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Here is a précis of Riegel's Flight From Inflation. I think it captures the most important points and shows the depth of
Riegel's insights about the nature of money and its liberation.
All of Riegel's most important works will soon be available at


FLIGHT FROM INFLATION: The Monetary Alternative


An annotated précis prepared by Thomas H. Greco, Jr. May 18, 2003

Shortly after reading this astounding work in 1987, I prepared a précis of
it, extracting the most provocative statements and evident truths for the
benefit of a small circle of correspondents. This précis was lost to me
until a recent move caused a hard copy to surface. Since two or three
subsequent computer upgrades have caused the original digital file to
disappear, I have undertaken to repeat my earlier effort for the benefit of
an ever growing circle of monetary freedom advocates and exchange
innovators. Now that the entire volume of Flight has been digitized, it will
be much more accessible and easier to extract. In the following, all of
Riegel's words are in regular type, with my comments being in italics and
enclosed in square brackets. I have bolded phrases that I think merit
particular attention, and have added some topical headings that may or may
not correspond to the headings in the book. Page numbers, where given, refer
to the page in the bound volume published by Spencer MacCallum, not the
digital file. - Thomas H. Greco, Jr. May 18, 2003


THIS BOOK PRESENTS a new concept of money, one which promises greater
freedom and a broader base for democracy. It points up the futility of the
political ballot-and the facility of the 'monetary ballot'-for the
attainment of human aspirations. It elucidates an evolution that has
progressed unobserved since the inception of monetary media and that is now
coming to an end in what appears, on the surface, to be a world calamity.

This book is the first to depart from the traditional concept of money as an
instrument of the state. It is the first to propose that money and state be

[Since the 1940's, when these words were written, others, even a few
academic economists, have begun to call for the separation of money and
state. Yet, the masses of people remain ignorant and enthralled by a power
they do not understand, a power that is at once political, as well as
economic. The global political monetary regime has been the primary
instrument by which power and wealth have become ever more concentrated in
fewer hands, and democracy and freedom have been progressively eroded. Its
inherent flaws and dysfunctions are responsible for enormous suffering, and
the calamity of which Riegel spoke is upon us. Riegel's insights into the
nature and mechanisms of money go a long way toward illuminating the path
toward peace and freedom. Let us hope that they can be quickly implemented
before world despotism becomes total.]

The Nature of Money

The essential quality of money, however, is its promise to deliver value in
any commodity or service at the choice of the holder. p. 14.

Unlike a dollar bill or a dollar check, for example, a silver dollar is not
wholly money. The former are complete split-barter instruments, while the
silver dollar is a qualified split-barter instrument, in that some value is
conveyed with the promise. To that extent it is not money. If a silver
dollar contains fifty cents worth of silver, its transference is half a
monetary transaction and half a barter transaction. pp. 14-15.

A would-be money issuer must, in exchange for the goods or services he buys
from the market, place goods or services on the market. In this simple rule
of equity lies the essence of money.

... it is apparent that the buyer who issued the monetary instrument to the
seller has made a commitment to the community that is that he, in his turn,
will engage in business, i.e. will bid for money by offering his own goods
and services in the open market. In this competitive situation, he redeems
his original issue through the sale of his goods and services. Thus money is
actually backed by the value surrendered by the seller and potentially
backed by a value in the possession of the next seller. p. 15

...two factors are necessary to money creation: a buyer, who issues it, and
a seller, who accepts it. Since the seller expects, in turn, to reissue the
money to some seller, it will be seen that money springs from mutual
interest and cooperative action among traders, and not from authority.

... money is an accounting system,.. p. 16.

... the basis of money is a pledge to surrender value on demand - to offer
goods or services in the market at competitive or market price and, thereby,
to give value when money is tendered. p. 17.

Money is created by the process of incurring a debit and is destroyed by the
process of offsetting a debit.

The volume of money extant, therefore, has no relation to the volume of
business transacted in its name. The volume of money is determined by the
amount of deferred spending, or "savings."

