Money, Sound and Unsound

Ludwig von Mises said that there can never be too much of a good theory. Salerno proves it in this sweeping and nearly comprehensive book on applied Austrian monetary theory. In Money: Sound and Unsound, Salerno uses the Misesian/Rothbardian theory of money to reinterpret historical episodes, reevaluate the history of thought, closely examine Federal Reserve policy, seek out cause and effect in business cycles, provide a new understanding of war and social unrest, and clarify the relationship between the state and the central bank.

But it is not just about the past. He presents a great model for the future, too, with essays on how to tell real from fake gold standards, how to calculate the money supply and follow what the Fed is up to, and how to reform the international monetary system to keep money from the destructive hands of the state.

This book might be considered an intermediate text on the topic. If you have read Menger, Rothbard, Mises, or Hayek on the topic of money and you want to know what is next, this book is your answer. Joseph Salerno is the master of the subject, and he demonstrates absolute virtuosity in these pages.

Salerno's yardstick concerns the soundness of money. He is speaking of a subject too rarely raised: the quality of the money itself. Money originated as a commodity out of market exchange. The further the government and central bank drive money from its original soundness — toward a paper money, and finally toward digits that government can manufacture out of nothing — the less sound the money becomes, and the more instability, inflation, false signaling, and economic chaos results.

As Salerno makes clear, money is either absolutely sound (meaning, part of the market order) or it is headed on that slide toward destruction.