Mises Identified the Final Goal of All Central Banking: The Creation of a Single World Bank

There has been a joint effort by governments and their monopolistic central banks to destroy free market money. Mises minced no words in his chapter, “The Return to Sound Money,” in The Theory of Money and Credit.

The destruction of the monetary order was the result of deliberate actions on the part of various governments. The government-controlled central banks and, in the United States, the government-controlled Federal Reserve System were the instruments applied in this process of disorganization and demolition. Yet without exception all drafts for an improvement of currency systems assign to the governments unrestricted supremacy in matters of currency and design fantastic images of super-privileged super-banks. Even the manifest futility of the International Monetary Fund does not deter authors from indulging in dreams about a world bank fertilizing mankind with floods of cheap credit. The inanity of all these plans is not accidental. It is the logical outcome of the social philosophy of their authors.

At least he did not refer to the insanity of these plans. Those plans were not insane. They were calculated to expand the supply of unbacked credit money. The result, he predicted in 1912, will be the eventual destruction of money. In a profound prediction made in the first edition of Theory of Money and Credit, and reprinted verbatim in the 1924 edition, Mises identified the final goal of all central banking: the creation of a single world bank. The goal of the central bankers is the unrestricted issue of unbacked credit money (whose borrowers must pay interest to the issuers).

It would be a mistake to assume that the modern organization of exchange is bound to continue to exist. It carries within itself the germ of its own destruction; the development of the fiduciary medium must necessarily lead to its breakdown. Once common principles for their circulation-credit policy are agreed to by the different credit-issuing banks, or once the multiplicity of credit-issuing banks is replaced by a single World Bank, there will no longer be any limit to the issue of fiduciary media.

--Gary North, Mises on Money (Auburn, AL: Ludwig von Mises Institute, 2012), 89-90.

Money Is a Commodity Not a Promise to Pay or Fiduciary Media; The Value of a Coin Is Based on the Weight and Fineness of Its Metal Not Its Face Value

Credit money is money that has less than a 100 percent reserve in coins. “If the money reserve kept by the debtor against the money-substitute issued is less than the total amount of such substitutes, we call the amount of substitutes which exceeds the reserve fiduciary media. As a rule it is not possible to ascertain whether a concrete specimen of money-substitutes is a money-certificate or a fiduciary medium.” Fiduciary media increase the amount of money in circulation. “The issue of fiduciary media enlarges the bank’s funds available for lending beyond these limits.”

Money is a commodity, Mises insisted. It is not a promise to pay. Fiduciary media is a promise to pay. It is a promise that cannot be fulfilled at the same time to everyone who has been issued fiduciary media.

The value of a coin is based on the weight and fineness of its metal.

Nevertheless, in defiance of all official regulations and prohibitions and fixing of prices and threats of punishment, commercial practice has always insisted that what has to be considered in valuing coins is not their face value but their value as metal. The value of a coin has always been determined, not by the image and superscription it bears nor by the proclamation of the mint and market authorities, but by its metal content.

--Gary North, Mises on Money (Auburn, AL: Ludwig von Mises Institute, 2012), 23.