What Has Government Done to Our Money?

Rothbard begins by smashing the myth that money is created by the state. Instead, he explains that money originates from the free market to solve the limitations of barter. In a barter economy, you need a "double coincidence of wants"—if you have eggs and want shoes, you must find a shoemaker who wants eggs.

Historically, gold and silver became money because they possess specific qualities: they are scarce, durable, divisible, portable, and uniform. When a society adopts a commodity as money, every price becomes expressed in terms of that commodity (e.g., "1 ounce of gold").

Once money is established, governments inevitably try to control it. Why? Because controlling money allows the state to generate revenue without the unpopularity of taxation. Rothbard outlines the steps governments take to seize control:

This leads to inflation, which Rothbard defines not as "rising prices" but as "an increase in the money supply." Rising prices are merely the consequence of inflation.

Rothbard traces the devolution of the global monetary system from the classical gold standard to the current fiat chaos.

Rothbard concludes that the only way to restore economic sanity is to completely separate money from the state. Money should be a product of the free market, just like shoes or bread.