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The Case Against the Fed
The most powerful case against the American central bank ever written. This work begins with a mini-treatment of money and banking theory, and then plunges right in with the real history of the Federal Reserve System. Rothbard covers the struggle between competing elites and how they converged with the Fed. Rothbard calls for the abolition of the central bank and a restoration of the gold standard. His popular treatment incorporates the best and most up-to-date scholarship on the Fed's origins and effects.
168 pages, Paperback
First published January 1, 1994
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2869 people want to read
About the author
Murray N. Rothbard
285 books1,131 followersMurray Newton Rothbard was an influential American historian, natural law theorist and economist of the Austrian School who helped define modern libertarianism. Rothbard took the Austrian School's emphasis on spontaneous order and condemnation of central planning to an individualist anarchist conclusion, which he termed "anarcho-capitalism".
In the 1970s, he assisted Charles Koch and Ed Crane to found the Cato Institute as libertarian think tank.
In the 1970s, he assisted Charles Koch and Ed Crane to found the Cato Institute as libertarian think tank.
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Displaying 1 - 30 of 77 reviews
October 2, 2009
This is the best starting point for anyone who wishes to understand the problems with debt-based central banking. Given the economic turmoil over the past year, I suspect this book would garner more attention, as it should.
Rothbard deftly illustrates the dangers of fractional reserve lending, which is the primary source of a bank's income on its deposits (which it is not allowed to count as revenue). The Federal Reserve rules the roost in the banking world, and sadly it is not a reserve, has never been audited, and is one of the most corrupt entities in the American government.
Rothbard gives a brief history of the Fed, and then shows the reader how it prints money, distributes this money, creates inflation, which in turn hurts investors and people who wish to retain savings.
If you want to understand the current economic problems in America, take it from one of the foremost experts in the Austrian school of economics.
Rothbard deftly illustrates the dangers of fractional reserve lending, which is the primary source of a bank's income on its deposits (which it is not allowed to count as revenue). The Federal Reserve rules the roost in the banking world, and sadly it is not a reserve, has never been audited, and is one of the most corrupt entities in the American government.
Rothbard gives a brief history of the Fed, and then shows the reader how it prints money, distributes this money, creates inflation, which in turn hurts investors and people who wish to retain savings.
If you want to understand the current economic problems in America, take it from one of the foremost experts in the Austrian school of economics.
February 15, 2021
An excellent and highly accessible analysis of central banking in the United States. The Federal Reserve is a regressive, redistributive institution responsible for a number of catastrophic boom/bust cycles. It has also made possible the devaluation of our currency and an adventuristic foreign policy - the full scope of that calamity is difficult to fathom. Rothbard makes a persuasive case for the abolishment the organization and a return to commodity-backed currency (gold would be his commodity of choice). Great book.
November 3, 2015
Murray Rothbard, in customary fashion, destroys the myths surrounding the Federal Reserve in “The Case Against the Fed”. Though this is only about 150 pages long, Rothbard is able to go into detail about the theories surrounding fractional reserve banking and central banking, the specific history of central banking in America, and his plan to abolish the Fed. I think this is a fantastic short work; I only wish it was longer. The only thing keeping this from five stars from me is my disagreement with Rothbard over 100% reserve banking. I believe that free banking absent of any central bank is the answer, not imposed 100% reserve banking. If 100% reserve banking is what the people demand in a free market, that is what will dominate, but it should be up to the market to decide.
Rothbard opens this book theoretically, explaining banking from an elementary perspective. He explains how fractional reserve banking emerged and how fractional reserve banking would constitute fraud in the warehousing industry. He discusses the inherent insolvency of banks in a fractional reserve system; thus, it is in the banks’ best interest to cartelize to ensure that inflation is evenly spread throughout the banking system. A cartelized system with a central bank at the head benefits banks with a lender of last resort and a system in which one bank’s expansion of credit does not take down the entire banking system. Furthermore, a central bank enables inflation during recessions, which flies in the face of contractionary pressures typically brought on by the market. A central bank enables larger booms and more intense busts, a theory that is borne out by the last century in America.
Beyond his more general criticism of central banking, Rothbard does a great job to describe the banking industry’s complicity in and support of the Federal Reserve System. More specifically, he documents the J.P. Morgan control of the initial Federal Reserve and the later takeover by Rockefeller interests. If Rothbard’s Austrian theories do not convince readers of the Fed’s shadiness, the mainstream banking industry’s overwhelming support of the Fed should do the trick.
I would recommend “The Case Against the Fed” to anyone with an interest in banking, financial markets, or economics. I really wish more people would have read books like these and Ron Paul’s “End the Fed” before proclaiming Ben Bernanke a hero in 2009. An ability to look deeper beneath the surface seems to have been lost among our politicians and media members. Hopefully the Fed’s continuing blunders over monetary policy will convert more people to the anti-central banking end of the spectrum. Though I am more of a free banking advocate than a 100% reserve banking advocate, Rothbard’s discussions of the Fed are important.
Rothbard opens this book theoretically, explaining banking from an elementary perspective. He explains how fractional reserve banking emerged and how fractional reserve banking would constitute fraud in the warehousing industry. He discusses the inherent insolvency of banks in a fractional reserve system; thus, it is in the banks’ best interest to cartelize to ensure that inflation is evenly spread throughout the banking system. A cartelized system with a central bank at the head benefits banks with a lender of last resort and a system in which one bank’s expansion of credit does not take down the entire banking system. Furthermore, a central bank enables inflation during recessions, which flies in the face of contractionary pressures typically brought on by the market. A central bank enables larger booms and more intense busts, a theory that is borne out by the last century in America.
Beyond his more general criticism of central banking, Rothbard does a great job to describe the banking industry’s complicity in and support of the Federal Reserve System. More specifically, he documents the J.P. Morgan control of the initial Federal Reserve and the later takeover by Rockefeller interests. If Rothbard’s Austrian theories do not convince readers of the Fed’s shadiness, the mainstream banking industry’s overwhelming support of the Fed should do the trick.
I would recommend “The Case Against the Fed” to anyone with an interest in banking, financial markets, or economics. I really wish more people would have read books like these and Ron Paul’s “End the Fed” before proclaiming Ben Bernanke a hero in 2009. An ability to look deeper beneath the surface seems to have been lost among our politicians and media members. Hopefully the Fed’s continuing blunders over monetary policy will convert more people to the anti-central banking end of the spectrum. Though I am more of a free banking advocate than a 100% reserve banking advocate, Rothbard’s discussions of the Fed are important.
October 7, 2008
Ever since the creation of the Federal Reserve, the U.S. taxpayers have been hostages to the banking cartel.
This book simply explains how the Feds cause the cycle of boom and busts, and how they profit from it. It explains how inflation and fractional reserve banking works, also to their benifit at the expense of the taxpayer.
In summary the book expains how the Morgans and Rockerfellers have a monopoly on counterfieting the U.S. dollar with the "full faith and credit of the U.S. Government".
This book, though written in 1994, helps one understand what is going on in todays "economic crisis".
This book simply explains how the Feds cause the cycle of boom and busts, and how they profit from it. It explains how inflation and fractional reserve banking works, also to their benifit at the expense of the taxpayer.
In summary the book expains how the Morgans and Rockerfellers have a monopoly on counterfieting the U.S. dollar with the "full faith and credit of the U.S. Government".
This book, though written in 1994, helps one understand what is going on in todays "economic crisis".
