Michael Anton Fischer

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Valuta – First Letter

Now we come to the second Part of “The Essence of Money” called “Valuta”. In this series of letters, we will learn how money functions in international trades and how (in a Gold standard world), Gold and Fiat currencies interact.

One of the most important lessons lies already in the introduction. Why is it that we accept the laws of nature, when it comes to physics, but not economics?

Unconcerned about the worried look of the farmer and equally indifferent to the satisfied smirk of the fruit grower, the sun has blazed down, obedient to some law of nature that we do not know. We took refuge in the shade, we fought the embers with water where we could. But we have not been able to force the fireball to dampen its rays, we have not been able to command the winds to draw a protective curtain of clouds in front of the burning light. We have been able to subordinate ourselves humbly to the higher power, to adapt ourselves wisely to the facts: that is all we have been able to do.
Most people also realise this and make no attempt to grind themselves up in a useless struggle with nature. They do not rebel against the laws which they have recognised as eternal and unchangeable. But why do they act so sensibly only in the field of the forces of nature, and not also in the economic field? Why do they believe they can dictate the direction of development by arbitrary interventions and measures of force as they see fit? Why do they deliberately overlook the fact that the economy, too, has its eternal laws, to which there is no other wisdom than subordination and adaptation?

Essence of Money – PArt II. Valuta

Our efforts to meddle with the natural laws of economics, are at best not effective, but often futile. You can’t argue with Math, Physics… or human nature…

The laws of economics infallibly cause this cause to produce that effect. Pay attention to this causal connection, respect it, act according to it, avoid the cause if you don’t want the effect, but don’t miss wanting to change the connection and bend it in a direction that suits you. ‘Economic development, too, has its one-time rule and does not ignore those who violate the principle that ‘two times two is four’.

Essence of Money – PArt II. Valuta

How dire these consequences can be we already saw in Part I. “On Money”, but we will learn many more examples in Part II. to IV.

[…] almost all our social struggles, with their attendant symptoms of political incitement, public immorality, general unscrupulousness in acquisition, epidemic robbery and murder, are a consequence of this disregard for economic laws: Indeed, even the German Revolution of 1918 was largely due to this disregard, because the arbitrary manipulation with the yellow coin, even more than the war, brought about the division of the people into the group of the exploiters and that of the exploited, and thereby created the mental disposition for the collapse. 

Essence of Money – PArt II. Valuta

On Money – Twelfth Letter

Let’s have a look at the final letter in Argentarius’ “On Money” collection of letters today.
This letter is what I call the “anti-MMT smackdown”. Lansburgh here anticipates arguments that are currently -100 years later- being made by MMT economists like Maurice Höfgen from Germany.

If one looks at the matter in the light of day, the whole question of currency is basically only a harmless example of multiplication. One simply has to multiply all one’s expenditures by 10 or 100 or 1000, according to the devaluation of money or the increase in prices. Objectively, this means nothing, because every expenditure of one is an income of the other, and therefore the income also increases by 10, 100 or 1000 times. One only has to get used to adding a zero to all numbers in traffic life.

Alfred Lansburgh: The Essence of Money – Part i. On money

According to Argentarius, monetary downfall is as bad or worse for a country as losing a world war and we will soon see why.

This harmlessness, my son, cannot be countered strongly enough, for the ignorance that expresses itself in it borders on the criminal. It is bad enough when a nation slides down the slippery slope of inflation in clueless recklessness. But if it then blithely ignores the consequences of this slide or tries to see the best side of them instead of taking hold of the reins of the state and putting the brakes on in time, then the people are hastening towards their doom. For, to put it in meagre words, the decline of its currency is probably the greatest misfortune that can befall a nation. Even a lost war does not bring it such serious immediate damage as the ruin of its monetary system.

Alfred Lansburgh: The Essence of Money – Part i. On money

Lansburgh realizes that economists that make this claim, fail to account for the Cantillion effect, which means that the people closest to the money printer benefit because they get the newly printed money first, when prices are still low. This of course means that people who are the farthest away from the money fountain lose out.
Inflation is a silent, hidden means of redistributing money from the poor to the wealthy.

Above all, they overlook one significant circumstance: the devaluation of money, i.e. the multiplication of expenditure, affects the whole. The counterpart to this, the increase in income, however, benefits only a fraction of the population, and this fraction, of course, to such an extent that the relationship between income and expenditure improves extraordinarily. And it is mainly capital, in so far as it possesses material assets, which profits in this way. On the other side, however, which only learns about the moment of the increase in expenditure from the devaluation of money, are, apart from the pensioners, who are particularly severely damaged, mainly the mentally and physically working classes, the civil servants and the state pensioners.

