This book was originally published in German as Theorie des Geldes und der Umlaufsmitte in 1921. The English translation was published in 1934 but even today, it is still considered one of the best books that describe the value of money and economics!
Although we live in a capitalist society that makes money and credit the two most important concepts, it is not easy for citizens to completely understand them. This book is divided into 4 parts that include: nature of money, the value of money, money and banking and monetary reconstruction.
The first part, “Nature of Money” describes the general idea of money. Mises describes the functions of money, the value of money, different kinds of money and the enemies of money in this chapter. According to Mises, money functions as the commodity that facilitates the interchange of goods and services. The secondary function of money is to find economic order by becoming the medium of exchange.
“The Value of Money” is a chapter that explains the concept of value of money. According to the author, the central element is the purchasing power. This chapter also includes some of the subjective and objective factors of value of money, determinants of purchasing power and problems of measuring the objective exchange-value of money.
The third chapter, “Money and Banking” is a section that explains to the readers about banking, the media’s influence on money, credit and interest. Mises explains the connection between the amount of money in the market and the level of rate of interest.
“Monetary Reconstruction,” the last section of the book, introduces the principle of sound money, the current “Gold Standard” currency systems and the classification of monetary theories.
The author shows how money began in the market, what its values are and introduces several theories and terms that are reflected on the economies we have today. This book grabs the interest of readers by its extensive research on economic terms. This book may seem a bit stern and bewildering for readers to read. However, once you hold on to this book, you would be able to get a grasp on the problems you may face that involves money and credit. The book is available for free online in the Ludwig von Mises Institute.
By Moon Jung Kim