Money Mischief: Episodes in Monetary History

By "challenging" I do not mean that this book challenged my beliefs or that I disagreed with it; I mean that I found parts of chapters 2 and 3 hard to understand at first and had to re-read them before I felt I was on solid ground. This is not a first book on Economics; it's a serious treatise on monetary theory and history. Chapter 4 is a technical "what if" scenario looking back at our silver policy; some readers may want to skip it, as the author suggests. I found later chapters perfectly understandable. (For an easier read on general Economics I recommend Basic Economics 4th Ed: A Common Sense Guide to the Economy (excellent!) and From Here to Economy: A Shortcut to Economic Literacy --those books have no equations or charts. They are for everybody, as their titles suggest.) I learned a lot, a great feeling. This also reinforced things I learned from Basic Economics . If you decide that you can't "hang in there," I urge you to at least include the brilliant five-page epilogue in your reading before giving up; it should be within the grasp of most readers. Just as shortages and surpluses are always price phenomena, "Inflation is always and everywhere a monetary phenomenon." We've known that for over a thousand years. So why do authorities keep bungling monetary policy? See the epilogue.

Many of Milton Friedman's previous books, especially "Free to Choose" are aimed at a popular audience, supporting the cause for freedom in many different aspects of society. With it, this book shares the brilliance and throughness of thought employed by Friedman, perhaps the most well known (if not the best) economist of the 2nd half of the 20th century. In "Money Mischief" Friedman enters the realm of monetary economics, briefly telling a history of the different systems that have been employed through history for value conservation. Aside from perhpas the first 100 pages, the rest of the book relies on some notion of monetary economics and international trade and finance. Most of the book is devoted to the study of the old metallic or bimetallic standards and the early days of the fiat money system (the one most used today). An experienced economist will recognize the brilliance of the arguments linkings seemingly unrelated events such as the US elections in 1892 and the fall of the Chiang Kai-shek government in China (believe me, Friedman convinced me they were directly linked). For a non-economist, the first one hundred pages may tell a brief history of money, so if that is your interest, stop there. Experienced economists will definitely enjoy the suddle linkages of events, such as deflations and the California gold rush and the development of the cyanide process for extracting gold. The book is aimed at a more knowledgeable crowd; with such an aim, it achieves its objective brilliantly.

In his best selling study, Robert L. Heilbroner calls Economists 'The worldly philosophers'. That description certainly captures what Milton Friedman does in this book - he takes the seemingly simple concept of money, the unit of exchange we use daily and rarely reflect upon, and demonstrates how complicated the issues regarding it are. (As an interesting aside, Heilbroner's original title for his book was 'the money philosophers' - a definition that fits Friedman in this book even better then his chosen title, even if it is too narrow to account for all of economics). More then half of this collection of essays is about the so-called 'Crime of 1873' - America's decision, following the issuance of fiat money (that is, money irredeemable in specie) during the Civil War, to peg the dollar not to both silver and gold, but to gold alone. This seemingly arcane and academic topic was a major political issue in the 1880s and 90s, climaxing with the nomination of the silver Democrat, William Jennings Bryan to the presidency of the United States in 1896. As the Unites States, along with most other 19th century nations such as Germany and France, followed Great Britain in adopting the gold standard, the price of gold rose in terms of other resources, so prices went down. Therefore there was a severe deflation causing much unrest and discontent. The cure to the deflation came not through political or monetary means, however, but because of an invention of a method to extract gold from low grade ore. This increased the supply of gold, lowered its prices. Hence stopping the deflation, and killing the presidential ambitions of William Jennings Bryan. The rest of the book describes various issues, from FDR's decision to 'help silver' which helped Communism in China instead (by increasing the cost of silver, overvaluing the Chinese currency and thus hurting Chinese exports and undermining the Chinese economy), to the policy of pegging a currency to the dollar (not a good idea as it subjects the country to the whims of the world economy. The policy was a grave failure to Chile and a great success to Israel, due entirely to external changes in the value of the dollar). The theme of the later parts of the book is undoubtedly inflation. Friedman demonstrates his claim that inflation is "always and everywhere a monetary phenomenon" (p.104). Inflation is caused by government increasing the money supply, although one time price increases may be caused by unfortunate outside events (like Arabs reduction of the exportation of oil in the early 1979s). Although Friedman is well known as an economic right winger, there is nothing in this account that should be displeasing to anyone from the left - Friedman's case is against mismanagement, not for small or big governments. Nor is there any argument about whether government spending should go to the military, to welfare, or to any other cause. Although Friedman's book is filled with stories of the political economy, its moral is politically neutral. Indeed, Friedman clearly discusses how inflation is often used by governments because direct taxation is unpopular (p.205) - can you say "read my lips, no new taxes"? Furthermore, the economic analysis of some reviewers in Amazon is shaky. Friedman writes "all these adjustments [the negative effects of inflation] are set in motion by changes in the rates of monetary growth and inflation. If monetary growth was high but steady... the economy would adjust to it. ... Such an inflation would do no great harm " (p.222). Although Friedman does not like inflation, he actually makes a case for it, at least at a low single digit level. Since people are usually sellers of few things and purchasers of many, they are more aware of the increase in the price of the commodity they sell then they are of the increase of general prices, especially when those changes are low. People like to see their income go up, as they feel it is a just reward for their efforts (p. 70). 'Money Mischief' is an interesting, challenging book. Its chapters vary from the extremely technical and difficult, (notably chapter 4, a counter-factual exercise estimating the effect of continuing bimetallism after 1873), to 'pop economics' chapters which are no less enlightening and easier to read. The book ends with a discussion of the new experiment started in the 1970s - currency which is entirely unredeemable by any kind of good. Earlier economists thought that this was impossible, and would necessarily lead to high inflation, but Friedman is optimistic - he believes that aware and well informed public and decision makers can pressure the government against unduly increasing the money supply. Thus, widespread understanding of economics is the real cure for inflation.

This book from Milton Friedman is the first one I read from him, although I've watched a lot of videos at youtube and other online channels with him. The monetary things are explained in his simple and clear style and while reading I get insights about things that were very messed up in my head before that. Highly recommend for general understanding of the problems of today's society like inflation, goverment regulations and policies and money. There are also some description of how the FED and the other central banks function, as well as general explanation of what money are. There are 2-3 chapters that are targeted at more experienced economists with some math formulas and statistics but in general the book is not scientific and is contributing to each mind that reads it.

Un testo ormai classico, cibo per la mente di chi vuole capire concetti e fenomeni economici fondamentali.

Intellectualism isn't bad but down-speaking to people isn't good. Too complicated.

Probably the most useful book to understand the current monetary policy challenges, and Mr Bernanke's views and medicine required. highly recommended.

A book that is interesting more than entertaining, and certainly the reader needs to be focused when reading its contents . . . without background distractions such as radio, television, family or friends. It offers an interesting foundation for understanding how governments can work/manipulate their economies and how economic history does repeat itself. Mr. Friedman, a remarkable author, is never-the-less an economist having established illustrative models based on assumptions that are indeed "academic". Still, the work is insightful.

There is a lot of good information here. However it almost seems like Friedman is trying to make a technical, easy read. Like most things that are neither fish nor fowl it is merely OK