Alfred Lansburgh: The Essence of Money – Part i. On money

Everyone who possesses claims expressed in money, such as interest, pension, salary, wage, pension and the like, is harmed to the extent of the deterioration of money. Anyone who owns certain real assets, such as real estate, livestock, furniture, stocks, etc., is normally neither harmed nor benefited, because the real assets rise in price by approximately the same amount as the money in which the price is expressed loses purchasing power. (Forcible harm, such as that done to homeowners by the state’s housing policy, is not considered here.) Finally, everyone who owns advertising values, i.e. factories and machines, and produces real values with them, as well as everyone who sells these products, profits from inflation; and this because the selling prices of his products, i.e. his income, adapt themselves faster to the falling value of money, i.e. rise faster than his expenses for wages, rent, interest, taxes, etc., and because this favourable relation appears not once, but many times, with each act of sale anew. In short, the first class is expropriated by inflation in favour of the third class.

Alfred Lansburgh: The Essence of Money – Part i. On money

But not only does inflation redistribute, it damages and hurts economy and the society in various other ways as well.

Now one could take the view that compassion is not a matter of economics and that one should not view the process through the lens of sentimentality. One rises high, the other sinks low, that’s just human fate. What matters is not the individual, but the whole. But this is precisely where the catch is: although these processes seem to affect only certain classes of people, it is the totality that suffers the most serious damage. First of all, from a moral point of view: In the whole nation, even if it is straightforwardness and honesty itself, every sense of right and fairness is gradually disappearing. Namely, because all classes, even the inflationary profiteers, believe themselves cheated by the state. And indeed, we know that money is a right, namely a right to obtain goods of a very definite value. And what is law must, as is well known, remain law in a state of order. No right, however, must stand more securely and last longer than the right of possession, which is embodied in money, for in trusting in its existence, states and peoples conclude sacred treaties which are valid for 100 years and more. This right, this right of all rights, has been grossly violated by the state, which has decimated the value of money through inflation. Every worker, every civil servant, every pensioner feels cheated out of his or her rights by the state, which is supposed to protect them. But also the beneficiaries of the deterioration of money, who, so to speak, feed off the fat of the general public, feel that their rights are threatened by the state, because the state demands from them the taxes that it needs in order to alleviate, at least to some extent, the misery for which they themselves are responsible. Since only a few of the beneficiaries know the real connection between their income and the misfortune of others, and most of them attribute it to their own efficiency, which is only the effect of inflation, they regard it as an act of violence and a disenfranchisement when the state wants to tax away part of their profits. Hence the general ‘tax evasion’ […]

Alfred Lansburgh: The Essence of Money – Part i. On money

With this letter, the series about money is complete, and we have learned the basics, of how money works. In Part II. “Valuta”, we will learn how money affects international trade and the global economy.

Stay tuned.

On Money – Eleventh Letter

First they ignore inflation, then they deny inflation, then they tell you inflation is good, and finally, they blame it on somebody else.

Central banks have been lying about inflation, since their inception. Their lies were exposed by Argentarius over 100 years ago. Yet to this day, people believe the same old claims.
The only way we can prevent history from repeating itself, is to study history.

The terrible effect, dear James, which an arbitrary increase in money has on the ‘value of money’, i.e. on the size of the claim to goods embodied in money, is usually only recognised rather late. The effect must already be quite profound, the deterioration of money must have reached an ominous degree, before the state or the central banks admit that the devaluation of money is a consequence of their own wrong monetary policy. But once they have recognised this and publicly admitted the connection between the devaluation of money and so-called ‘inflation’, something happens that could be called amusing if it did not have such serious consequences. The state or the central bank then try to mitigate inflation in a very specific way, in a way that clearly shows that one can suspect the connection between monetary debasement and inflation and still have very amateurish views about money.

Alfred Lansburgh: The Essence of Money – Part i. On money


Particularly eerie is the fact that already a century ago, central banks were trying to get people to use “cashless” methods of payments.
Even more horrible is the fact that today, the banks are even more disingenuous about the reason they want to get rid of cash. They tell us it is “to combat money laundering”, when in fact they want to be able to inflate or deflate the money supply at will.

There is no doubt that it was a mistake to issue such large quantities of banknotes and thereby weaken the value of money. It would therefore be necessary to attempt to withdraw a part of the banknotes, but in such a way that no holder of a banknote suffers a loss as a result. Cashless payment transactions are best suited for this purpose.

