Paper Money Collapse: The Folly of Elastic Money, 2nd Edition

PrologueContra the Mainstream Consensus—What This Book Is About

This book presents an economic argument. It attempts to demonstrate that the present consensus on money and monetary policy is wrong, and that monetary policies that broadly reflect this consensus must, contrary to the intentions of policy makers and the expectations of large parts of the public, further destabilize the economy.

After the financial crisis in 2007 and 2008, unprecedented monetary policies were implemented globally, and a public debate about these policies has ensued. The reader may therefore wonder if a true monetary policy consensus still exists. Yet almost all discussions in the media, in financial markets, in policy circles, and, as far as I can tell, in academia, still consider certain fundamental aspects of our monetary system unchallengeable and beyond serious criticism. A clearly delineated intellectual common ground exists beyond which accepted, enlightened, and sophisticated debate is believed to cease. That is what I call the mainstream consensus. I will try to give a short and fair representation of this consensus first, then outline briefly why this consensus is wrong, and how I will demonstrate this.

The Ruling Mainstream Consensus on Money

Today’s mainstream view on money holds that the abandonment of a system of hard money, of money with a fairly inflexible supply, such as a gold standard, and the implementation in its place of a system of essentially elastic money, that is, a paper ...