December 31, 2024
Leaving aside the (mostly) minor historical inaccuracies, reads more as a case against banking in general, and specifically overnight borrowing of any form. The Fed focus makes this argument somewhat ideological and doesn't engage with more themes that allow interbank markets outside of the Fed
February 8, 2024
THE AUSTRIAN/LIBERTARIAN ECONOMIST PROPOSES TO ABOLISH THE FEDERAL RESERVE
Economist Murray Rothbard wrote in this 1994 book, “It is little known… that there is a federal agency that tops the others in secrecy by a country mile. The Federal Reserve System is accountable to no one; it has no budget; it is subject to no audit; and no Congressional committee knows of, or can truly supervise, its operations. The Federal Reserve, virtually in total control of the nation’s vital monetary system, is accountable to nobody---and this strange situation, if acknowledged at all, is invariably trumpeted as a virtue.” (Pg. 3)
He continues, “Let us consider any other private industry. Wouldn’t it be a tad suspicious if, say, the insurance industry demanded unchecked power for their state regulators, or the trucking industry total power for the ICC, or the drug companies were clamoring for total and secret power to the Food and Drug Administration? So shouldn’t we be suspicious of the oddly cozy relationship between the banks and the Federal Reserve? What’s going on here? Our task in this volume is to open up the Fed to the scrutiny it is unfortunately not getting in the public arena.” (Pg. 7) He adds, “if the public knew what was going on… it would soon discover that the Fed, far from being the indispensable solution to the problem of inflation, is itself the heart and cause of the problem. What we need is not a totally independent, all-powerful Fed, what we need is no Fed at all.” (Pg. 11-12)
He states, “Money, then, is unique among goods and services since increases in its supply are neither beneficial nor needed; indeed, such increases only dilute money’s unique value: to be a worthy object of exchange.” (Pg. 20)
He reports, “David Hume … in effect postulated what I like to call the ‘Angel Gabriel’ model, in which the Angel, after hearing pleas for more money, magically doubled each person’s stock of money overnight…” (Pg. 22)
He asserts, “Governments everywhere and at all times are short of money, and much more desperately so than individuals or business firms. The reason is simple: unlike private persons or firms, who obtain money by selling needed goods and services to others, governments produce nothing of value and therefore have nothing to sell. Governments can only obtain money by grabbing it from others…” (Pg. 58-59)
He observes, “Many critics of the Fed like to harp on the fact that the private bankers legally own the Federal Reserved System, but this is an unimportant legalistic fact; Fed… profits from its operations are taxed away by the Treasury. The benefits to the bankers from the Fed come not from its legal profits but from the very essence of its operations: its task of coordination and backing for bank credit inflation. THESE benefits dwarf any possible direct profits from the Fed’s banking operations into insignificance.” (Pg. 121)
He states, “the Fed has the well-nigh absolute power to determine the money supply if it so wishes. Over the years, the thrust of its operations has been consistently inflationary. For not only has the trend of its reserve requirements … been getting ever lower, but the amount of its amassed U.S. government bonds has consistently increased over the years, thereby imparting a continuing inflationary impetus to the economic system.” (Pg. 144-145)
He proposes, “There is only one way to eliminate chronic inflation, as well as the booms and busts brought by the system of inflationary credit… And the only way to do THAT is to abolish legalized counterfeiting: that is, to abolish the Federal Reserve System, and return to the gold standard, to a monetary system where a market-produced metal, such as gold, serves as the standard money, and not paper tickets printed by the Federal Reserve…. It would be easy to return to gold and to abolish the Federal Reserve, to do so at one stroke: All we need is the will.” (Pg. 146)
This book (written only a year before Rothbard’s death) will appeal to fans of Rothbard.
Economist Murray Rothbard wrote in this 1994 book, “It is little known… that there is a federal agency that tops the others in secrecy by a country mile. The Federal Reserve System is accountable to no one; it has no budget; it is subject to no audit; and no Congressional committee knows of, or can truly supervise, its operations. The Federal Reserve, virtually in total control of the nation’s vital monetary system, is accountable to nobody---and this strange situation, if acknowledged at all, is invariably trumpeted as a virtue.” (Pg. 3)
He continues, “Let us consider any other private industry. Wouldn’t it be a tad suspicious if, say, the insurance industry demanded unchecked power for their state regulators, or the trucking industry total power for the ICC, or the drug companies were clamoring for total and secret power to the Food and Drug Administration? So shouldn’t we be suspicious of the oddly cozy relationship between the banks and the Federal Reserve? What’s going on here? Our task in this volume is to open up the Fed to the scrutiny it is unfortunately not getting in the public arena.” (Pg. 7) He adds, “if the public knew what was going on… it would soon discover that the Fed, far from being the indispensable solution to the problem of inflation, is itself the heart and cause of the problem. What we need is not a totally independent, all-powerful Fed, what we need is no Fed at all.” (Pg. 11-12)
He states, “Money, then, is unique among goods and services since increases in its supply are neither beneficial nor needed; indeed, such increases only dilute money’s unique value: to be a worthy object of exchange.” (Pg. 20)
He reports, “David Hume … in effect postulated what I like to call the ‘Angel Gabriel’ model, in which the Angel, after hearing pleas for more money, magically doubled each person’s stock of money overnight…” (Pg. 22)
He asserts, “Governments everywhere and at all times are short of money, and much more desperately so than individuals or business firms. The reason is simple: unlike private persons or firms, who obtain money by selling needed goods and services to others, governments produce nothing of value and therefore have nothing to sell. Governments can only obtain money by grabbing it from others…” (Pg. 58-59)
He observes, “Many critics of the Fed like to harp on the fact that the private bankers legally own the Federal Reserved System, but this is an unimportant legalistic fact; Fed… profits from its operations are taxed away by the Treasury. The benefits to the bankers from the Fed come not from its legal profits but from the very essence of its operations: its task of coordination and backing for bank credit inflation. THESE benefits dwarf any possible direct profits from the Fed’s banking operations into insignificance.” (Pg. 121)
He states, “the Fed has the well-nigh absolute power to determine the money supply if it so wishes. Over the years, the thrust of its operations has been consistently inflationary. For not only has the trend of its reserve requirements … been getting ever lower, but the amount of its amassed U.S. government bonds has consistently increased over the years, thereby imparting a continuing inflationary impetus to the economic system.” (Pg. 144-145)
He proposes, “There is only one way to eliminate chronic inflation, as well as the booms and busts brought by the system of inflationary credit… And the only way to do THAT is to abolish legalized counterfeiting: that is, to abolish the Federal Reserve System, and return to the gold standard, to a monetary system where a market-produced metal, such as gold, serves as the standard money, and not paper tickets printed by the Federal Reserve…. It would be easy to return to gold and to abolish the Federal Reserve, to do so at one stroke: All we need is the will.” (Pg. 146)
This book (written only a year before Rothbard’s death) will appeal to fans of Rothbard.
January 19, 2026
Murray Rothbard’s The Case Against the Fed is a critical examination of the U.S. Federal Reserve System from an Austrian economics perspective. The book argues that the Fed is not a neutral stabilizing institution, but a politically driven monopoly that distorts markets, enables government expansion, and generates economic instability.
Rothbard’s main thesis is that central banking enables artificial credit expansion through the use of fiat money and fractional-reserve banking. According to him, this process lowers interest rates below their market level, fuels unsustainable booms, and inevitably leads to recessions. He also contends that inflation is not accidental but inherent to the system, functioning as a hidden tax that transfers wealth from savers to governments and financial institutions. Historically, Rothbard disputes the claim that the Fed reduced volatility, arguing instead that it worsened crises such as the Great Depression.
Proponents of Rothbard's arguments emphasize moral hazard, loss of monetary discipline, and erosion of purchasing power. Critics of the Fed also point to asset bubbles, unequal wealth effects, and political pressure influencing monetary policy. From this view, a commodity-based or free-banking system would better align money with market signals.
Counterarguments stress that Rothbard underestimates the instability of pre-Fed banking systems and overstates the feasibility of purely market-based money. Mainstream economists argue that central banks can mitigate panics, act as lenders of last resort, and reduce the severity of recessions. They also note that deflationary systems can impose social and economic costs.
The pros of having the Fed include coordinated monetary policy, crisis management, and financial system backstopping. The cons include inflation risk, moral hazard, reduced market discipline, and concentration of economic power. Overall, the book presents a rigorous but ideologically committed critique that continues to influence debates on central banking.
Rothbard’s main thesis is that central banking enables artificial credit expansion through the use of fiat money and fractional-reserve banking. According to him, this process lowers interest rates below their market level, fuels unsustainable booms, and inevitably leads to recessions. He also contends that inflation is not accidental but inherent to the system, functioning as a hidden tax that transfers wealth from savers to governments and financial institutions. Historically, Rothbard disputes the claim that the Fed reduced volatility, arguing instead that it worsened crises such as the Great Depression.