Alfred Lansburgh: The Essence of Money – Part i. On money

And unsurprisingly the calls for central bank currencies, which means nothing else than citizens having an account directly with central banks, is not new either.
The reasoning behind it, is that this way the central bank can print money (or destroy it) directly without the middle men in the commercial banks. Which is precisely why they weren’t given this power in their mandates because this would give them far too much power.
The concept of digital central bank currencies (CBDC) is even more insidious, however. Because unlike the analog ledgers of the last century, a digital ledger would be much less difficult to manipulate and can be coupled to personal information; creating a social credit score that goes deeper into society than anything Orwell imagined in 1984.
Therefore, it’s imperative that we defend ourselves against this power grab by buying the only asset they cannot manipulate – Bitcoin.

That is why, my dear son, you will always hear the praise of cashless payments sung when inflation and monetary distress have reached a high level. With pleas and threats, with enlightening writings and with the well-known imperatives (‘Pay cashless!!!’ ‘Promote remittances’ ‘Fight inflation!’), the public is urged to hand in their banknotes and have an account opened for them, either with the central bank itself or with another bank which in turn has non-cash dealings with the central bank. In fact, the propaganda is usually successful. The private credit balances at the banks, the bank credit balances at the central bank experience a considerable increase, which clearly shows how much banknotes would have had to be issued if the public did not now often pay by cheque and transfer instead of banknotes. Only one thing remains missing, and that is – success.

Alfred Lansburgh: The Essence of Money – Part i. On money

The reason central bankers can pull this scam on us is that so few people understand what money really is. (And I suspect even many central bankers don’t.)
Namely, a right, born out of a transaction. Money’s sole purpose is to represent and guarantee that a good or service that has been delivered, is correctly compensated for with other goods or services.

As I said, this would be very amusing if it did not show in such a frightening way at what a low level the knowledge of money and its laws still stands, even when one has finally understood the connection between inflation and monetary distress. For, to put it briefly, my dear fellow: the whole idea of wanting to fight inflation by promoting cashless circulation is hare-brained nonsense. Cashless transport may be a very useful institution under certain circumstances (by no means always!). But it cannot counter inflation for one very simple reason, namely because it is – itself – a part of inflation. Money, it cannot be said often enough and loudly enough, is not only identical with the monetary signs that one encounters in traffic. In its essence, money is nothing material at all, but something abstract: a right to purchase goods. Whether this right is embodied in gold bars, in coins, in cash notes, in bank notes, or finally in current account balances, is completely irrelevant. The only thing that matters is that there are only so many rights to draw goods as the traffic with its daily services and counter-services generates from itself.

Alfred Lansburgh: The Essence of Money – Part i. On money

So please don’t be fooled, cashless payments neither fight inflation nor money laungering.

And every note, every sight deposit arbitrarily created by the state or a bank is surplus, bad money. Whether the arbitrarily issued banknotes are left to circulate quietly or whether they are withdrawn and replaced by book credits, so-called ‘giro money’, is of no importance. Or have the wrongfully issued rights to goods been eliminated because they no longer pass from hand to hand in physical notes but in incorporeal giro money? Will even one single iota of purchasing power in the country be exercised less if payment is made in non-cash instead of cash? And that is what matters: Less purchasing power must be exercised if one wants to reduce the price of goods or, which is the same thing, increase the ‘value of money’.

Alfred Lansburgh: The Essence of Money – Part i. On money

On Money – Tenth Letter

Can there be too little Money?

No, as Argentarius explains, this is a ridiculous notion. Here are a few highlights from today’s letter:

In the first paragraph, Lansburgh addresses the common misunderstanding that money supply must be growing, if the economy grows, with a brilliant analogy. He then exposes the real intention of those crying for more money, namely that they want to gain more than their fair share of the purchasing power.

As old as money, dear James, is the complaint of people that there is ‘too little money’. This is a misunderstanding that I dare not hope will ever completely disappear from the world. It will probably only ever be a very few people who realise that ‘too little money’ is an absurdity. Money is the scale according to which the available goods are distributed among the population, and one can only increase the individual portions of goods by increasing the quantity of goods, but not by lengthening the scale. Whoever complains that he has too little money, in reality complains only that he has not sold enough goods or services and has therefore only been able to procure a small portion of the available quantity of goods.

Alfred Lansburgh: The Essence of Money – Part i. On money

Next he tackles the issue of why Gold is valuable, which is much different, from what Gold bugs claim to this day.