... money is but a medium of evidencing barter balances. It is a claim upon
neither particular goods nor particular traders, but upon any goods in the
hands of any trader. In that sense only is there a store of value behind
monetary instruments. The idea that there is a reserve of value, such as
gold, which can back or support the money extant, is a chimera. p. 18.

The only essential is that the initiator [the issuer] be also a potential
finisher. To be such, he obviously must be a personal enterpriser, i.e., one
who is obliged to go into the market and bid for money. This requirement
being fulfilled, his issue is genuine money. p. 20.

Money does not destroy the principle of barter. It merely splits it into
halves, improving it by introducing a time lag between the surrender of
value and the requisition of value, during which lag the monetary instrument
certifies the right of the seller to make the requisition at such time and
from such trader as he may choose.

The pure monetary medium, when it comes, will be an instrument intrinsically
valueless, evidencing the transference of a value that is unidentified with
any commodity, yet has a relative requisitionary power upon all. p. 106.

The Concept of an Abstract Value Measure

... only precedent and practice are required to establish a monetary unit.
p. 128.

A Monetary Rationale

Basically, there is only one commodity exchanged, and that is human effort.
is the basic or virgin commodity. It has no quality of obsolescence,
for it is always associated with the latest and therefore the most timely
products. It is the only value. p. 94.

... values are always in a condition of flux, moving in and out of
commodities under the control of the law of supply and demand, and hence no
commodity retains a fixed portion of value. p. 22.

... it is mistaken to attribute purchasing power to money, for it has none;
it is merely the conduit through which purchasing power flows; such
purchasing power lying in the commodities or values exchanged. p. 23.


For many centuries, accordingly, one or more governments have always been
willing to hear the expense of maintaining the price of gold above its true
value as determined in free exchange, and thus gold has been given the
appearance of having a constant value. This has given rise to the
superstition that gold is not only stable in value, but that it is, in fact,
a criterion of value. p. 107.

Its last artificial support is the dollar, and when the dollar grows too
weak from inflation to hold the price of gold above its actual value, gold
will be on its own. The dollar will be so reduced in purchasing power that
$35 per ounce will actually be a low price for gold, and its price will rise
above that figure. p. 109.

[This was written before 1953. Things developed just as Riegel predicted.]

Definition of Money

Only by turning our backs on the muddle of past monetary economics can we
fully understand the subject of money. We must reject such irrelevancies as
metallic and other standards, managed currency, bullion and specie
redemption, quantity theories, legal tender, and other issues which have
consumed endless hours of debate. Let us simply apply our common sense to
the rationalization of the subject of money. Error has labyrinths; truth is
an obelisk.

a) Money is a Receipt for Value

b) Expressed in Terms of a Value Unit, and is

c) A Transferable Claim

d) For an Equivalent Value

e) To be Determined by Competitive Exchange

f) In Which the Issuer is an Active Vendor

g) Whose Issue Conforms to the Customs of a Convention of Participants in
the Monetary System.

p. 23.

Monetary credit must be a social credit, backed by all participants in the
exchange system but identified with none.

Only under free competition can the requirements of trade equitably regulate
the value of money.

He who would create money to buy goods or services must be prepared to
produce goods or services with which to buy money. p. 24.

The rules and regulations prescribed in the convention of the participants
must be honored, to assure fidelity of issue. This implies a formally
structured monetary system and authority which establishes the monetary
unit, prescribes the issuing process, its limits, the implements to be used,
and such other mutually acceptable rules as will give dependability to the
unit and to the system.


The purpose of money is to facilitate barter by splitting the transaction
into two parts, the acceptor of money reserving the power to requisition
value from any trader at any time.

The method of money is to employ a concept of value in terms of a value unit
dissociated from any object.

The monetary unit is any adopted value, which value is the basis relative to
which other values may be expressed.

The monetary system is a cooperative agreement among traders to regulate the
issuance of monetary instruments, to express and exchange values in terms of
the monetary unit, and to keep account of such exchanges. .

Monetary instruments may be any evidences of monetary transactions that
serve the convenience of trade and the purpose of accountancy. p. 25.

Circulation and Hoarding

A money hoarder, on the other hand, is one who insists on giving value
without receiving value-a monetary masochist. He harms no one but himself,
if his extraction of money circulation does not starve exchange, and it
cannot if money creation is not controlled by a monopoly. p. 134.


