The Mystery of Banking

This book could essentially be summed in one sentence: The author thinks that fractional reserve banking is the scam of the millennium, but offers no categorical proof that it stands to the detriment of society. He cherry picks examples of this form of banking using almost no real academic study. What really gives up the ghost for his agenda is the adjectives he chooses when describing modern banking schema, which are very subjective, unscientific, and often incorrect usages. For example, when a central bank chooses to create new money, a fully legal process that one can agree or not agree with, the author constantly uses the word "counterfeiting" to describe this- an emotionally powerful word, that is incorrectly used, as counterfeiting implies illegality. There are many other examples of such bias in his emotion-laden word choices, but essentially very little academic rigor to his foregone conclusions. What I am actually interested in, is understanding what economic science says about the benefits and detriments of fractional reserve banking. I came to this book with the point of view that the USA has had the highest standard of living the world for 120 years running. So something is going right with our monetary system. But, perhaps we could do better, and I wished to have a glimpse of some alternate theories that would have some scientific backing. But, this book lives in a very different kingdom from academics, some distance place well across the border in the realm of libertarian propaganda.

One of these days I will write a review that is a little more worthy of this fabulous book. Until then, this will have to do.Q - So should you buy this book?A - Yes.Q - But really, I wasn't a finance major; who should buy this book?A - Anyone who hasn't read it, but is capable of doing so. You do not need to be versed in finance or macroeconomics. Murray will teach the necessary economics along the way, or point you to related sources for further understanding when necessary. (Side note - for those who are truly unfamiliar with "Austrian" theory or would like a wonderful primer on economics, I can think of no better place to start than Henry Hazlitt's timeless classic "Economics in One Lesson".) As far financial literacy goes, understanding this book would deal quite a blow to many who may think of themselves as so called financial experts. For how could one truly be a financial expert, but yet have no real understanding of money whatsoever.Q - What will you learn?A - Why money in itself is so important. Why the current central banking system is so harmful to those of us not employed on Wall Street, at the Fed, or in the upper echelon of the Washington élite. What fractional reserve banking is, how it works, and why it couldn't exist in a truly free market. You will also learn a great deal of the history of banking in the United States (as well as Great Britain), and will quickly see the utter fallacy in criticisms of Austrian Business Cycle theory (don't worry if you don't know what this is) on grounds that attempt to argue that monetary inflation couldn't have caused nineteenth century business cycles, as obviously the Fed didn't exist yet.Q - Is this really just a long drawn case for the Gold Standard?A - Some reviewers thought so. I would say that interpretation fails to see a thing for what it is, and is a 10 foot view of 30,000 foot subject. To paraphrase Albert J. Nock, that understanding implies literacy without the true ability to read. Without making the whole case here, I would simply state that the real point centers on the evils of government control of money and interference in the financial system, and more directly the evils of fiat government money not backed by production. Assuming this simply was an argument for the gold standard on its face, this still wouldn't be a real knock against the book. Even simply explaining the gold standard, requires some thorough treatment, as the term "gold standard" used by Steve Forbes is very different from the system Ron Paul would be referencing by the same (or similar) terminology. Now, all that being said, gold and silver are the historical examples we have of how the government's ability to inflate can be severely limited or controlled. (Debasing metal doesn't offer the ability to create trillions from thin air). Does that mean money would have to be gold in a truly free market? Nope.Murray Rothbard is plain spoken, easy to understand, and most importantly a true polymath genius. He takes what should be an absolutely powder dry subject, and makes it not only understandable, but interesting. I always shiver a bit when I read book reviews with statements along the line of "this should be required reading for students, voters, citizens, etc.", yet it is difficult to overemphasize the true importance of the ramifications of this subject. A nefarious magic trick has been played on most of the world to convince us that bank notes are money, and do not have to be backed by anything other than the full faith in credit of the central government. Wealth requires production, you can't spend your way to riches, and microeconomics is economics. We have paid, and will continue to pay a burdensome price for our failure to understand the mystery of banking.