The actual superiority of gold money – in the eastern part of the world of silver money – has a far deeper cause than the whim or obstinacy of the great masses. The relative stability of value of gold money is rather due to the fact that the production of such money is beyond the arbitrary power of the state.

Alfred Lansburgh: The Essence of Money – Part i. On money

Argentarius then proceeds to dissect the “Gold Standard” further and unknowingly presents the case on why Bitcoin will be better money than Gold almost a century after his writing.

Namely, that it is only produced by performance.

The advantages of Bitcoin over Gold here are twofold:
1. Golds total supply is not transparent, so Banks storing Gold can cheat.
2. New technologies (mining machines, asteroid mining) can make the production of Gold easier, while Bitcoin’s difficulty adjustment ensures that supply increases predictably.

The requirement that performance and only performance gives rise to money is ideally fulfilled in the case of gold money (or money fully backed by gold). Such money can never produce more than is justified and needed by human intercourse, which exchanges performance for performance. And since the quantity of money, or the relation between this quantity and the services, decides on the purchasing power, on the ‘value’ of the money, gold money, in which the quantity or the relation cannot undergo any arbitrary shift, is stable in value. Exactly as stable in value, however, would be any other money that arises exclusively from performance, that is produced by circulation itself and is not forced upon circulation from outside according to any principles whatsoever.

Alfred Lansburgh: The Essence of Money – Part i. On money

Finally, Lansburgh makes the case, for why central banks are not only unnecessary, but outright dangerous institutions.

The privilege of all central banks is thus based on the twofold error that the ‘value’ of money has nothing to do with the amount of money in circulation in the country, and that only gold, or the possibility of exchanging it for gold, gives money its stability of value. Whereas in reality it is just the other way round: Gold as such has no influence on the ‘value of money’, whereas the money supply has the sole influence.

That is why, my dear fellow, all central banks without exception have failed as soon as they wanted to put it to the test and make a considerably increased quantity of notes available for circulation – for instance in war or in a crisis.

Alfred Lansburgh: The Essence of Money – Part i. On money

If you want to hear the full reading of this letter for free, you can do so on YouTube.

Or you can get the full version of the book on Amazon.

On Money – Ninth Letter

Hi guys,

In the ninth letter of On Money, we will learn the reason, why the money market has so much power today and why this necessarily creates a society split into the haves and have nots, where the gap between rich and poor must grow ever wider.

Luckily, Argentarius was no socialist and explains, why the “social policy” usually hurts the poor and middle class more than it helps.

The upcoming lections, will show us a way out of this dilemma.

And with this glimmer of hope… to the reading…

On Money – Eight Letter

Hi Guys,

Today’s letter is an extraordinarily important one for all my fellow Bitcoiners. Because today’s letter debunks one of the most stubborn myths about money, namely the deflationary crash.

Of course Argentarius lived too early to be confronted with the Keynesian myth spun around the Great Depression, so he can not directly counter their lame “arguments”.

But he rather brilliantly takes away the ground these “arguments” try to stand on to this day.

In this lecture Lansburgh will show us, how circulation of money is controlled by economic activity and not the other way round and how interest is the self regulating driver of economic activity.

Viewed from this perspective it is clear of course, how misguided central bank policies are that lower the interest when they want to stimulate economic activity.

Lower interest to stimulate the economy is the equivalent of giving a patient who just got his leg ripped of by a shark adrenaline  and cocaine to stimulate him.
Of course for a while it will seem to work, but in the end the therapy must prove fatal, if the doctors don’t come to their sense.

The same is true for the Euro-Dollar system, with it’s negative interest rates today. All this cheap money can ever stimulate is drug induced pseudo-economic activity, while at the same time, the real economy is bleeding to death.

And with this gruesome picture in your heads… to the reading…

On Money – Seventh Letter

Hi Guys,

In the 7th Letter of On Money, we will learn the answer to an economic conundrum that is plaguing economists of 2021 as much as it did in 1921.

Namely, the connection between economic growth and money.

Maybe you have heard some economists claim that excessive money printing causes inflation, while others claim that the velocity of money causes inflation.

The latter thus claims inflation can’t happen today, because the velocity of money is at record lows today.

What both of them don’t understand is can be learned from this letter. Firstly, we must distinguish between “useful” and “idle” circulation of money.

Money circulates productively, when it is used to build new products, real estate and companies. While it circulates idly, when it is inherited or used to purchase shares from the stock market.