Proponents of Rothbard's arguments emphasize moral hazard, loss of monetary discipline, and erosion of purchasing power. Critics of the Fed also point to asset bubbles, unequal wealth effects, and political pressure influencing monetary policy. From this view, a commodity-based or free-banking system would better align money with market signals.
Counterarguments stress that Rothbard underestimates the instability of pre-Fed banking systems and overstates the feasibility of purely market-based money. Mainstream economists argue that central banks can mitigate panics, act as lenders of last resort, and reduce the severity of recessions. They also note that deflationary systems can impose social and economic costs.
The pros of having the Fed include coordinated monetary policy, crisis management, and financial system backstopping. The cons include inflation risk, moral hazard, reduced market discipline, and concentration of economic power. Overall, the book presents a rigorous but ideologically committed critique that continues to influence debates on central banking.
August 24, 2022
I think it helped that I've done some reading on the federal reserve before I read this, but Murray Rothbard is one of the most clear and relatable writers on this subject, without skimping on intelligence (because I'm still often completely lost.)
Understanding how the fed operates and affects our lives should be one of the most crucial points in economic and political analysis, and this seems to me to be one of the most important books on the fed.
Understanding how the fed operates and affects our lives should be one of the most crucial points in economic and political analysis, and this seems to me to be one of the most important books on the fed.
May 15, 2014
The Case Against the Fed exposes the Federal Reserve System as the most secretive and fraudulent federal agency that is accountable to nobody where it is not even subject to budgets or audits nor Congressional Oversight. Basically, it has complete immunity from any transgressions because the banks have convinced the government and the public to grant the Federal Reserve full monopolistic and absolute power over the monetary system without any accountability.
The Federal Reserve System engages in fraud by counterfeiting through the process known as fractional reserve banking; banks commit fraud by inversely pyramiding deposits by lending more than what is in reserves. In the process, fractional reserve banking expands the money supply, for the result is consequently the boom and bust cycle.
Over the history of central banking, counterfeiting money has proven to be tricky because it is impossible without monopolization, for the only method to control money is to eliminate free market restrictions on fractional reserve banking. America has had four central banking systems, and each system was incrementally designed to monopolize money. Free market restrictions prevent commercial banks from inflating the currency by issuing pseudo banknotes. Commercial banks can’t inflate universally without the assistance of a central bank acting as the lender of last resort, so when the public realizes the banks’ insolvency, the central bank bails them out.
Rothbard explains how bankers, academics, politicians, and businessmen hoodwinked the American public through widespread propaganda tactics to convince them that the only way to fix the run on banks was fractional reserve banking with a central bank even though the apparent cure was already the problem.
The existence of the FDIC is rather an amusing notion because how can fractional reserve banking possibly be insurable considering all banks are inherently insolvent; besides no business can be properly insured because insurance is managing risk from uncontrollable events whereas business has controllable events yet impossible to manage risk of the marketplace.
Overall, Murray Rothbard is undeniably and irrefutably an economic genius along with being a brilliant author. The Case Against the Fed is more geared towards novice readers of economics, yet every time I indulge in a book with Rothbard’s name on it, it is always enjoyable no matter what.
The Federal Reserve System engages in fraud by counterfeiting through the process known as fractional reserve banking; banks commit fraud by inversely pyramiding deposits by lending more than what is in reserves. In the process, fractional reserve banking expands the money supply, for the result is consequently the boom and bust cycle.
Over the history of central banking, counterfeiting money has proven to be tricky because it is impossible without monopolization, for the only method to control money is to eliminate free market restrictions on fractional reserve banking. America has had four central banking systems, and each system was incrementally designed to monopolize money. Free market restrictions prevent commercial banks from inflating the currency by issuing pseudo banknotes. Commercial banks can’t inflate universally without the assistance of a central bank acting as the lender of last resort, so when the public realizes the banks’ insolvency, the central bank bails them out.
Rothbard explains how bankers, academics, politicians, and businessmen hoodwinked the American public through widespread propaganda tactics to convince them that the only way to fix the run on banks was fractional reserve banking with a central bank even though the apparent cure was already the problem.
The existence of the FDIC is rather an amusing notion because how can fractional reserve banking possibly be insurable considering all banks are inherently insolvent; besides no business can be properly insured because insurance is managing risk from uncontrollable events whereas business has controllable events yet impossible to manage risk of the marketplace.
Overall, Murray Rothbard is undeniably and irrefutably an economic genius along with being a brilliant author. The Case Against the Fed is more geared towards novice readers of economics, yet every time I indulge in a book with Rothbard’s name on it, it is always enjoyable no matter what.
December 28, 2024
I knew the Fed shouldn’t exist, that it does considerable avoidable harm, and it helps a highly centralized, anti-limited government to be very much what the Constitution prohibited and tried to prevent. While appearing to legitimize a criminal banking system and ensure we’re all treated just fine by it. But Rothbard’s brief history of how the Fed came to be, following the Bank of England before it (the first central bank, brought into being by banks and by the UK government, its main reason being to finance deficits); its being surreptitiously pushed by the big Wall Street banks, essentially for opposite reasons of their PR - so banks could inflate even in recessions, create even more fake money vs actual deposits, be even less accountable to depositors and that by law, and - as all this means even more frequent crashes and burns - to have a lender of last resort; is a very concise but devastating history. The book also has a helpful synopsis of money and monetary theory. Subjects not well known or understood, presumably in part because the fractional-reserve mafia has successfully kept us in the dark.
Would that the Fed chairman, FOMC members, and regional Fed bank presidents had to respond to these assertions under oath in court. And House and Senate Finance Committee chairs and members, President, Treasury Secretary, so on. Of course, in a non-administrative state America if not to be pointless, i.e., an America close to what the Founders and Framers intended. Not that we’ll ever have that again. Perhaps the best hope now is there being a critical mass of people knowing all too well and despising our anti-Constitutional anti-democratic anti-republic, with its mafia bosses knowing of us, wanting us to remain a small, unheard group of laughable pathetics, so constraining themselves just a bit to keep others laughing at us rather than joining us.
Would that the Fed chairman, FOMC members, and regional Fed bank presidents had to respond to these assertions under oath in court. And House and Senate Finance Committee chairs and members, President, Treasury Secretary, so on. Of course, in a non-administrative state America if not to be pointless, i.e., an America close to what the Founders and Framers intended. Not that we’ll ever have that again. Perhaps the best hope now is there being a critical mass of people knowing all too well and despising our anti-Constitutional anti-democratic anti-republic, with its mafia bosses knowing of us, wanting us to remain a small, unheard group of laughable pathetics, so constraining themselves just a bit to keep others laughing at us rather than joining us.
September 23, 2012
Murray Rothbard cuts through the popular dogma our government expects us to sheepishly buy into. Rothbard showcases his ability to present the facts in a way a layperson can understand it in lieu of the technical jargon and higher mathematics of the professional economist. This books covers the creation of money and with it, its subjective value based on acceptance by the masses. He shows a stark comparison of gold and other forms of "money" as it was adopted by other countries and civilizations and how specifically gold had become the standard of many societies.
Rothbard explains the detrimental effects of the "Federal" "Reserve" and the affects it has on our economy. He also breaks down the creation of the "Fed" and the perpetrators of this deplorable organization. This is an excellent book for any layperson who is interested in understanding money's creation, fractional reserve banking, and the role the "Federal" "Reserve" plays in our economy. It is not a long book but is replete with great information and insight.
I was never "into" economics or really government insofar as I voted and toed the party line. However after stumbling on to Dr. Ron Paul and listening to his message, I realized that the "Fed" and the economics of this country play a paramount role in how we "behave" as a country. I have read some other authors recommended by Dr. Paul, Hayek, Mises, etc and this is my first step into Rothbard's work. I plan to continue to read his work since I enjoyed this one so much.
Rothbard explains the detrimental effects of the "Federal" "Reserve" and the affects it has on our economy. He also breaks down the creation of the "Fed" and the perpetrators of this deplorable organization. This is an excellent book for any layperson who is interested in understanding money's creation, fractional reserve banking, and the role the "Federal" "Reserve" plays in our economy. It is not a long book but is replete with great information and insight.
