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150 of 155 people found the following review helpful
on March 10, 2004
In his best selling study, Robert L. Heilbroner calls Economists 'The worldly philosophers'. That description certainly captures what Milton Friedman does in this book - he takes the seemingly simple concept of money, the unit of exchange we use daily and rarely reflect upon, and demonstrates how complicated the issues regarding it are.

(As an interesting aside, Heilbroner's original title for his book was 'the money philosophers' - a definition that fits Friedman in this book even better then his chosen title, even if it is too narrow to account for all of economics).
More then half of this collection of essays is about the so-called 'Crime of 1873' - America's decision, following the issuance of fiat money (that is, money irredeemable in specie) during the Civil War, to peg the dollar not to both silver and gold, but to gold alone. This seemingly arcane and academic topic was a major political issue in the 1880s and 90s, climaxing with the nomination of the silver Democrat, William Jennings Bryan to the presidency of the United States in 1896.
As the Unites States, along with most other 19th century nations such as Germany and France, followed Great Britain in adopting the gold standard, the price of gold rose in terms of other resources, so prices went down. Therefore there was a severe deflation causing much unrest and discontent.
The cure to the deflation came not through political or monetary means, however, but because of an invention of a method to extract gold from low grade ore. This increased the supply of gold, lowered its prices. Hence stopping the deflation, and killing the presidential ambitions of William Jennings Bryan.
The rest of the book describes various issues, from FDR's decision to 'help silver' which helped Communism in China instead (by increasing the cost of silver, overvaluing the Chinese currency and thus hurting Chinese exports and undermining the Chinese economy), to the policy of pegging a currency to the dollar (not a good idea as it subjects the country to the whims of the world economy. The policy was a grave failure to Chile and a great success to Israel, due entirely to external changes in the value of the dollar).
The theme of the later parts of the book is undoubtedly inflation. Friedman demonstrates his claim that inflation is "always and everywhere a monetary phenomenon" (p.104). Inflation is caused by government increasing the money supply, although one time price increases may be caused by unfortunate outside events (like Arabs reduction of the exportation of oil in the early 1979s).
Although Friedman is well known as an economic right winger, there is nothing in this account that should be displeasing to anyone from the left - Friedman's case is against mismanagement, not for small or big governments. Nor is there any argument about whether government spending should go to the military, to welfare, or to any other cause. Although Friedman's book is filled with stories of the political economy, its moral is politically neutral. Indeed, Friedman clearly discusses how inflation is often used by governments because direct taxation is unpopular (p.205) - can you say "read my lips, no new taxes"?
Furthermore, the economic analysis of some reviewers in Amazon is shaky. Friedman writes "all these adjustments [the negative effects of inflation] are set in motion by changes in the rates of monetary growth and inflation. If monetary growth was high but steady... the economy would adjust to it. ... Such an inflation would do no great harm " (p.222).
Although Friedman does not like inflation, he actually makes a case for it, at least at a low single digit level. Since people are usually sellers of few things and purchasers of many, they are more aware of the increase in the price of the commodity they sell then they are of the increase of general prices, especially when those changes are low. People like to see their income go up, as they feel it is a just reward for their efforts (p. 70).
'Money Mischief' is an interesting, challenging book. Its chapters vary from the extremely technical and difficult, (notably chapter 4, a counter-factual exercise estimating the effect of continuing bimetallism after 1873), to 'pop economics' chapters which are no less enlightening and easier to read.
The book ends with a discussion of the new experiment started in the 1970s - currency which is entirely unredeemable by any kind of good. Earlier economists thought that this was impossible, and would necessarily lead to high inflation, but Friedman is optimistic - he believes that aware and well informed public and decision makers can pressure the government against unduly increasing the money supply. Thus, widespread understanding of economics is the real cure for inflation.
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60 of 62 people found the following review helpful
I must confess of my unbounded admiration for Milton Friedman. He has contributed so much to our understanding of the effects of monetary policy and has been such a tireless advocate for freedom that I must admit I am not impartial in any way, so readers beware.
This book examines 10 different episodes in world history in which seemingly trivial policy choices towards money had profound, unexpected, and unforeseen consequences (usually very bad). They make enjoyable reading and are most educational.
The discussions are not all that technical and, to me, sparkle with wit and insight. This book can serve as a great introduction to how gold and silver money was abused, the effect that minting rights can have, how technology changes in mining precious metals caused a crisis of devaluation, what the heck bimetallism is and what the issues around it were (are), and most important, the risks of the kind of money we have (fiat money - because it is not tied explicitly to some kind of commodity and is therefore at the risk of somebody running the printing press too much). This is all great stuff. Enjoy!
There are several useful graphs and tables. Also, a reference list in the back can act as a bibliography for further reading.
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65 of 70 people found the following review helpful
on February 9, 2005
Many of Milton Friedman's previous books, especially "Free to Choose" are aimed at a popular audience, supporting the cause for freedom in many different aspects of society. With it, this book shares the brilliance and throughness of thought employed by Friedman, perhaps the most well known (if not the best) economist of the 2nd half of the 20th century.