Idle circulation is not bad per se, it is only bad, when the idle circulation eats up the useful circulation as we see today.

In a healthy economy, price determines the velocity of money and the rate of production determines the price.

So if you want to increase the useful velocity of money, production of goods must be increased, until the point, when prices become so cheap that it becomes more desirable for people to invest their money in existing companies, rather than new enterprises. This is both the driver and regulator of economic growth in a healthy economy, where the number of money tokens is relatively stable.

But what happens in our money sick economy today?

By means of the virtual printing press we give massive amounts of new money signs to those people who usually use their money mostly in idle circulation, namely banks, big corporations etc.

By this Cantillion effect, we transfer purchasing power from the normal people, who usually buy goods and services, to those who buy shares and exiting real estate. 


We thus artificially transfer money from useful into idle circulation and thus, seemingly the velocity of money goes down.

But by putting money into idle mode, we create the effect that prices of exiting houses and other assets, like stocks (think buybacks) inflate.

And the more money the central banks press into the market by means of QE and cheap credits, the faster and higher these existing asset prices rise.
Thus the asset prices outpace the rate of return on newly created goods and services.

This forces producers to increase their margins, think shrinkflation, low quality goods, exploitation of workers, environmental pollution.

Effectively the environmental disaster we see happening is largely not the fault of rampant, free market capitalism, but rather the consequence of the central planners at the FED, EZB and all the other central banks, happily creating money.

But the longer this goes on, the less potential there is for manufacturers to cut costs, so at some point, necessarily production must fall. This is what we saw in 2019.

Bizzarly, the Covid crisis saved producers, because it both artificially lowered production further and by means of government bailouts and handouts, increased their margins.

Nevertheless, producers will need to increase their price and/or reduce production the more money central banks blow into the financial sector.

And when this happens, at some point all the dams break and suddenly the money that has been idling in the financial sector, rushes into the economy and creates hyperinflation.

It’s nearly impossible, to predict when such a tipping point is reached, and it might well be that we are already past the point of no return, but what is certain is, that if monetary policy continues as is, the Euro-Dollar system will go into hyperinflation.

And it will be far worse than that in Germany in 1923.

Why?

Because in Weimar Germany the world reserve asset was Gold. And today it is the dollar. This is an unprecedented situation in history.

Usually when the dominant currency collapses, people switch back to gold, but there is not gold currency to switch to and to make matters worse, the gold market is heavily manipulated by central banks and with paper gold.

So in my opinion -and this is not financial advice- our only way to rescue our purchasing power, is Bitcoin.

And with this grim prediction and the orange silver lining, to the reading… 

Audio Book Argentarius: The Essence of Money: Part I. On Money – Sixth Letter

Hi guys,

Today we will study how money is born and how it dies.

In the sixth letter of On Money by Argentarius aka Alfred Lansburgh, we will put together the pieces from the first five lessons and thus create a precise understanding of why Libertarians are not overly dramatic when they say:

Inflation is theft.

It is indeed theft and in this lecture we will learn how it works.

So all in all a lesson more important for you than you might think, because at the time of filming this late in 2021, inflation in the USA and Europe has hit 40 year highs, if you trust the official numbers and levels not seen since Argentarius was writing in Weimar Germany, if you look at the actual uncovered money supply.

And on that happy note… to the reading…

Argentarius: The Essence of Money

In 1923 the German Banker Alfred Lansburgh published the book “Das Wesen des Geldes” (eng. The Essence of Money) in his series of “Letters of a Bank Director to his Son” under the pen name “Argentarius” which is Latin and means “Banker”.

The original book, printed by Lansburgh’s own publishing house “Die Bank” (engl. The Bank) contained the Letter collections:
I. Vom Gelde (eng. On Money)
II. Valuta
III. Die Notenbank (eng. The Central Bank)

In later years, Die Notenbank was replaced by the letters “Währungsnot” (eng. Monetary Crisis) in which Argentarius documented the downfall of the Weimar Germany Mark in 1923.

Since the year 2021 feels a lot like a global resurrection of the fatal monetary policies of 1921 Weimar Germany, we thought it important to bring back the original collection and also to make the works of Lansburgh available to an international audience.

We have thus created a version creating the full four letter collections and released it in German under the original title “Das Wesen des Geldes”. Which you can get here.
And also in English under the title “The Essence of Money”. Which you can get here.

We have also started to create an audiobook version on YouTube which we will release in this playlist.

If you want to learn more about Argentarius there is a great website available at http://lansburgh.de

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