"Without free competition in the commodity market, low-quality and low-priced enterprises will take over; without free competition in the market of ideas, wrong ideas will spread among the people." - Hayek

With the rise of Bitcoin, especially when it reached its all-time high in 2017, Hayek's Denationalization of Money was hailed as the "Bible of the Cryptocurrency Circle". When Bitcoin fell in 2018, countless people questioned the correctness of Hayek's theory.

Recently, with the continuous rise of Bitcoin and the massive monetary policy of various countries, Hayek's book "Denationalization of Money" has been sought after again and is out of stock. Today, I will sort out the six core ideas in the book for you:

1. The government’s monopoly on currency rights has a long history but may not be reasonable

In the minds of ordinary people, it seems natural for the government to have a monopoly on the right to issue currency. However, the rationale for this monopoly system has never been that the government will provide the market with sound currency, but because the monopoly is vital to the government's finances - when the government's finances are in distress, it can issue currency indiscriminately to meet its own needs, and in the process, the people's savings will be greatly reduced.

The system in which the government monopolizes the right to issue currency has all the disadvantages of monopoly: even if you are not satisfied with their products, you have to use them.

If the public understands that they pay the painful price of inflation for the convenience of daily transactions - property shrinkage and economic depression, they will definitely reflect on this long-standing but not necessarily reasonable system.

2. Keynesianism is wrong

The public and economists generally believed in Keynesianism: the government had the power to save the Great Depression by printing more money. Unfortunately, this was only true in the short run.

The Great Debate in Economics in the 20th Century:

Hayek vs. Keynes, (scan the code to collect Hayek's works)

The truth is that such an expansion of the money supply, which seems to have short-term benefits, is the root cause of more serious unemployment in the long run. But for politicians, if they can buy the support of the people in the short term, they will not care about the long-term.

The bad consequences of Keynesianism are:

The government's addiction to over-issuing money will become more and more serious - in order to maintain the economic recovery brought about by over-issuing money, the authorities will have to accelerate the over-issuance of money, and will have to increase it more and more each time so that the inflation rate can exceed people's expectations.

If monetary policy fails to do this, either by stopping the acceleration or abandoning inflation policy altogether, the economy will fall back into the abyss.

Eventually, inflation will get out of control, causing an irreversible disaster.

3. The Great Depression was caused by Monopoly Money

The monetary history of mankind is basically the process of artificially created inflation.

Many socialists claim that the Great Depression is inseparable from the capitalist system. But in fact, the Great Depression was caused by the government's obstruction of the free operation of private enterprises and the prevention of private enterprises from providing a kind of currency that can ensure market stability.

1929 Wall Street stock market crash triggers the Great Depression

Because the government over-issues money, it will increase employment in the short term - although in the long run it will inevitably lead to the misallocation of jobs and thus large-scale unemployment. But no government can resist the temptation to take such measures.

Governments have become dependent on the ability to issue money to finance their activities. They view this ability as a very important economic policy tool.

Therefore, monetary policy is not so much the savior of depression as it is the root cause of depression, because monetary authorities can easily succumb to the clamor of cheap money, thereby directing production in the wrong direction and ultimately causing a great depression.

4. Currency should not be a policy tool, but a component of the market's autopilot mechanism

I believe that money should not be a policy tool, but rather a component of the market, and people can only obtain relevant information through abstract price signals. The essence of money is the blood of the market economy. Currency under government monopoly will continue to undermine a healthy market environment and cause irreparable consequences.

5. Currency Competition is Better Than Currency Monopoly: Sound Money Can Only Come from Self-Interest, Not from Benevolence

It has long been regarded as axiomatic that the supply of money cannot be left to competition; but we have been stuck with bad money because governments have prevented private enterprise from providing us with better money.

We cannot look to intelligence or sympathy, but to pure self-interest to provide us with the institutions we want. We shall not be in happy times indeed until the good money we expect will come not from the benevolence of governments, but from the regard for the own interests of the banks that issue it.

It seems to me that we would gain more by prohibiting the manipulation of money by government than any government could ever do. Private enterprise can do it better than any government could. Money issued by private enterprise would not only be a very profitable business, providing the public with a sound currency that they could trust and use, but it would also impose a discipline on the issuers that the government never has and never will.

6. The future of non-nationalized currency will eventually come

I wish I could say that what I have proposed is a plan for the distant future; we can still wait.

A wise scholar wrote the following review of the first edition of my pamphlet: "Yes, just as three hundred years ago no one believed that the government would give up its control over religion, so we may see in the next three hundred years that the government will be ready to give up its control over money.

Today, why should we read Hayek and his "Denationalization of Money"?

Jeffrey Wood, an American economics professor, said: "'The Denationalization of Money' aims to turn the politically impossible into a possibility that we can grasp."

Professor Mao Shoulong's reasoning is more straightforward: "In the hands of ordinary people, currency is money; in the hands of entrepreneurs, it is capital; in the market engaged in currency transactions, it is an asset. But in the hands of those who monopolize the right to mint coins, it is currency, which can be more or less, just a convenient general equivalent or accounting tool, and sometimes a taxation tool.

In order to make currency become money, capital, and assets, from the perspective of order, denationalization is the fundamental direction. "Denationalization of Currency" is a classic work on the theory of currency marketization and must be read. "