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NOTE I. Introduction

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Chapter 1. Introduction.

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Few economic subjects are more tangled, more confused than money.

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Wrangles abound over tight money versus easy money,

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over the roles of the Federal Reserve system and the Treasury,

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over various versions of the gold standard, etc.

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Should the government pump money into the economy or siphon it out?

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Which branch of the government?

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Should it encourage credit or restrain it?

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Should it return to the gold standard?

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If so, at what rate?

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These and countless other questions multiply, seemingly without end.

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Perhaps the babble of views on the money question stems from man's propensity to be realistic,

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that is, to study only immediate political and economic problems.

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If we immerse ourselves wholly in day-to-day affairs, we cease making fundamental distinctions

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or asking the really basic questions.

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Soon, basic issues are forgotten and aimless drift is substituted for firm adherence to

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principle.

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Often we need to gain perspective, to stand aside from our everyday affairs in order to

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understand them more fully.

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This is particularly true in our economy, where interrelations are so intricate that

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we must isolate a few important factors, analyze them, and then trace their operations in the

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complex world.

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This was the point of Crusoe economics, a favorite device of classical economic theory.

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Analysis of Crusoe and Friday on a desert island, much abused by critics as irrelevant

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to Today's World, actually performed the very useful function of spotlighting the basic

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axioms of human action.

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Of all the economic problems, money is possibly the most tangled, and perhaps where we most

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need perspective.

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Money moreover is the economic area most encrusted and entangled with centuries of government

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meddling.

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Many people, many economists, usually devoted to the free market, stop short at money.

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Money, they insist, is different.

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It must be supplied by government and regulated by government.

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They never think of state control of money as interference in the free market.

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A free market in money is unthinkable to them.

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Governments must mint coins, issue paper, define legal tender, create central banks,

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Pump money in and out, stabilize the price level, etc.

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Historically, money was one of the first things controlled by government, and the free market

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revolution of the 18th and 19th centuries made very little dent in the monetary sphere.

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So it is high time that we turn fundamental attention to the lifeblood of our economy—money.

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Let us first ask ourselves the question, can money be organized under the freedom principle?

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Can we have a free market in money as well as in other goods and services?

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What would be the shape of such a market?

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And what are the effects of various government controls?

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If we favor the free market in other directions, if we wish to eliminate government invasion

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of Person and Property, we have no more important task than to explore the ways and means of

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a free market in money.