Lecture One on Mises Theory of Money and Credit

Theory of

Below is the first lecture on chapters 1 & 2 of Mises’ magisterial work, The Theory of Money and Credit. Anyone can understand this work, but they must grasp thoroughly each concept and think through the implications of what Mises is saying. For example, if you understand Mises’ concept of the Subjective Theory of Value, then any theory that teaches that money measures economic value, or that any government should establish policies that preserve the value of money because money is a measure of value, is anti-Misesian.  Therefore, the call for government-licensed monopolistic central bank, is an anti-Misesian call for government intervention into the economy. And there is no measure of economic value, therefore, the government’s consumer price index is meaningless and misleading.

Money transmits value, Mises taught, but money does not measure value. (What?).  Subject valuation “arranges commodities in order of their significance; it does not measure its significance.”

OK, so if you want to delve into the greatest treatise on Money and Credit and become a better investor then I suggest you FIRST LISTEN to the lecture while looking at the Lecture Slides, THEN read the chapters which include the study guide for each chapter. Both the book and study guide are below. Also Gary North’s book, Mises on Money is another excellent study guide incorporating some of Mises’ other works like Human Action.

If folks want me to post more lectures (AFTER) you have listened to lecture one, then let me know in the comments section because it takes time to post the other eight lectures). Or tell me NOT to post more lectures.

Course Outline

2012 1Q Mises on Money and Banking Lecture 1 (Slides on readings)

econ400_lecture1 (MP3)  Lecture- 90 minutes



Quiz 1 on Mises Theory of Money and Credit_Ch 1 and 2

Books and Study Guides

Mises on Money and Credit_BOOK

STUDY GUIDE to_Money and Credit

Mises on Money_Vol_3 by Gary North

Lessons for the Young Economist  (for beginners)


6 responses to “Lecture One on Mises Theory of Money and Credit

  1. John-
    Feel free to keep them coming, but I’m drinking from a fire hose right now. I am going to go through the Liberty Classroom’s Austrian course before I get to Theory of Money and Credit. This class uses Man, Economy and State and Human Action as the text books.

    How does the Austrian view on value (I don’t have an understanding of that yet) affect your view on intrinsic value of companies? Or does it have an influence?

    • How do you like the Liberty Classroom Course?

      Type in Austrian economics and Graham or Graham and Von Mises. I wrote a post on that topic.

      Margin of safety was developed to incorporate uncertainty. Subjective value is uncertain or not preciely measurable.

      • I haven’t spent enough time with it yet to form a full opinion, but I have high expectations. The set up is nice. There are plenty of slides, videos, links to reading material. They also regularly have live chat sessions with the instructors, so they are accessible. I haven’t taken advantage of this. The only complaint so far is that Herbener, the econ prof, is pretty monotone and unexcitable.

  2. I’ll start off by saying I don’t know much about Austrian Theory of Business Cycles but I am very keen on learning. I just looked through the course outline. One of the thing that really annoys me about the subject is their lack of models(not even one!).

    I am not saying models are the be-all end-all but you need some sort of framework or model to think about things. Otherwise, people can keep going back and forth on what is right or wrong. At least with a model we can say “no I don’t think that is going to happen because you assumed x will go up whereas I am assuming x will go down in this model”. You get me?
    Or are there really models but I am not aware of them?

    It was the same reason why I didn’t go into technical analysis. They say its all “intuition” which doesn’t make much sense to me. Fundamental analysis has models that help me think through things.

  3. Dear Faisal:

    I respectfully disagree. You need multiple mental models of how the world works like incentives, human misjudgement, the laws of supply and demand but you don’t need mathematical models in a social “science.” Human action can NOT be quantified.

    You like that yellow flower more than the blue flower but you can’t precisely measure that in that instance. You can make an ordinal ranking but not an absolute ranking. I like Betty more than Bill but Bill more than John therefore I like Betty more than John based on preferences but I can’t mathematically measure my preference.

    Take today in the markets, massive malivestments are being made due to distorted prices of interest rates, but we can’t measure the abolute distortion, we can only understand the laws of human action in a world of uncertainty.

    So homes can be bought by people with no incomes or jobs because people will sell them a mortgage from a bank that is ignorant of the credit risk due to distorted interest rates and government preferences in the housing market, but we know with the laws of supply and demand that this is unsustainable but you can’t build a model for that. The laws of supply and demand and common sense will tell you that it is a house of cards.

    The ADVANTAGE of Austrian Economics is that you realize that models to measure markets are just that–statistical models without certainty. Build a model to predict how a woman will choose whom to date? Let me know so I can invest because we would make Zillions.

    Also for the record–today I again bought small mining stocks and now down to 20% cash. I again threw up all over my computer key board. I feel sick. I feel like these companies will go to $0.00. But that ain’t what the numbers say. We will see.

  4. John, please post further videos. At times i get confused, there is so much to learn and i am unable to cop up. I

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