Value investing is a multidisciplinary investment style, which requires knowledge of topics ranging from finance to marketing, through law or economics. The book Money, bank credit and economic cycles by Jesús Huerta de Soto serves to understand the influence of the current banking and monetary system in the economy, which, as we will explain below, can be very useful when selecting our investments.
- Título: Money, bank credit and business cycles (4th Edition)
- Author: Jesús Huerta de Soto
- Editorial: Unión Editorial
- Año: 2.009
- Page: 685
Analysis and opinion of Money, bank credit and economic cycles
First of all, I think it is important to make a little review about the author. Jesús Huerta de Soto is one of the greatest representatives of the Austrian school of economics today at the international level. I already advance you that it is not unlikely that the author will become one of the next Nobel laureates in economics for continuing his studies on the business cycle from the point of view of this school of economic thought.
Why did I decide to read this book? Trying to better understand the functioning of the banking and monetary systems, I got the book Money, bank credit and business cycles, which I borrowed from the library of the Law School of my university. Even before I finished reading it, I finally managed to understand how the current monetary system that governs today works.
The book explains first the evolution of money, its concept and its current condition of fiduciary value, lacking real value. It continues with the history of banking and the constant failures throughout history caused by the fractional reserve system sustained by the complicity of some rulers interested in easy loans. Finally, it explains how the current fiat money system combined with a fractional reserve banking system causes economic cycles with artificial credit expansions followed by periods of economic recession caused by the excesses experienced.
The author proposes as a solution a banking regulation with a 100% cash ratio on demand deposits, combined with a gold standard monetary system, which would give greater stability to the economy by ending artificial economic cycles.
What is the use of understanding the business cycle in practice? For many things. Knowing the situation of the economic cycle can serve to guide many of our investment decisions, such as the purchase of a flat. Without going any further, the managers of Bestinver They used their knowledge of Austrian business cycle theory to avoid investing in banking or real estate during the housing and credit bubble from which we are still recovering today.
This book is available for free in PDF format from Jesús Huerta de Soto's website, so those of you who are interested in reading it have no excuse not to. Here you have a link to download the book directly "Money, bank credit and business cycles".
Money valuation, bank credit and economic cycles
Money, Bank Credit and Economic Cycles by Jesús Huerta de Soto is a technically impeccable book, very instructive, which will make us question the influence of the monetary system on the economy and its suitability. It will make more than one question the current monetary status quo, just as it happened to me.
- Score: 9 / 10
- Level: Very high
- Recommended to: All people who want to understand how the current monetary, banking and economic systems work, that is, to everyone.