Full Reserve Banking versus the Real Bills Doctrine

In Full Reserve Banking versus the Real Bills Doctrine, Philipp Bagus defends Austrian monetary theory and full reserve banking against the real bills doctrine. Responding to economist Juan Ramón Rallo’s critique of Ludwig von Mises’s The Theory of Money and Credit in Una crítica a la teoría monetaria de Mises, Bagus demonstrates that Mises’s supposed errors are not errors at all. He mercilessly dismantles Rallo’s proposed alternative theory of money point by point. Bagus shows that only by abandoning the aberrations of real bills doctrine, fractional reserve banking, and Feketian liquidity theory and adopting Austrian monetary theory will the economic discipline be able to advance in reaching a true understanding of monetary phenomena.