Can the market fully manage the money and banking sector? Jesús Huerta de Soto, professor of economics at the Universidad Rey Juan Carlos, Madrid, has made history with this mammoth and exciting treatise that it has and can again, without inflation, without business cycles, and without the economic instability that has characterized the age of government control.

Such a book as this comes along only once every several generations: a complete comprehensive treatise on economic theory. It is sweeping, revolutionary, and devastating--not only the most extended elucidation of Austrian business cycle theory to ever appear in print but also a decisive vindication of the Misesian-Rothbardian perspective on money, banking, and the law.

Jörg Guido Hülsmann has said that this is the most significant work on money and banking to appear since 1912, when Mises's own book was published and changed the way all economists thought about the subject.

Its five main contributions:

• a wholesale reconstruction of the legal framework for money and banking, from the ancient world to modern times,
• an application of law-and-economics logic to banking that links microeconomic analysis to macroeconomic phenomena,
• a comprehensive critique of fractional-reserve banking from the point of view of history, theory, and policy,
• an application of the Austrian critique of socialism to central banking,
• the most comprehensive look at banking enterprise from the point of view of market-based entrepreneurship.

Those are the main points but, in fact, this only scratches the surface. Indeed, it would be difficult to overestimate the importance of this book. De Soto provides also a defense of the Austrian perspective on business cycles against every other theory, defends the 100% reserve perspective from the point of view of Roman and British law, takes on the most important objections to full reserve theory, and presents a full policy program for radical reform.

It was Hülsmann's review of the Spanish edition that inspired the translation that led to this Mises Institute edition in English. The result is astonishing: an 875-page masterpiece that utterly demolishes the case for fiat currency and central banking, and shows that these institutions have compromised economic stability and freedom, and, moreover, are intolerable in a free society.

De Soto has set new scholarly standards with this detailed discussion of monetary reform from an Austro-libertarian point of view. Huerta de Soto’s solid elaboration of his arguments along these lines makes his treatise a model illustration of the Austrian approach to the study of the relationship between law and economics.

It could take a decade for the full implications of this book to be absorbed but this much is clear: all serious students of these subject matters will have to master this treatise.

Download Money, Bank Credit, and Economic Cycles

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Hardcover: 885 pages
Publisher: Ludwig von Mises Institute; 2nd edition (April 14, 2009)
Language: English
ISBN-10: 1933550392
ISBN-13: 978-1933550398

INTRODUCTION
The economic analysis of juridical institutions has come to the fore in recent years and promises to become one of the most fruitful spheres of economics. Much of the work completed thus far has been strongly influenced by traditional neoclassical assumptions, namely by the concept of strict maximization in contexts of equilibrium.

Still, economic analyses of law reveal the shortcomings of the traditional approach and do so perhaps better than any other branch of economics. In fact, juridical institutions are so intimately involved in daily life that it is notoriously difficult to apply the traditional assumptions of economic analysis to them. I have already attempted elsewhere to expose the dangers the neoclassical perspective brings to the analysis of juridical institutions.

Economic analyses of law are certainly necessary, but they call for a less restrictive methodology than has generally been used to date, one more suited to this particular field of research. The subjectivist view is a more fitting approach.

Developed by the Austrian School, it is based on their concept of creative human action or entrepreneurial activity and implies a dynamic analysis of the general processes of social interaction. This perspective promises to make great contributions to the future development of the economic analysis of juridical institutions.

In addition, most studies of juridical institutions carried out so far have had exclusively microeconomic implications because, among other reasons, theorists have simply borrowed the traditional analytical tools of neoclassical microeconomics and applied them to the analysis of law. This has been the case, for example, with respect to the economic analysis of contracts and civil liability, bankruptcy law, the family, and even criminal law and justice. ...

PREFACE TO THE ENGLISH-LANGUAGE EDITION
It is a genuine pleasure for me to see this handsomelyprinted English edition of my book, Dinero, Crédito Bancario y Ciclos Económicos, which first appeared in Spain in 1998.

This translation incorporates the small number of corrections included in the second Spanish edition of January 2002, and it is the result of the great effort of Melinda A. Stroup, who wrote the first English manuscript of the entire book.

This English version was thoroughly examined by Dr. Jörg Guido Hülsmann, whose comments on several important points improved the manuscript significantly. I would also like to acknowledge the work of my research assistant, Gabriel Calzada, who searched for various English editions of rare books unavailable in Spain and looked up certain quotations and references. Last, I personally inspected the final version in its entirety to ensure the accuracy of its content.

I am grateful to the Ludwig von Mises Institute, and especially to its president, Lewellyn H. Rockwell, Jr., for bringing the project to its culmination with such high standards.

Jesús Huerta de Soto
Señorío de Sarría
May 2005

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