In "Money Mischief" Friedman enters the realm of monetary economics, briefly telling a history of the different systems that have been employed through history for value conservation. Aside from perhpas the first 100 pages, the rest of the book relies on some notion of monetary economics and international trade and finance. Most of the book is devoted to the study of the old metallic or bimetallic standards and the early days of the fiat money system (the one most used today). An experienced economist will recognize the brilliance of the arguments linkings seemingly unrelated events such as the US elections in 1892 and the fall of the Chiang Kai-shek government in China (believe me, Friedman convinced me they were directly linked).

For a non-economist, the first one hundred pages may tell a brief history of money, so if that is your interest, stop there. Experienced economists will definitely enjoy the suddle linkages of events, such as deflations and the California gold rush and the development of the cyanide process for extracting gold. The book is aimed at a more knowledgeable crowd; with such an aim, it achieves its objective brilliantly.
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18 of 18 people found the following review helpful
on October 8, 2009
Since the passing of Milton Friedman, I have worried that his pro-Capitalistic rhetoric and all he was able to achieve would melt away. Of course, it is too soon to be able to understand whether this will happen or not. To continue my education from the great Milton Friedman, I read "Money Mischief: Episodes in Monetary History" by him.

For those of you who wish that they took a class in macroeconomics in college or maybe are just interested in money this is a must read. For all others, they may find it hard to get through.

Friedman does a great job of covering topics like the Gold Standard, the Silver Standard/movement, bimetallism, the change to a fiat currency, pegging currencies, and inflation. When I studied macroeconomics, I felt like much of my education in money was incomplete. This book completed it. This book can get overly technical for the non-economist at times but learning about monetary systems is technical within itself.

I highly recommend this book and the continuing education of what Dr. Friedman has done for the current state of economic policy in the world. The one topic that Friedman covers that I think is important is the Silver movement. Most people learn about this movement in high school and the Wizard of Oz is based off of it.

My absolute favorite quote from the book was,

"As a result, the U.S. silver purchase program must be regarded as having contributed, if perhaps only modestly, to the success of the communist revolution in China."
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25 of 28 people found the following review helpful
on January 1, 2000
I am not an economist. This book opened my eyes to how the government influences the economic progress of us all through money supply. It is easy to read and understand. I highly recommend it to any lay people with an interest in why we are subject to economic catastrophies. I would be very interested in other readers views on this book, so please email me at .
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15 of 16 people found the following review helpful
on February 10, 2010
Dry reading but very informative. Makes me feel like I am back in college, minus the fraternity parties. Given the current political climate, we all need to become students of capitalism so that we can defend it against all the socialist nonsense that surrounds us.
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12 of 13 people found the following review helpful
on July 19, 2009
This is a very interesting and important book. It is interesting because it lays the foundation for understanding monetary systems in general and the term, "the economy," in particular. It does so, in part, by walking the reader through America's monetary history; illustrating quite clearly the benefits and pitfalls of the bimetallic silver/gold standard in use up until 1873 and the subsequent gold standard in effect until the 1930s. In assessing this history, the primary advantage of having a universally recognized "commodity," such as gold, silver, copper, or whatever, as the monetary standard becomes apparent. It inhibits governments from inflating the money supply, thereby causing inflation and levying a hidden tax on a nation's people.

The book is important because, for the first time in recorded history, the United States and all the major nations in the world are on a "fiat money standard" with government actions based solely on handshakes between politicians, and a wink and a nod between nations. The world, as the author says, is in uncharted waters with the specter of monetary expansion and the resulting inflation and, heaven forbid, hyperinflation always on the horizon.

I found the first part of this book, chapters 1-7, difficult to follow. The reason, I'm sure, is two-fold. First, the text if heavily laden with the jargon and terminology commonly used by students of economics, the meanings of which weren't always apparent until later in the book. It would certainly have been helpful if the author had provided a legend defining some of these terms for those readers who don't happen to be economists. The second reason was explained by the author himself in the final chapter of the book where he observed that the primary reason most people don't understand "the economy" and how it functions is that they base their understanding on their own personal experiences - and that is not how economies operate.

