Episode 7: Inflation Is a Sin—Guido Hülsmann
It would not occur to most of us to imagine that monetary policy 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.
Guido Hülsmann’s website
My series of articles on Prof. Hülsmann’s book
Read Nicholas Oresme’s De Moneta for free
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
1:12:02 Prof. Hülsmann’s upcoming books
1:18:53 This week’s excerpts: Aristotle, Jean-Baptiste Say, Etienne Gilson
Theme music: “Franciscan Eyes”, written and performed by Thomas Mirus.
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