chapter 4
    6. Chapter 5
    7. Chapter 6
    8. Chapter 7
    9. Chapter 8
    10. Chapter 9
    11. Chapter 10
    12. Epilogue
  16. About the Author
  17. Index

Product information

  • Title: Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown
  • Author(s):
  • Release date: September 2011
  • Publisher(s): Wiley
  • ISBN: 9781118095751