Murray does a great job of simplifying a complicated subject. Besides graphs, mostly showing price, supply and demand, it’s pretty simple. Murray believes in the Austrian school of economics and praises the times America adhered to a gold standard. I don’t agree with everything he writes but really enjoy his perspective. I would recommend to anyone interested in an overview of banking, economics, or money creation.

If you want to finally understand how the current banking system (based on the concept of the fraction reserve system - i.e., legalized counterfeiting) works, this is the book for you. Great explanation of the mechanics. Also, the book clearly demonstrates that we need to clearly delineate between loan banking (i.e., savings/investment) and deposit banking (i.e., money warehousing), and get deposit banking back to a 100% fractional reserve basis if we are ever to get out of the repeating boom-bust business cycle in which we constantly find ourselves (the world over). I would recommend this book for anyone interested in gaining an understanding of how our money system really works (including money creation in a fiat money system like what we have), how savings/investment/credit work today (as well as how they really should work), and the mechanics of modern (ill-conceived) centralized fractional reserve banking.

The origins of the current crisis are all explained in this book. It can easily seem like Rothbard wrote this book just a few weeks ago. The main reason this book is so relevant is because nothing has really changed over the years. The Fed continues to create money out of thin air in ever increasing quantities, and the commercial banks continue with pyramiding on top of that. It's the boom and bust cycle all over again.If you're interested in questions such as what is the fractional reserve system and how it effects the money supply, how the Fed lowers interest rates, what are open market operations, how the Fed monetizes debt, and much more, this book will definitely provide you with answers. This book will help you understand what exactly the Fed has been doing the past few years (actually a lot longer) and what will be the implications of the Fed's policies on the economy. Highly recommended.

In case Amazon is clumping reviews, this is for the edition released by Important Books in 2017, ISBN 978-1-38-817383-8 (the one with the yellow cover with various currencies like USD, GBP and Euro).As you can see in the scan, there's a significant amount of white space at the top which makes no sense, the regular font is very narrow and small making it hard to read while the titles are written with a different font which has weird spacing (see the space after the C in "Chapter" or "Central" or the space after the R and m in "Removing"). The same font used for the chapter titles is used to emphasize some words in the text or caption various diagrams, which makes it quite annoying.I bought the paper version of the book because it's easier for me to read a normal book than a PDF, which is freely available on the Mises Institute website, but the book is practically unreadable. I would normally return it if it wasn't more expensive to ship it back to Amazon.

I have started to try and understand the mysteries of the banking system and this book was a revelation. It gave the history of events for both the British and American systems, the gradual centralisation and the removal of banking constraints to faccilitate the continued boom and bust of bank created inflation of the money system.It was very clear and easy to read. Sometimes I wonder if banking is closer to a whodunit thriller than dry figures and this book leaves no doubt about how and why political leverage has been applied. Truly excellent and has encouraged me to read further.

This should be read by everyone. They will then understand that money has no value, it is created out of "thin air". It will also explain why the 2007/2008 credit crash was caused. Also how the public can control the banks and governments. Only buy what you actually need and prices will come down, however buy all sorts of "other things" (extra things) and prices go up with inflation. Become informed of how valueless money is.

This is probably the best intro to the school of Austrian economics and basic financial theory, its really accessible and gives a world class over view of fractional reserve banking and how our modern financial systems work. I found this book to be very accessible and educational and really benefited from reading it and its enjoyable to read and pretty cheap on Kindle too. 5 stars no doubt about it!! Grab it and dig in.

Everybody should read this. It is not a difficult text but makes pretty clear why we are in the mess we we are today; greed combined with a false creed that bankers, both central and chartered, hand in hand (and in your pocket) with ruling elites know best how keep the economy going (sure they do).And now we have the zombie economies of the West to pass on to our children. Here you go kids, sorry we stood by open-mouthed while life and richness was sucked out of your inheritance by parasites. Hope you don't make the same mistake as us. Read this and maybe you won't.