I was never "into" economics or really government insofar as I voted and toed the party line. However after stumbling on to Dr. Ron Paul and listening to his message, I realized that the "Fed" and the economics of this country play a paramount role in how we "behave" as a country. I have read some other authors recommended by Dr. Paul, Hayek, Mises, etc and this is my first step into Rothbard's work. I plan to continue to read his work since I enjoyed this one so much.
November 22, 2008
The most important thing I learned in this book is that the private ownership of the Federal Reserve is not the most interesting part of its sneakiness. It is the control and power which the Federal Reserve can exert by expanding and contracting credit at will - totally unregulated, that makes it so pernicious. The issuance of high-powered money (money at stage 1 of the inflation process) to the Fed's friends and families makes it terribly powerful.
One more interesting tidbit was the fact that Marriner Eccles (a latter-day saint) was part of the Rockefeller-led ousting in 1930s of the Morgan family who had principle control over the Fed initially. He also served as Chairman of the Fed from 1934 - 1948. Hm.
One more interesting tidbit was the fact that Marriner Eccles (a latter-day saint) was part of the Rockefeller-led ousting in 1930s of the Morgan family who had principle control over the Fed initially. He also served as Chairman of the Fed from 1934 - 1948. Hm.
July 28, 2013
Besides Ron Paul's similar stance on the issue, there is not many other books out there that present such a full, convincing, and scathing case against the Federal Reserve being the central bank in the U.S. and the undue influence it has over the economy, markets, and the actions people take on a daily basis.
The benevolence of the Fed is quickly laid 6 feet under and you will be caught thinking about the dollars you hold in your hand every time you go to the store. If you are interested in the markets, economy, money, or what the future has in store for the U.S. dollar, this is an absolute must read.
The benevolence of the Fed is quickly laid 6 feet under and you will be caught thinking about the dollars you hold in your hand every time you go to the store. If you are interested in the markets, economy, money, or what the future has in store for the U.S. dollar, this is an absolute must read.
April 14, 2010
Generally considered to be a classic introduction to Austrian economics, I highly recommend The Case Against The Fed as a starting point for those interested in the financial driving factors behind American boom/bust cycles. Note that while you can purchase a more convenient electronic copy of this book for a few dollars--which I recommend doing--you can also download it for free from the Ludwig von Mises Institute at http://mises.org.
November 20, 2008
Murray Rothbard gives a withering rebuke of the institution that may have more impact on our daily lives than any other in the country.
June 28, 2009
the first half of the book is very pertinent to our current economic situation and the second half exposes the in-bed-ness of industry and central banking.
Read
March 30, 2011Excellent. Just wish it covered the whole New Deal too, not jsut the beginnning few years!
September 24, 2017
Paranoid nonsense, but I promised I'd read it to expand my "scope of thinking" - a gold bug's wet dream.
February 1, 2026
It’s always interesting to read the theories and opinions of others and this is the work of a Murray Rothbard, a major figure of the Australian School of Economics and former head of the Mises Institute, a right-wing political party based in Alabama. According to chatGPT, Rothbard taught economics at a Brooklyn community college until the age of 40, and was domestic partner of one Joey Schumacher. When he was 60, amid allegations of racism , he fled New York and got a job at UNLV where he taught until his death from a heart attack while at Caesar's Palace 8 years later.
This pamphlet was published by that Institute in 1994, one year after GE Griffin of the John Birch Society had already published the much longer “Creature From Jekyll Island” book, from which most of the material in this book is lifted (without recognition). It also doesn't have good pictures like Griffin's book.
The premise is that the Federal Reserve bank was thrust upon the American people in 1913 by a consortium of bankers, who were trying to squash the competition of up-and-coming smaller banks, west of New York who were happy to make even less profits than the Morgans and Rockefellers. That the Fed enables the banks to continuously practice fractional banking without fear of being run-on, as new book reserves are always coming into the system, allowing commercial banks to “lend and extend” or roll over their bad loans to the point that we end up with Japanese-type zombie companies, stomping around, like drunken Godzillas, guzzling down real-resources which are ultimately provided by the gullible taxpayer-classes via the hidden "inflation tax".
When I go to take a loan from Wells Fargo to start up a new 'Dogecoin-long, JPY-short' hedge fund, lay people think that Wells Fargo takes Mr Smith's deposited green money out of Smith's savings account, and lends it to me at 8% interest, giving Smith 3% and keeping 5% for itself. What Wells actually does is this, in its accounting books:
debit $108,000 1 yr IOU from Smith (PV @ 8% $100,000 - collateralized by Yale MBA)
credit Smith check-writing ability up to the amount of $100,000
Voila, $100,000 has been created with the stroke of a pen. There is no green money ("Federal Reserve money") involved - Wells is giving Smith their "credit money" and Smith is giving Wells his promise to pay green money back with interest. He can, if he wishes, withdraw green money from its vault. Wells wouldn't like this, it will leave it with less "bank reserves" which will put upward pressure on the Fed Funds Rate. But the Fed will fix it soon enough - it will respond to this by creating more "base" money by putting its name on its money and using it to buy Treasury bonds from some dealer who got it off some bank. But most people don't use green money, they write checks - I write a $50k check to Smith and he now has Wells' promise to procure $50k green money should he want it. More likely he will deposit it with his bank (say BNYM) who will now have Wells' promise and ask Wells for green money. Then they settle in the clearinghouse, described a few paragraphs below.
Rothbard hates this Journal Entry money-creation trick.
This is nothing new, it is how banks have worked for centuries. Of course, JPMC won't create money for any old Boer, you have to have an Ivy League college degree to get a loan, which degree is come to be known by the word "collateral". Plebians can only get a loan to buy a house, which serves as collateral, should you get fired from your job. House prices only ever go up and also, banks can always sell their mortgages to Fannie Mae, so mortgages are a suitable form of collateral for ("invisible") note issue, or rather, checking-money issue. A dollar in a Wells Fargo checking account is like an American-style call option on a Federal Reserve Note with a strike price of zero, collateralized by the IOU of the customer who took out the loan. Rothbard doesn't quite understand this.
In Rothbard’s ideal world, the Fed would be liquidated. But in Rothbard’s mind, the way to liquidate it is simply to “cancel” the Fed’s assets (ie “cancel” its TBond holdings). Rothbard doesn’t say that the Tbonds should be sold into the open market for its notes and have the *Notes* (“green money”) cancelled. He would cancel these bonds and then revalue the gold upward by tenfold as discussed below.
Back in 1994, per figure 12 on p 147, the Fed held only $345 bn of TBonds. Today it holds $5 trillion of them (and other bonds of nearly $2 trillion).
Per Rothbard's Plan ("RP"), its paper money and Fed bank deposits (ie the Fed’s liabilities) would then be redeemed for its gold (260 million ounces is what Rothbard claims the Fed owns), putting gold back into the commercial banks’ vaults, and freezing base money. Base money would now consist of gold alone (no more Federal Reserve Notes or book entry deposit reserves). At the time Rothbard wrote, he says Fed liabilities were $404 billion but today they are (as mentioned above) closer to $7 trillion: $7 tn / 260 million oz would set a gold price of $26k / oz. Lucky you, Fox News viewer, you're going to get 10 fold richer on your gold holdings if the Australian School get their wish.
Side-Note: Rothbard’s plan would, at best, be highly disruptive to commerce, and at worst, cause an instant depression. At today's WORLD spot price of $2500, 260 m oz yields $650 billion worth of gold to cover $7 trillion worth of dollars issued, 11 fold too little. By cancelling the Fed's TBonds, Rothbard is cancelling the bulk of the Fed's assets, without reducing its liabilities (notes and book deposits with banks). So USD would collapse against other currencies of countries which did not do this plan. Put differently, the SPOT price in GBP may stick around GBP 2000 / oz, based on the supply of, and demand for, gold. Europeans would happily buy gold in London at GBP 2000 / oz, bring it to America and buy $26k worth of our shit, you pleb!
