"A Black Hole in Economics" is now available on Amazon.com

Thank you for your patience! This book project was nearly two years in the making, and I’m pleased with the result.

A Black Hole in Economics: Money Creation and its Consequences is now available in Kindle (ebook) format for $7.50. I plan to publish a paperback edition in December.

Where does money come from? How is it created? Why should you care?

You might be surprised that many financial experts fumble when faced with these fundamental questions. The fog of ignorance surrounding money creation isn't just limited to the public; it stretches to pundits, politicians, and even academics. However, on this vital topic, ignorance is anything but bliss. Not understanding money creation and its consequences could cost you dearly during a period of slow economic growth and persistent price inflation.

If you want to understand money creation and why it’s critical to your financial well-being, this book is for you. I hope you’ll buy, read, and review it on Amazon.com. One thing I can say for sure is that there is no other book like it.

Here’s a screenshot of the classy cover art designed by Quent Cordair:

And here is the full text of the Introduction, summarizing the book's arc and what you’ll gain by reading it.

Introduction to A Black Hole in Economics: Money Creation and its Consequences:

Pour yourself a favorite beverage and let the adventure unfold as we explore the secrets of money creation—how money is created, how governments exploit the process to siphon your wealth, and what you must do to prosper in an era of financial repression.

This book is for anyone who wants to understand money creation in the modern economy. In the following pages, I’ll explain how money is created, who creates it, and the consequences of money creation, both good and bad.

Whether you’re an investor navigating volatile markets, a student searching for understanding, or a conscientious voter who wants to stay well-informed, this book is for you. Get ready to have your assumptions challenged as we dive headfirst into what I call the “black hole” of economic knowledge. After reading this book, you’ll emerge with insights that will transform your perspective on money, banks, and their impact on your life.

Chapter One, Money Creation—Who Cares? starts the journey by unraveling why modern money creation is poorly understood and why it’s crucial to grasp its basic mechanics. (“Money” includes more than just paper currency and coins. Most money is in the form of bank deposits.)

In Chapter Two, Money Creation, Then and Now, we delve into the core principles of how banks have always wielded the miraculous power to create credit, shaping it into the medium of exchange we know as money. You’ll be surprised at the unexpected similarities and critical differences between money creation under the gold standard and our contemporary “fiat-reserve” standard.

Chapter Three, Money from Nothing, applies the lessons of Chapter Two to understand the essential elements of modern money creation. To reinforce our new knowledge, we zoom in on concrete examples of money creation and money destruction, including a surprising revelation of where paper money comes from and why our money creation system should be called “pure credit creation.”

In Chapter Four, Good Money Creation: The Capitalist Money Factory, we take a brief historical tour of banking in the United States to demonstrate that it was designed to promote non-inflationary money creation. We show why responsible money creation in a free-market economy is essential for growth and innovation.

But money creation in the wrong hands can cause great economic ruin. In Chapter Five, Bad Money Creation: The Statist Wrecking Ball, we expose the destructive power of politicians and bureaucrats who subvert the investment decisions of privately owned banks. We’ll dive deep into two famous financial crises to reveal how unproductive money creation, driven by government interference in the commercial banks, causes economic destruction through price inflation, asset bubbles, wasted capital, and unjust economic inequality.

In Chapter Six, we’ll focus on the most destructive consequence of the U.S. government’s policy of irresponsible money creation: Uncle Sam’s Unpayable Debt. We’ll explain how irresponsible money creation encourages unsustainable government spending, leading to a mountain of sovereign debt that can never be paid with dollars of today’s purchasing power.

Chapter Seven, The Arsonist and the Fireman, lays bare the challenges and choices posed by the United States’ unpayable financial obligations. Prepare for a counter-intuitive insight: The same politicians who have misused our money creation system, burdening us with unpayable debt, will likely resort to creating even more money to alleviate that burden. Their policies will result in “financial repression”—a peculiar combination of high inflation with low “real” interest rates that makes saving for the future challenging but not impossible.

Finding ourselves in a new financial environment dominated by financial repression, we must adopt a different approach to saving and investing. In Chapter Eight, Surviving Financial Repression, we roll up our sleeves and delve into practical financial strategies to help you safeguard and grow your wealth in a world where interest rates will not keep up with inflation.

Although I refrain from making detailed investment recommendations, fear not! Chapter Eight recommends numerous talented investment advisors who can guide you on your specific investment program. These are the same experts I trust to help manage my family office. With the insights from this book and carefully chosen advisors, you’ll be equipped to design your own saving and investment program, ensuring you’re well-prepared to navigate the treacherous waters of financial repression.[i]

For serious students and enthusiasts wanting a deeper dive, I’ve included a bibliography of books, scholarly articles, speeches, and essays that helped sharpen my thinking for this book.

For the real strivers, there are also three Appendices to address several background issues that may interest financial professionals or others who simply want to keep digging.

Appendix 1, Defining Money, explains why I endorse Ludwig von Mises’s simple yet profound definition of money as “a commonly accepted medium of exchange.” We’ll also venture into the US Federal Reserve’s definition of “broad money supply” and delve briefly into the controversies surrounding what the Fed classifies as “money.”

In Appendix 2, The Legal Basis of Bank Money Creation, we’ll introduce the Constitutional and legislative foundations of money creation in commercial banks.

Lastly, Appendix 3, Paul Samuelson’s Fractional Fiction, critiques and rejects Paul Samuelson’s faulty exposition of “fractional reserve banking.” Based on a 2014 ground-breaking empirical experiment by Professor Richard Werner of Oxford University, the “credit creation theory” of banking is shown to be the only one consistent with actual banking practice.

That’s a summary of the roadmap we'll follow on our journey to understanding money creation. However, before we dive in, let's take a few pages to explore why money creation is so significant, why you should care about it, and why you may not have previously recognized its importance. That is the subject of Chapter One.

“Like” this post, buy the book, and write a review - you’ll be glad you did!

Thanks for reading!

HardmoneyJim, October 21, 2024