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What has Government done to our money?

What Has Government Done to Our Money? is a book by Murray N. Rothbard that details the history of
money, from early barter systems, to the gold standard, to present day systems of paper money. The book
was printed out in 1963 by Ludwig Von Mises Institute and has 120 pages. After fifty years, it remains the
best book in print on the topic, a real manifesto of sound money.
Murray Rothbard was the distinguished professor of economics at the University of Nevada, and dean of
the Austrian School. He authored 17 books, including the one under review here What Has
Government Done to Our Money? Essentially, the book explains what money is and describes how
money has changed. Money changed because governments and banks abandoned the gold standard. Fiat
currency emerged, and with it a whole bunch of problems.
The book is has two primary parts. The first part relates the history of money and what government has
done to it. This part includes Money in a Free Society, Government Meddling With Money, and The
Monetary Breakdown of the West. In the second part, Rothbard presents his case for a 100 Percent Gold
According to Rothbard, money became problematic way back in 1913, which was when America adopted
the Federal Reserve System a Central Bank. As Rothbard points out, A Central Bank attains its
commanding position from its governmentally granted monopoly of the note issue. From that point on
the definition of money began to change.
The first money issued by the Fed in 1914 stated:
This Note Is Receivable By All National and Member Banks and Federal Reserve Banks and for all
Taxes, Customs, and Other Public Dues. It Is Redeemable in Gold on Demand At the Treasurey
Department of the United States in the City of Washington, District of Columbia or in Gold or Lawful
Money At Andy Federal Reserve Bank.
By 1950 this was revised to
This Note Is Legal Tender for All Debts, Public and Private, and Is Redeemable in Lawful Money At the
United States Treasury, or At Any Federal Reserve Bank.
The Constitution, remember, demands that lawful money be made only of silver or gold. So although
the 1950 revision was vague, it still met the legal definition imposed by the Constitution. The Feds paper
could be redeemed for gold or silver on demand.

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Then in 1963, the wording was changed again. This time it read: This Note Is Legal Tender for All Debts,
Public and Private.
This statement meant the money could not be exchanged for gold or silver or for that matter anything
else. In effect, this money was money only because the Fed said it was.
Fiat currency became the new star of the show. To Rothbard, the Fed is nothing more than a massive
counterfeiting operation that forces Americans to pay ever-growing interest on money that continues to be
worth less and less. In Rothbards opinion, the only way to stop this vicious cycle is by the return to a
free market commodity money such as gold, and by removing government totally from the monetary
Rothbard sums up by stating that gold, that scarce and valuable market-produced metal, has always
been, and will continue to be, by far the best money for human society. Having said it, he turns his
attention to the 100 Percent Gold Dollar.
Rothbard does not advocate a return to the pre-1933 gold standard. Why? Because it seems clear to me
that the gold standard of the 1920s was so vitiated as to be ready to collapse. A return to such a gold
standard would only pave the way for another collapse. Instead, Rothbard advocates a 100 Percent
Gold standard. Such a system, he argues, would end fractional-reserve banking, which is simply
fraud. In addition, it would bring inflation to a screeching halt and force governments to balance their
One of the big objections to 100 percent gold is that the money supply would be insufficient. In short,
there wouldnt be enough money to go around. Rothbard counters this objection by directing attention to
the great monetary lesson of classical economics: that the supply of money essentially does not matter.
In other words, Rothbard is saying that money is a medium of exchange. Which means the purchasing
power of the available money supply will adjust accordingly. Each monetary unit will be worth more.
Rothbard goes on to state bluntly this is the only system compatible with the fullest preservation of the
rights of property. It is the only system that assures the end of inflation and, with it, of the business cycle.
He admits that his recommendation is radical, especially in todays world. Yet he insists that such a
measure is in keeping with the great traditions of Jefferson and Jackson, both of who were fully devoted
to capitalism and the free market.
Adopting a 100 percent gold dollar would be painful, concedes Rothbard. He perceives two ways to go
about it. Force a deflation of the supply of dollars down to the currently valued gold stock or raise the
price of gold. Whichever route is selected, Rothbard believes it must be done. Not to do so is to
abandon human reason.
This is a powerful book. Its message is powerfully argued. Much historical and logical evidence is
presented. Yet one has to wonder if anyone is listening.