The RP would also inexorably lead to one major bank (say JPMC) accumulating all of the gold in its vault, and letting the banks just use the clearinghouse for offset (still doing the debit/credit trick described above: "Hey Citi sissy-boys, look what we have: $20 mil of your shitty checking claim-money, send $20 m gold to 270 Park Avenue". "Joke's on you, JPMC trannies, we have $22 mil of YOUR shitty checking claim-money - send $2 m gold coin money to your mom's house asap, Thx, lol". "Lol, k, we'll owe you, here's a draft on us, k?". "K".).
Rothbard actually goes further than insisting on convertibility, he sought to *outlaw* fractional banking (much like Irving Fisher’s 100% Money book, but with no central authority inflating base money), hence we would have never ending price deflation. The government would punish bankers who did the debit/credit trick. That is, he would have the government enforce 100% reserve banking, which he considered to be the most libertarian policy imaginable (?)
The main episode of 100% reserve banking that I know of was the old Bank of Amsterdam in the 1600s which operated like a charm, but was certainly a central bank. A 100% system would actually work better if everyone had an account with the Fed and there were no private banks.
Enough of the background and theory, lets get to the pitfalls of this plan:
1. Bankers such as Jamie Dimon who are accustomed to $30m / year salaries + bonus for a job well done, would suddenly find it much more difficult to get compensated fairly, because banks make money by creating it and lending it at interest. If they are constrained to only lending credit-money *convertible into coin*, or worse, only lending from *savings deposits*, their profits would be far less, which is unfair on the banker and bank shareholders. The reason all the tallest buildings in your nearest metropolis are banks, is because that is the way God designed it. For bankers to mint themselves money and underwrite our existence. It is also very dangerous for the populace to suddenly find themselves getting more bang for their buck , - the reasons are far too numerous to list in this book review.
2. Wall Street, also, depends on ever inflating base money so they can “lever up” and float the tide of the inevitable bull market, caused by an increasing money supply (more money =- higher stock prices. Higher stock prices act as collateral for more leverage... &etc). This is how Wall Street and Lombardy street have worked for hundreds of years, and it simply isn’t fair on these folks to take away their “fuel”. Implementing the RP would be like a forced default on a Harvard MBA degree or a CFA certificate. Those people earned the right.
3. The “entrepreneur” function would be shifted from the bourgeoisie intelligentsia banker (most of who are America’s finest - from the Ivys and MIT), -- who is presently able to underwrite whatever project his enlightened mind sees fit (without fear of default, since he knows bank reserves are on the way), -- to the “invisible hand” which is guided by profit motives only. Thus, we would live in a world where the consumer got what he wanted, rather than what is good for him. Important programs such as Diversity, Equity and Inclusion and Green Energy would quickly lose funding and important scholars such as Greta would fade into irrelevance. No one wants to see that.
4. The entire foundation of MMT rests upon the Fed creating limitless money to finance important government programs like building prisons for blacks and Hispanics, making weapons, curing Africa, eliminating warm weather, hiring good politician-folks and finding new drugs to keep us happy. With no Fed, the government would not be able to get this limitless money ...and important and enlightened people like Ilhan Abdullahi Omar, who worked hard in life to get to be where she is, would be thrown into the savage capitalist labor market. In other words, she would have to get a normal job and her only other career experience is “nutrition educator”. That doesn't sound fair.
5. In Rothbard’s ideal world, there just wouldn’t be enough laws. Lawyers and judges would quickly find that they had a lack of supply of clientele. That’s not fair either. They would spend all their time prosecuting bankers. According to chatGPT, there also wouldn't be any people of color in Rothbard's ideal world.
In summary, Rothbard would rob the productive members of society and gift the grubby working classes (with their inferior college degrees).
To conclude, it would be an interesting experiment, but just sounds like too much disruption and too much hard work and it's not equitable. If things are unstable, the John Exter pyramid will take the place of Rothbard’s dreams naturally. Or, we will end up with Klaus Schwab which would be a much happier and more enlightened outcome.
https://cdn.mises.org/The%20Case%20Ag...
This pamphlet was published by that Institute in 1994, one year after GE Griffin of the John Birch Society had already published the much longer “Creature From Jekyll Island” book, from which most of the material in this book is lifted (without recognition). It also doesn't have good pictures like Griffin's book.
The premise is that the Federal Reserve bank was thrust upon the American people in 1913 by a consortium of bankers, who were trying to squash the competition of up-and-coming smaller banks, west of New York who were happy to make even less profits than the Morgans and Rockefellers. That the Fed enables the banks to continuously practice fractional banking without fear of being run-on, as new book reserves are always coming into the system, allowing commercial banks to “lend and extend” or roll over their bad loans to the point that we end up with Japanese-type zombie companies, stomping around, like drunken Godzillas, guzzling down real-resources which are ultimately provided by the gullible taxpayer-classes via the hidden "inflation tax".
When I go to take a loan from Wells Fargo to start up a new 'Dogecoin-long, JPY-short' hedge fund, lay people think that Wells Fargo takes Mr Smith's deposited green money out of Smith's savings account, and lends it to me at 8% interest, giving Smith 3% and keeping 5% for itself. What Wells actually does is this, in its accounting books:
debit $108,000 1 yr IOU from Smith (PV @ 8% $100,000 - collateralized by Yale MBA)
credit Smith check-writing ability up to the amount of $100,000
Voila, $100,000 has been created with the stroke of a pen. There is no green money ("Federal Reserve money") involved - Wells is giving Smith their "credit money" and Smith is giving Wells his promise to pay green money back with interest. He can, if he wishes, withdraw green money from its vault. Wells wouldn't like this, it will leave it with less "bank reserves" which will put upward pressure on the Fed Funds Rate. But the Fed will fix it soon enough - it will respond to this by creating more "base" money by putting its name on its money and using it to buy Treasury bonds from some dealer who got it off some bank. But most people don't use green money, they write checks - I write a $50k check to Smith and he now has Wells' promise to procure $50k green money should he want it. More likely he will deposit it with his bank (say BNYM) who will now have Wells' promise and ask Wells for green money. Then they settle in the clearinghouse, described a few paragraphs below.
Rothbard hates this Journal Entry money-creation trick.
This is nothing new, it is how banks have worked for centuries. Of course, JPMC won't create money for any old Boer, you have to have an Ivy League college degree to get a loan, which degree is come to be known by the word "collateral". Plebians can only get a loan to buy a house, which serves as collateral, should you get fired from your job. House prices only ever go up and also, banks can always sell their mortgages to Fannie Mae, so mortgages are a suitable form of collateral for ("invisible") note issue, or rather, checking-money issue. A dollar in a Wells Fargo checking account is like an American-style call option on a Federal Reserve Note with a strike price of zero, collateralized by the IOU of the customer who took out the loan. Rothbard doesn't quite understand this.
In Rothbard’s ideal world, the Fed would be liquidated. But in Rothbard’s mind, the way to liquidate it is simply to “cancel” the Fed’s assets (ie “cancel” its TBond holdings). Rothbard doesn’t say that the Tbonds should be sold into the open market for its notes and have the *Notes* (“green money”) cancelled. He would cancel these bonds and then revalue the gold upward by tenfold as discussed below.
Back in 1994, per figure 12 on p 147, the Fed held only $345 bn of TBonds. Today it holds $5 trillion of them (and other bonds of nearly $2 trillion).
Per Rothbard's Plan ("RP"), its paper money and Fed bank deposits (ie the Fed’s liabilities) would then be redeemed for its gold (260 million ounces is what Rothbard claims the Fed owns), putting gold back into the commercial banks’ vaults, and freezing base money. Base money would now consist of gold alone (no more Federal Reserve Notes or book entry deposit reserves). At the time Rothbard wrote, he says Fed liabilities were $404 billion but today they are (as mentioned above) closer to $7 trillion: $7 tn / 260 million oz would set a gold price of $26k / oz. Lucky you, Fox News viewer, you're going to get 10 fold richer on your gold holdings if the Australian School get their wish.
