The Evil Princes of Martin Place

I've (finally) just finished reading The Evil Princes of Martin Place by Chris Leithner.  It took me quite a while to finish, primarily because I haven't had that much time to read lately, but also because it's not an easy book to skim - I really had to concentrate.

Overview of The Evil Princes of Martin Place

In the book, Leithner presents a history of banking and money, analyzes the causes of depressions and recessions, describes the failings of the banking system, including the central banks and governments that support them, and comes up with some fixes for the problems that he sees.

Some specific conclusions that Leithner reaches in the book are:

• For centuries, and with the full support of the state, fractional reserve banks have misappropriated depositors' funds and counterfeited money.  For this reason, they are inherently illiquid and at all times ... bankrupt.
• Central planning inevitably collapses... Central banks don't fight inflation, they cause it.
• The state has embedded its protections of fractional reserve banks so deeply within its legislation and regulation.
• The intervention of government causes financial crisis and economic slumps.
• The end of the interventionists boom does not cause difficulties: it reveals them.

And Leithner's radical proposals to fix the problem:

• Abolish legal tender laws.
• Abolish the central bank.
• Abolish fractional reserve banking.

One of the most interesting and impressive aspects of this book for me was the shear rigour that Leithner applies to his arguments.  As radical as his solutions are, it's hard to disagree with them.

Chris Leithner is also the author of "The Intelligent Australian Investor", which is how I first came to be aware of him, his investment company, and his newsletter.  I very much look forward to reading Leithner's newsletter, even though I have no idea what each editions rant will be about.  Once you get used to the tone, they are very educational.  I would have to credit Leithner with much of my understanding on topics like inflation, the role of central banking, and even rigour and patience.

I only have 2 complaints about this book.  Firstly, although interesting, and perhaps fundamental to investing, the topic isn't what I would prefer to read about.  I'd really love Leither to have another go at "The Intelligent Australian Investor" and talk more about investing strategies, how he applies his rigour to his analysis of  companies, and to give some mechanical instruction for his readers (in preference to ranting on about the failures of governments and politicians).

Secondly, Leithner occasionally adds weird Christian references.  I'm not sure whether Leither is a Christian or not - I certainly find it hard to believe that someone that applies such rigour and logical dissection of arguments could possibly have a belief-set compatible with Christianity, or any religion for that matter - however, these references occasionally come up, and I simply don't understand their relevance.  Having said that, thankfully the references are few and far between, and don't detract too much from his message.

Some final words of warning from Leithner:

The Global Financial Crisis, which is still in its early stages...

I must remember patience.  I must remember patience.

Now, on to the next 2 books on the theme of central banking:

• End the Fed
• The Creature from Jekyll Island