Episode 7: Inflation Is a Sin--Guido Hülsmann

It would not occur to most of us to imagine that monetary has a moral component. Catholic prelates are as silent about matters like fiat money, central banking and inflation and as are the secular ethicists. But the production of currency is not just a matter for the technocrats, and the Catholic tradition once had something to say on the topic. Economist Guido Hülsmann has combined the moral-economic analysis of the scholastics, particularly the 14th-century bishop Nicholas Oresme (who wrote that debauching the currency is worse than either usury or prostitution), with the insights of the Austrian school of economics in order to formulate an authentically Christian Ethics of Money Production for the modern age.

 

Links:

Guido Hülsmann’s website http://www.guidohulsmann.com/

Jörg Guido Hülsmann, The Ethics of Money Production: Buy https://amzn.to/2lifyQT or read for free https://mises.org/library/ethics-money-production

Thomas's series of articles on Prof. Hülsmann’s book https://www.catholicculture.org/commentary/articles.cfm?id=694

Read Nicholas Oresme’s De Moneta for free https://mises.org/library/de-moneta-nicholas-oresme-and-english-mint-documents

 

Timestamps:

3:13 Interview with Guido Hülsmann

Part 1: Money and Banking

3:51 Silence of Catholic social teaching on money production; using scholastic tradition, esp. Nicole Oresme, as a source

5:38 What is the “Austrian school” of economics and why would the Catholic mind find it compelling?

10:58 Competing definitions of money: commodity or sign?

14:54 Origin and evolution of banking; from simple money warehousing to fractional reserve

21:00 Varying origins of fractional reserve banking in Europe

25:10 Absence of legal and contractual clarity throughout the history of fractional reserve banking; attempts by states to keep banks from going bankrupt leading to the creation of central banks

Part 2: Inflation and Its Consequences

34:53 Three unprecedented modern developments: the abandonment of precious metals, the imposition of fiat money, constant inflation

40:19 The first economist was a scholastic: Bishop Oresme on inflation and the debasement of coinage

48:56 Render to Caesar: does all money belong to the government? Oresme says governments may not alter previously existing moneys without the consent of the entire community

50:54 Inflation worse than usury and prostitution according to Oresme; deceptive practices by governments

54:01 Similar economic consequences of debasement of coinage and modern inflation: Enrichment of earliest recipients of new money at the expense of latest recipients

57:54 A uniquely modern recurrence: the business cycle as a result of fractional reserve banking

1:00:43 Central banks incentivizing commercial banks to irresponsible behavior leading to the 2008 financial crisis

1:08:26 Cultural consequences of inflation: a debt-based economy, borrowing and investment prioritized over saving, materialism and short-term thinking

1:12:45 This week’s excerpts: Aristotle, Jean-Baptiste Say, Etienne Gilson