Side-Note: Rothbard’s plan would, at best, be highly disruptive to commerce, and at worst, cause an instant depression. At today's WORLD spot price of $2500, 260 m oz yields $650 billion worth of gold to cover $7 trillion worth of dollars issued, 11 fold too little. By cancelling the Fed's TBonds, Rothbard is cancelling the bulk of the Fed's assets, without reducing its liabilities (notes and book deposits with banks). So USD would collapse against other currencies of countries which did not do this plan. Put differently, the SPOT price in GBP may stick around GBP 2000 / oz, based on the supply of, and demand for, gold. Europeans would happily buy gold in London at GBP 2000 / oz, bring it to America and buy $26k worth of our shit, you pleb!
The RP would also inexorably lead to one major bank (say JPMC) accumulating all of the gold in its vault, and letting the banks just use the clearinghouse for offset (still doing the debit/credit trick described above: "Hey Citi sissy-boys, look what we have: $20 mil of your shitty checking claim-money, send $20 m gold to 270 Park Avenue". "Joke's on you, JPMC trannies, we have $22 mil of YOUR shitty checking claim-money - send $2 m gold coin money to your mom's house asap, Thx, lol". "Lol, k, we'll owe you, here's a draft on us, k?". "K".).
Rothbard actually goes further than insisting on convertibility, he sought to *outlaw* fractional banking (much like Irving Fisher’s 100% Money book, but with no central authority inflating base money), hence we would have never ending price deflation. The government would punish bankers who did the debit/credit trick. That is, he would have the government enforce 100% reserve banking, which he considered to be the most libertarian policy imaginable (?)
The main episode of 100% reserve banking that I know of was the old Bank of Amsterdam in the 1600s which operated like a charm, but was certainly a central bank. A 100% system would actually work better if everyone had an account with the Fed and there were no private banks.
Enough of the background and theory, lets get to the pitfalls of this plan:
1. Bankers such as Jamie Dimon who are accustomed to $30m / year salaries + bonus for a job well done, would suddenly find it much more difficult to get compensated fairly, because banks make money by creating it and lending it at interest. If they are constrained to only lending credit-money *convertible into coin*, or worse, only lending from *savings deposits*, their profits would be far less, which is unfair on the banker and bank shareholders. The reason all the tallest buildings in your nearest metropolis are banks, is because that is the way God designed it. For bankers to mint themselves money and underwrite our existence. It is also very dangerous for the populace to suddenly find themselves getting more bang for their buck , - the reasons are far too numerous to list in this book review.
2. Wall Street, also, depends on ever inflating base money so they can “lever up” and float the tide of the inevitable bull market, caused by an increasing money supply (more money =- higher stock prices. Higher stock prices act as collateral for more leverage... &etc). This is how Wall Street and Lombardy street have worked for hundreds of years, and it simply isn’t fair on these folks to take away their “fuel”. Implementing the RP would be like a forced default on a Harvard MBA degree or a CFA certificate. Those people earned the right.
3. The “entrepreneur” function would be shifted from the bourgeoisie intelligentsia banker (most of who are America’s finest - from the Ivys and MIT), -- who is presently able to underwrite whatever project his enlightened mind sees fit (without fear of default, since he knows bank reserves are on the way), -- to the “invisible hand” which is guided by profit motives only. Thus, we would live in a world where the consumer got what he wanted, rather than what is good for him. Important programs such as Diversity, Equity and Inclusion and Green Energy would quickly lose funding and important scholars such as Greta would fade into irrelevance. No one wants to see that.
4. The entire foundation of MMT rests upon the Fed creating limitless money to finance important government programs like building prisons for blacks and Hispanics, making weapons, curing Africa, eliminating warm weather, hiring good politician-folks and finding new drugs to keep us happy. With no Fed, the government would not be able to get this limitless money ...and important and enlightened people like Ilhan Abdullahi Omar, who worked hard in life to get to be where she is, would be thrown into the savage capitalist labor market. In other words, she would have to get a normal job and her only other career experience is “nutrition educator”. That doesn't sound fair.
5. In Rothbard’s ideal world, there just wouldn’t be enough laws. Lawyers and judges would quickly find that they had a lack of supply of clientele. That’s not fair either. They would spend all their time prosecuting bankers. According to chatGPT, there also wouldn't be any people of color in Rothbard's ideal world.
In summary, Rothbard would rob the productive members of society and gift the grubby working classes (with their inferior college degrees).
To conclude, it would be an interesting experiment, but just sounds like too much disruption and too much hard work and it's not equitable. If things are unstable, the John Exter pyramid will take the place of Rothbard’s dreams naturally. Or, we will end up with Klaus Schwab which would be a much happier and more enlightened outcome.
https://cdn.mises.org/The%20Case%20Ag...
December 21, 2021
The book starts off strong with a clear description of the genesis of money starting from barter and money-commodities, the mechanism of monetary inflation via the money multiplier effect embedded in fractional-reserve banking, the concept of bank reserves etc. The author presents credit expansion as legalized counterfeiting which dilutes the value of previous money and redistributes wealth to the new owners. He compares banking to warehousing of other goods, fungible or infungible, to argue that money multiplication in the form of credit is embezzlement. He lampoons the notion that central bankers are "inflation hawks" when they are the ones creating price inflation via monetary inflation. He does so in very clear terms and it's hard not to agree with him or at least understand his perspective.
He then covers the events that led to the creation of the Federal Reserve system, spending most of the time writing about events before it, not after. Unfortunately, this section of the book contains a lot of name dropping of little meaning, while staying light on the details and effects.
At one point, the author introduces the idea of cartelization of each industry by their leading players, with the central bank being the cartel coordinator for banking. He compares this to similar regulations in other industries, including the Meat Inspection Act in meat processing. He frames it as the leading industry players intentionally lobbying the government for introduction of additional regulation which would make it more difficult for smaller companies to compete due to additional costs. Seeing the author frame the Meat Inspection Act, which actually raised the meat processing standards in the US and was overall a very desirable introduction, as this very elaborate con made me realize that the author is very one-sided and that he won't present both the pros and cons of the Fed and central banking in a balanced way.
The book covers the events leading to the creation of the Fed well (albeit one-sidedly), but is very skimp on the post-creation events, especially how the Fed fared through the Great Depression, the Bretton Woods era and the official ending of the gold standard in 1971.
To end the book, the author suggests simply liquidating the Fed and returning to the gold standard for commercial banking, as a precursor to the more ambitious goal of total abolishment of fractional-reserve banking in general. Here again, he does not go into great detail into what the effects of this reform could be.
All in all, a short, clearly-written book with great explanation of basic monetary concepts, but suffering from great bias and a lack of detail.
He then covers the events that led to the creation of the Federal Reserve system, spending most of the time writing about events before it, not after. Unfortunately, this section of the book contains a lot of name dropping of little meaning, while staying light on the details and effects.
At one point, the author introduces the idea of cartelization of each industry by their leading players, with the central bank being the cartel coordinator for banking. He compares this to similar regulations in other industries, including the Meat Inspection Act in meat processing. He frames it as the leading industry players intentionally lobbying the government for introduction of additional regulation which would make it more difficult for smaller companies to compete due to additional costs. Seeing the author frame the Meat Inspection Act, which actually raised the meat processing standards in the US and was overall a very desirable introduction, as this very elaborate con made me realize that the author is very one-sided and that he won't present both the pros and cons of the Fed and central banking in a balanced way.
The book covers the events leading to the creation of the Fed well (albeit one-sidedly), but is very skimp on the post-creation events, especially how the Fed fared through the Great Depression, the Bretton Woods era and the official ending of the gold standard in 1971.
To end the book, the author suggests simply liquidating the Fed and returning to the gold standard for commercial banking, as a precursor to the more ambitious goal of total abolishment of fractional-reserve banking in general. Here again, he does not go into great detail into what the effects of this reform could be.
All in all, a short, clearly-written book with great explanation of basic monetary concepts, but suffering from great bias and a lack of detail.
January 24, 2026
I had serious doubts about the author's stance even before reading this book. My view of the Fed is quite simple: A) a body that (effectively) sets interest rates must be as seperate as possible from political influence. This is literally a foundational principle of our financial system. B) A strong LOLR (lender of last resort) is essential to lessen the impacts of devastating financial crises.