Whether or not any given reader should undertake this entire book depends on that reader's interests and background. I, for one, found the monetary history of the United States to be quite interesting and informative, but, as I read, I kept thinking, "This is irrelevant since we haven't been on any kind of commodity standard for over 45 years." So, I can't exactly recommend it. But anyone interested in understanding the cause and impacts of and the cure for inflation will certainly benefit by reading Chapters 8 through 11.
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34 of 42 people found the following review helpful
on June 12, 2002
Imagine a grand winning case that is laid before the Supreme Court to change the course of modern life around the world. Friedman starts at the very beginnings of money and traces its evolution in copious detail. As proceedings finally reach the summation which is the final chapter: "Monetary Policy in a Fiat World." I see the court in a unanimous wonderment over the masterful job that has been done by Friedman. Well, the court required is public opinion--- a bit more cumbersome.
In any nation at any point in modern history, inflation comes from only one source the national government, not by some physical event, war or deficit spending. He details how the cause of inflation is growing the money supply faster than the output of goods and services. In his fabulous review of money he chronicles the centuries of price stability that came to an end with the creation of paper money. This fiat money is not backed by a precious metal and it has spread becoming the only remaining currency in the world. He does not argue for the return to a precious metal standard as some have misrepresented.
He provides details in country after country of how governments hallucinate that the citizens will not blame the government. Inflation directly benefits the government at the expense of the citizens. In addition to the impact on your liquid assets, the government debt is paid back or refinanced with far less valuable inflated dollars. He shows how tax cuts only giving back the tax increases that come from bracket creep in an inflationary environment. Finally. People and the financial markets quickly learn that interest rates have to compensate for inflation plus a real above inflation.
In current times this means government ten year bond rates of six to eight percent or more. The last ten years was the most ideal time in a century to control inflation. However, inflation was still three to five percent per year. The only logical assumption is that in the next ten years inflation is more likely to be near five percent or more. The historical real return required on government bonds is viewed as about three percent hence the total yield of six to eight percent. Currently, it is slightly below the range. Home mortgages will tend to be a couple percent higher than the government bond. In the simplest terms, had the Federal Reserve controlled inflation to zero, mortgage rates would be half what they are today. Since Greenspan went into the job committed to zero inflation like no other Fed Chairman, there will be no realistic basis for trusting in any potential Federal Reserve policy to eliminate inflation. It would take many years of proof before bond markets would believe any such policy. Because of money mischief we are stuck with high interest rates for a very long time. Thanks to our Federal Government and no one else. The blame could not be more clear.
Many governments have fallen including democracies over the matter of inflation. As USA citizens learn about inflation, it follows that political views will change. One of Friedman's most valuable contributions is the mathematical proof and imperial evidence collection that a little inflation does not help reduce unemployment. It worsens employment. Specifically, while 3% inflation is a smaller crime against the people than 10% inflation, it is still a crime with no redeeming virtue. This is not a matter of theory or political philosophy. Thanks largely to Friedman, the proof is in and the public debate should draw to a close.
The crowning moment of the book is when he details the observations that fiat money as a global money system is only a few decades old and it remains to be seen if governments can be harnessed by citizens to stop inflation. Friedman causes us to appreciate that there is only one place to draw the line. That is at zero inflation. The wreckage of inflation is not just in the aggregate economy, the low income and the retired. The mismanagement of money in the case of the USA by the Federal Reserve eventually reeks havoc in the securities markets. While Friedman is the Federal Reserves most articulate and worthy critic, his goal is to strengthen the spine of the Federal Reserve by educating the public and the government. After reading this book you are likely to see the senators that rant that "only they care about the unemployed and the Federal Reserve must now and always pump up the money supply" as at best badly misinformed.
To label Friedman a conservative or a libertarian economist as some reviewers do is to suggest that you can dismiss the authors views as not mainstream and suspect. This convention has clearly crossed over from the liberal major market media of modern times. It is truly dastardly to degrade the standing of Milton Friedman. His great works should command everyone's study and one should allow your views to be challenged simply on the merits of Friedman's work. A Nobel Prize is not awarded as the result of some game. Friedman's contributions to the modern world are profound.
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11 of 12 people found the following review helpful
on June 12, 2010
I am a beginning student of economics. I have a general sense of how and why things work, but I am by no means an expert. I bought this book because I wanted to understand more about monetary policy. I now understand more about monetary policy. So, I am very satisfied in that respect. Of course, the book leaves me with a lot of questions, but I think that is probably an accurate reflection of the world at large.

As the title indicates, I never would have thought that a book on monetary policy would be so interesting. I mean-come on-monetary policy...not exactly a thrill a minute subject. But, Dr. Friedman's genius is that he links the nuts and bolts of monetary theory to a story-showing how and why things went the way they did-and most importantly, showing why monetary policy is SO critical. As with "Capitalism and Freedom" Dr. Friedman explains difficult concepts to the common person without watering them down-and without talking down to them.

I would NOT recommend this book as a starting point for a study of economics. If that is what you are considering-better start somewhere else and come back here. But, if you have a basic background in economics PLEASE read this book.
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11 of 12 people found the following review helpful
on December 26, 2009
Though the book is rather technical in a number of places, I would have to say that Milton Friedman uses history extremely well in showing what can happen when governments take full control of economic matters. And by not knowing her history, America is once again repeating its mistakes.
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