Mises Institute Banking
Jul 21, 2026
Jonathan Newman, a lecturer at Mises University and commentator on Austrian monetary theory, gives a concise lecture on banking. He explains money substitutes and fiduciary media. He contrasts bank promises with balance sheets and describes how mixing safekeeping with lending produces fractional reserves. He walks through the money-multiplier process and discusses central bank influence and the case for 100% reserves.
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Why Banking Is First At Mises University
- Jonathan Newman explains banking is central at Mises U because banking is where money becomes strange and policy-relevant.
- He contrasts this industry-specific start with other lectures to show its foundational role for later monetary topics.
Bank Fine Print Promises Versus Reality
- Newman reads bank fine print showing banks promise deposits are available at par on demand while also claiming depositor ownership.
- These consumer-facing promises conflict with what annual reports reveal about reserve holdings and loans.
Two Distinct Bank Functions Explained
- Newman adopts Rothbard's split: deposit banking (money warehouse issuing receipts) and loan banking (financial intermediation using relinquished savings).
- Deposit receipts are tradable while the underlying gold sits in vaults, so no net money expansion occurs in pure deposit banking.