Rothbard argues not necessarily against the Fed, but more-so against fractional reserve banking as a "fraudulent" practice. Basically, he argues that we should have a 100% reserve requirement, all backed entirely by gold. I think this is misguided for a multitude of reasons which are much too long to discuss here. But I will say that the idea of financial crises / societal crises like the 2008 financial crisis and COVID would have been significantly worse, perhaps great depression level financial events, had the Fed not been able to rapidly expand the money supply.
The part of this book that I found more interesting was his discussion surrounding the origins of the Fed, which are steeped in private influence. During the Progressive Era the government regulated many major industries, including banking. I am a believer of the power of markets, though I think they should have significant regulations for consumer protection. One factor that I often fail to consider is that the companies being regulated are often those who are actually pushing for the regulation. Enterprise growth is as much an exercise in risk management as it is in bare-knuckle capitalism or product development. If I am say, a monopolistic company, perhaps the best way to avoid future, crushing regulation is the willingly--and perhaps enthusiastically--submit to lesser regulations now. If I enthusiastically engage in the regulation process I can create a mickey mouse legal framework. It seems to law-makers and the public like my power has been reduced, when really the legislation that I just pushed for entrenches my monopoly and powers through clever carveouts and blanket regulations that disproportionately impact smaller companies. This is an effective way to reduce the risk of crushing regulations down the line.
Rothbard argues that the Fed was a product of bankers doing the same thing as my example. In this case, he seems to be correct that bankers played a great role. I don't really take issue with that. I believe the Fed today is overwhelmingly beneficial for the global economy. To have a body that is independant (as much as possible) from the legislative and executive branches is key in ensuring that monetary policy does not become a political tool. And, as I mentioned earlier, we absolutely need a LOLR to lessen the burden of financial crises. I am tempted to work through my thoughts on the actual economic mechanisms here, but I do not feel like typing it out at length.
This was an interesting read, and I would recommend it to those who are interested in arguements agains the Fed, despite not buying it myself.
Rothbard argues not necessarily against the Fed, but more-so against fractional reserve banking as a "fraudulent" practice. Basically, he argues that we should have a 100% reserve requirement, all backed entirely by gold. I think this is misguided for a multitude of reasons which are much too long to discuss here. But I will say that the idea of financial crises / societal crises like the 2008 financial crisis and COVID would have been significantly worse, perhaps great depression level financial events, had the Fed not been able to rapidly expand the money supply.
The part of this book that I found more interesting was his discussion surrounding the origins of the Fed, which are steeped in private influence. During the Progressive Era the government regulated many major industries, including banking. I am a believer of the power of markets, though I think they should have significant regulations for consumer protection. One factor that I often fail to consider is that the companies being regulated are often those who are actually pushing for the regulation. Enterprise growth is as much an exercise in risk management as it is in bare-knuckle capitalism or product development. If I am say, a monopolistic company, perhaps the best way to avoid future, crushing regulation is the willingly--and perhaps enthusiastically--submit to lesser regulations now. If I enthusiastically engage in the regulation process I can create a mickey mouse legal framework. It seems to law-makers and the public like my power has been reduced, when really the legislation that I just pushed for entrenches my monopoly and powers through clever carveouts and blanket regulations that disproportionately impact smaller companies. This is an effective way to reduce the risk of crushing regulations down the line.
Rothbard argues that the Fed was a product of bankers doing the same thing as my example. In this case, he seems to be correct that bankers played a great role. I don't really take issue with that. I believe the Fed today is overwhelmingly beneficial for the global economy. To have a body that is independant (as much as possible) from the legislative and executive branches is key in ensuring that monetary policy does not become a political tool. And, as I mentioned earlier, we absolutely need a LOLR to lessen the burden of financial crises. I am tempted to work through my thoughts on the actual economic mechanisms here, but I do not feel like typing it out at length.
This was an interesting read, and I would recommend it to those who are interested in arguements agains the Fed, despite not buying it myself.
April 22, 2025
“The Case Against the Fed” by Murray Rothbard is a deceptively brief yet profoundly dense exploration of monetary policy and the Federal Reserve System. This is a book that demands careful attention, especially for those new to economic theory.
I like that Rothbard uses practical, and historical examples to clarify complex economic concepts. One of his central arguments is that inflation, fundamentally caused by government-sanctioned counterfeiting—his provocative but effective term—erodes the value of currency. He emphasizes that historically, productivity gains consistently outpaced the limited supply of gold, naturally leading to stable or falling prices. However, when governments replaced gold with easily printed paper currency, they inevitably succumbed to inflationary practices.
A significant portion of the book is about fractional reserve banking, which Rothbard critiques as a far more insidious form of inflation. He argues that this practice encourages excessive credit lending, benefiting banks initially but ultimately inflating the money supply and subtly taxing the public.
Rothbard further outlines how central banks, particularly the Federal Reserve, are primarily designed to stabilize the banking cartel through steady artificial credit expansion. He describes this as creating a double inverted pyramid with the Fed at the base containing a small amount of reserves and commercial banks being able to expand on top of these reserves with a 10:1 credit expansion ratio.
The historical context provided is exceptional, tracing central banking from its early roots through significant events, including the Progressive Era, the establishment of the Federal Reserve in 1913, and its restructuring during the New Deal. Rothbard connects these developments to larger ideological shifts driven by influential financial groups like Morgan and Rockefeller.
Ultimately, Rothbard concludes with a bold recommendation: dismantle the Federal Reserve entirely, revalue gold significantly to address public debt, and revert to a decentralized banking system reminiscent of the pre-Civil War era. This book is a potent read for anyone interested in understanding the deeper mechanics behind central banking, regardless of whether one fully agrees with Rothbard’s libertarian conclusions.
I like that Rothbard uses practical, and historical examples to clarify complex economic concepts. One of his central arguments is that inflation, fundamentally caused by government-sanctioned counterfeiting—his provocative but effective term—erodes the value of currency. He emphasizes that historically, productivity gains consistently outpaced the limited supply of gold, naturally leading to stable or falling prices. However, when governments replaced gold with easily printed paper currency, they inevitably succumbed to inflationary practices.
A significant portion of the book is about fractional reserve banking, which Rothbard critiques as a far more insidious form of inflation. He argues that this practice encourages excessive credit lending, benefiting banks initially but ultimately inflating the money supply and subtly taxing the public.
Rothbard further outlines how central banks, particularly the Federal Reserve, are primarily designed to stabilize the banking cartel through steady artificial credit expansion. He describes this as creating a double inverted pyramid with the Fed at the base containing a small amount of reserves and commercial banks being able to expand on top of these reserves with a 10:1 credit expansion ratio.
The historical context provided is exceptional, tracing central banking from its early roots through significant events, including the Progressive Era, the establishment of the Federal Reserve in 1913, and its restructuring during the New Deal. Rothbard connects these developments to larger ideological shifts driven by influential financial groups like Morgan and Rockefeller.
Ultimately, Rothbard concludes with a bold recommendation: dismantle the Federal Reserve entirely, revalue gold significantly to address public debt, and revert to a decentralized banking system reminiscent of the pre-Civil War era. This book is a potent read for anyone interested in understanding the deeper mechanics behind central banking, regardless of whether one fully agrees with Rothbard’s libertarian conclusions.
June 13, 2021
Rothbard starts by giving a history lesson on the origins of the Fed. Powerful banking elite in the US ,many connected by business and intermarriage , decided the country needed a central bank. After decades of political manoeuvres a central powerful bank called the Fed Reserve was created and passed into law late Dec 1913.
It was given the power to create money it was independent of government interference and it was controlled by a cabal of wealthy businessmen and banking families.
A move slowly away from the gold standard was a long time in planning with its final stage in 1973 after this date money is backed by faith in the Fed and government alone .
Rothbard teaches us about the basics of fractional lending and how it can be used to increase or decrease money supply. Depending on the banks deposit requirements , it decides how much a bank can lend say 1 to 5 or 1 to 20. The higher amount inducing inflation. Raising a banks requirements tightens market liquidity.
