The Mystery of Banking

God’s Broker
, the controversial book
on the life of Pope John Paul II by Antoni Gronowicz. The latter
book was soon withdrawn, which led to the dissolution of the
company. A little later, the successor company, Richardson &
Steirman, published the highly touted 
A Time for Peace
by Mikhail
Gorbachev, then premier of the U.S.S.R. This publishing coup,
however, did not prevent this firm from also winding up its affairs
in short order, as it seems to have disappeared after 1988. 
In addition to its untimely status as an orphan book, there
were a number of other factors that stunted the circulation of 
The
Mystery of Banking
. First, several reviewers of the original edition
pointedly noted the lax, or nonexistent, copy editing and inferior
production standards that disfigured its appearance. Second, in an
important sense, the book was published “before its time.” In
1983, its year of publication, the efforts of the Volcker Fed to rein
in the double-digit price inflation of the late 1970s had just begun
to show success. Price inflation was to remain at or below 5 per-
cent for the rest of the decade. During the 1990s, inflation, as
measured by the Consumer Price Index, declined even further
and hovered between 2 and 3 percent. This led the Greenspan
Fed and most professional monetary economists to triumphantly
declare victory over the inflation foe and even to raise the possi-
bility of a return of the deflation bogey. 
Despite the adverse circumstances surrounding its publica-
tion, however, 
The Mystery of Banking
has gone on to become a
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true underground classic. At the time of this writing, four used
copies are for sale on Amazon.com for between $124.50 and
$256.47. These prices are many times higher than the pennies
asked for standard money-and-banking textbooks published in
the 1980s and even exceed the wildly inflated prices of the latest
editions of these textbooks that are extracted from captive audi-
ences of college students. Such price discrepancies are a good
indication that Rothbard’s book is 
very
different—in content,
style, and organization—from standard treatments of the subject. 
Rothbard’s book is targeted at a readership actively interested
in learning about the subject and not at indifferent students
slouching in the 500-seat amphitheatres of our “research” univer-
sities. While it is therefore written in Rothbard’s characteristically
sparkling prose it does not shy away from a rigorous presentation
of the basic theoretical principles that govern the operation of the
monetary system. Indeed the book is peppered with diagrams,
charts, and tables aplenty—and even a simple equation or two.
But before you run for the hills, you should know that it is not a
“textbook” in the conventional sense. 
Conventional money-and-banking textbooks confront the
hapless reader with a jumble of dumbed-down mainstream theo-
ries and models. Some of these have been discredited and most
bear very little systematic relationship to one another or are in
actual conflict. The Quantity Theory, in both its “classical” and
monetarist versions, Keynes’s liquidity preference theory of inter-
est, the New Keynesian Aggregate Supply curve, the expectations-
augmented Phillips curve–one after another, all make their dreary
appearance on the scene. Worse yet, this theoretical hodgepodge
is generally set out in the 
last
four or five chapters of the textbook
and is usually preceded by a bland recitation of random technical
details and historical facts about monetary and financial institu-
tions. Unfortunately, the befuddled reader cannot make heads or
tails out of these facts without the guidance of a coherent theory.
For the privilege of being bewildered, misled, and eventually
bored to tears by this indigestible intellectual stew, students get to
pay $100 or more for the textbook.