ECO 473 Dr Dennis Foster Backstory The Austrian School Menger Principles of Economics BöhmBawerk Capital amp Interest Mises Theory of Money amp Credit Human Action ID: 906141
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Slide1
Money –Its Origin& Its Importance
ECO 473 – Dr. Dennis Foster
Slide2Backstory – The “Austrian” School
Menger
(Principles of Economics)
Böhm-Bawerk
(Capital & Interest)
Mises
(Theory of Money & Credit; Human Action)
Hayek
(Individualism & Economic Order)
(The Road to Serfdom)
Rothbard
(Man, Economy & State)
(The Mystery of Banking)
Slide3The Origins of Money
Arises in a market setting …
Direct exchange (barter) gives way to …
Indirect exchangeGoods serve as mediums of exchange.When we settle down to one = money.Characteristics:Portable, store of value, relatively scarce, divisible,
widely used, easily recognized.If available, gold and silver.
Slide4Money solves problems …
Double coincidence of wants
Allows for specialization of labor.Indivisibilities
Even with barter, discrete units may still be difficult.Calculation of profit and loss.Business formation is possible.
Division of labor Economic growth Rising living standards.
Slide5Is Money “Invented” by the State?
No.
Even with the idea, it is difficult to imagehow a king could create the institution of money.Governments have long been involved w/money.Minting (income=seignorage) & debasing.
Issue unbacked claims to money – FR Notes.Supplant the market money – FR Notes.Note that money unit is some weight of …
Pound sterling – a pound of silver.Dollar – an ounce of silver.POW camp & cigarettes as money.
Slide6ECO 473 – Dr. Dennis Foster
Money –
Its Origin
& Its Importance