The Fed is able to write itself a cheque then buy bonds on market and park this created money in the commercial banking sector .
This allows banks to lend out new money using the fractional lending principal .
Rothbard suggests abolishing the Fed and moving back to the gold standard so as to remove the boom and bust cycles he says the Fed creates by increasing or reducing money supply by buying or selling bonds. Of course interest rates are also controlled by the Fed. Gold should be revalued up to reflect the debt the Fed holds .
An interesting read that all should do.
It was given the power to create money it was independent of government interference and it was controlled by a cabal of wealthy businessmen and banking families.
A move slowly away from the gold standard was a long time in planning with its final stage in 1973 after this date money is backed by faith in the Fed and government alone .
Rothbard teaches us about the basics of fractional lending and how it can be used to increase or decrease money supply. Depending on the banks deposit requirements , it decides how much a bank can lend say 1 to 5 or 1 to 20. The higher amount inducing inflation. Raising a banks requirements tightens market liquidity.
The Fed is able to write itself a cheque then buy bonds on market and park this created money in the commercial banking sector .
This allows banks to lend out new money using the fractional lending principal .
Rothbard suggests abolishing the Fed and moving back to the gold standard so as to remove the boom and bust cycles he says the Fed creates by increasing or reducing money supply by buying or selling bonds. Of course interest rates are also controlled by the Fed. Gold should be revalued up to reflect the debt the Fed holds .
An interesting read that all should do.
May 8, 2023
Interesting read. Strangely as I've gotten older, I've become more convinced that both:
1. Many additional evils follow-on from having a fiat monetary system, and a fractional-reserve banking system, with the permanent inflation that follows from the above (and the human incentives created in a permanent inflation environment).
2. But at the same time, inflation *isn't* just about money printing, but is be caused by spikes in demand independent of currency issuance, etc.
This book would be most valuable for someone who had NEVER yet considered the Federal Reserve, fiat money, and fractional reserve banking... but I still enjoyed it.
Some nice comments at the beginning about the problems in trying to make government agencies "independent of politics"... he's talking about the Fed, but by golly you could apply all of that to our out-of-control public health agencies today, which also like to fancy themselves "just following the science, independent of politics".
The history shared in the book is a good reminder that progressive politicians pretending to be anti-big-business, while actually working with and for big business, has been the situation for a good century now. Impressive how long you can keep running the same scam.
1. Many additional evils follow-on from having a fiat monetary system, and a fractional-reserve banking system, with the permanent inflation that follows from the above (and the human incentives created in a permanent inflation environment).
2. But at the same time, inflation *isn't* just about money printing, but is be caused by spikes in demand independent of currency issuance, etc.
This book would be most valuable for someone who had NEVER yet considered the Federal Reserve, fiat money, and fractional reserve banking... but I still enjoyed it.
Some nice comments at the beginning about the problems in trying to make government agencies "independent of politics"... he's talking about the Fed, but by golly you could apply all of that to our out-of-control public health agencies today, which also like to fancy themselves "just following the science, independent of politics".
The history shared in the book is a good reminder that progressive politicians pretending to be anti-big-business, while actually working with and for big business, has been the situation for a good century now. Impressive how long you can keep running the same scam.
August 23, 2024
Murray Rothbard's The Case Against the Fed presents a compelling economic critique of the Federal Reserve, earning a solid 4 out of 5 stars. Rothbard effectively dismantles the Fed's role in the U.S. financial system, arguing that it serves as an instrument of inflation and financial instability rather than as a stabilizing force. His analysis is both thorough and instructive, making complex economic concepts accessible to readers. Rothbard's strength lies in his clear, logical exposition of economic theory, making this book an essential read for those interested in understanding the intricacies of monetary policy.
However, the book falls short when it ventures into historical narrative. Rothbard's treatment of the historical evolution of the Federal Reserve feels lackluster and tedious, lacking the engaging quality that a deeper historical analysis could provide. The prose, while serviceable, lacks the richness that could have made the historical sections more compelling. It is clear that Rothbard's expertise shines brightest in economic analysis rather than in historical storytelling. Nonetheless, The Case Against the Fed remains a valuable resource for its insightful economic perspective, even if its historical recounting leaves something to be desired.
However, the book falls short when it ventures into historical narrative. Rothbard's treatment of the historical evolution of the Federal Reserve feels lackluster and tedious, lacking the engaging quality that a deeper historical analysis could provide. The prose, while serviceable, lacks the richness that could have made the historical sections more compelling. It is clear that Rothbard's expertise shines brightest in economic analysis rather than in historical storytelling. Nonetheless, The Case Against the Fed remains a valuable resource for its insightful economic perspective, even if its historical recounting leaves something to be desired.
January 2, 2024
Neste livro pequeno, mas abarrotado de informações, Rothbard faz suas corretas alegações pelo fim do banco central, como instituição cartelizadora de bancos e monopolista da falsificação de dinheiro, e principal responsável pela inflação.
Rothbard expõe a natureza dos empréstimos bancários e a prática da reserva fracionária, apontando como isso leva a uma redistribuição de riqueza injusta e distorções de mercado. Ele afirma que o sistema bancário de reserva fracionária é fundamentalmente instável e propenso a crises financeiras.
Pincela a história dos bancos centrais e o lobby dos Morgan para sua criação, e também o histórico dos atos de governo que foram sucessivamente concentrando o sistema financeiro americano, enfatizando o papel do FED na expansão do crédito e na criação de ciclos econômicos.
Rothbard conclui que a solução para a inflação crônica e os ciclos econômicos destrutivos não está em um banco central independente, mas na ausência de um banco central, propondo o retorno ao padrão-ouro e a abolição do Federal Reserve, visando um sistema monetário mais sólido e estável.
Tempo estimado de leitura: 5 horas
Rothbard expõe a natureza dos empréstimos bancários e a prática da reserva fracionária, apontando como isso leva a uma redistribuição de riqueza injusta e distorções de mercado. Ele afirma que o sistema bancário de reserva fracionária é fundamentalmente instável e propenso a crises financeiras.
Pincela a história dos bancos centrais e o lobby dos Morgan para sua criação, e também o histórico dos atos de governo que foram sucessivamente concentrando o sistema financeiro americano, enfatizando o papel do FED na expansão do crédito e na criação de ciclos econômicos.
Rothbard conclui que a solução para a inflação crônica e os ciclos econômicos destrutivos não está em um banco central independente, mas na ausência de um banco central, propondo o retorno ao padrão-ouro e a abolição do Federal Reserve, visando um sistema monetário mais sólido e estável.
Tempo estimado de leitura: 5 horas
July 19, 2019
The cardinal strength of this book lay in the former half: a wonderfully edifying instruction on the nature of money, banking, and fractional reserve banking. The latter half rather slipped off its feet on the ascent the book was making and tumbled a bit. While spelling out the machinations involved in the advent of the Fed, I recall thinking to myself the author and reader were involved in a game of how many degrees of separation are there between central bank apologists and /or Fed officials and the financial oligarchs of the era.
June 2, 2025
Should be Compulsory Reading in Schools around the Country
In addition to the historical background for the Fed and the technical processes underpinning Fed operations, this book was a text book lesson in how powerful interests have preyed on fear and ignorance of the general population to manipulate and deceive them dating back over a century. They are relentless. Once their exploitative systems are in place, any criticism is labelled conspiracy. Once done, next to impossible to undo.
In addition to the historical background for the Fed and the technical processes underpinning Fed operations, this book was a text book lesson in how powerful interests have preyed on fear and ignorance of the general population to manipulate and deceive them dating back over a century. They are relentless. Once their exploitative systems are in place, any criticism is labelled conspiracy. Once done, next to impossible to undo.
August 28, 2022
Informative even if this book is old. The first 50 pages or so explain fractional banking, then you get the history of how the fed came to be, and why and by that point you see the pros and cons. Worth a read in my opinion. It’s short too. I’ll probably check out one of his more recent books on the subject for his latest take on things.
June 8, 2019
A must read book to understand the reason d’être of the Fed and how it operates and has been operating for almost a century. Important wake up call to distrust financial institutions and to carefully plan investment and wealth management decisions.
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