Commercial banks do not lend money. They permit the "borrower" to issue
money. The "loan," which is not in any true sense a loan because it does not
reduce the money resources of the lender, is simply entered as a credit to
the borrower on the books of the bank. It is a paper transaction, no money
having been lent and no new money having come into existence. The borrower,
however, now has legal authorization to write checks to the extent of the
loan and tender them in. trade. Upon their acceptance by a seller, new money
comes into existence. Until such time as the borrower, through becoming
seller, recaptures the money (extinguishes the money he created) with which
to liquidate his "loan," there may be many purchase and sale transactions
effected by the money he issued. Yet, throughout it all, not a single unit
of money has been lent or borrowed. "Borrowing money" from a commercial bank
is but a figurative phrase. It is getting authorization to create money-the
first step in the money creating process.

Money may, however, be truly borrowed from existing reserves of money. True
moneylenders include savings banks, building and loan associations, finance
companies and individuals. Such money, however, originated in commercial
banks through the process above described, and was accrued from surpluses.

Why does money lending exist? A little thought shows that it exists because
of the deficiency of commercial bank credit. p. 27.

Borrowing money offers no advantage over creating money, and it has positive
disadvantages. Interest charges are usually higher for borrowed than for
created money. To the money lender it involves the hazard of default by the
borrower, whereas default in a commercial bank "loan " is distributed,
almost painlessly, over the entire economy. "Loans" through commercial banks
are underwritten by the entire trading community, whereas a loan of existing
money is supported by the resources of the borrower alone.

Why, then do buyers resort to money lenders rather than commercial banks for
needed funds? The only answer is that the banker, the gatekeeper of the
trade channel, is limited by statute in the number of passes that he can
issue to personal enterprisers. p. 28.

Legal Counterfeit

What is not generally known - even to the perpetrators - is that governments
and banks unconsciously cooperate in legal counterfeiting.

... under the natural law of money issuance, governments cannot qualify as
issuers, because they are not in the necessitous situation of personal
enterprisers. They do not barter, and therefore have no need to escape from
barter. They do not bid for money in the open market with goods or services.
Their taxing power relieves them entirely from selling; they take merely by
taxing. Hence, when they are admitted to the issue power, their issue cannot
be a genuine promise to deliver value in trade. It must of necessity be

This legal-illegal practice is innocently perpetrated, in the United States,
not by the issuance of bills and coins, but through the loans made to the
Government by commercial banks. p. 33.

... the practice [of legalized counterfeit] arises from a universal
misconception of the source and essence of money, a misconception which
blinds legislators as well as the people they undertake to serve. Money
cannot be governed by man-made laws; it operates solely by natural law.

[This chapter contains an excellent historical account of the process by
which the Constitution was circumvented and the government has appropriated
the substance of its citizens by control of the monetary process.]

In those days, [of the Civil War-era "Greenbacks"] the means of inflating
the circulation was by printing currency. The modern way is to print bonds,
sell them to commercial banks, then print checks to draw against the bank
balance and let the currency expand according to public demand. This is the
smarter way of using the printing press. It fools the people. p. 148.

Legal counterfeit blends with the genuine money supply and is
indistinguishable from it. It is, therefore, more insidious and, through
sheer volume, vastly more destructive of the power of the monetary unit than
is illegal counterfeit. It inevitably manifests itself in higher prices of
goods and services. The public is bewildered by the higher prices, and it
requires but slight propaganda by the author of the inflation, the
Government, to deflect criticism onto private business which, in the end, is
always obliged to bring the bad news of rising prices to the people. The
public does not realize that it is, in effect, indirectly paying taxes over
the merchant's counter instead of paying them directly to the tax collector.
The Government finds this a ready way to increase taxation without being
detected. p. 39.

The destructive effect of inflation is not confined to its covert taxing
power. That is only its early manifestation. Its later destructiveness lies
in its power to amend and finally to nullify the contractual relationships
upon which the social order depends. The whole philosophy of freedom is
written in the single phrase, Power to Contract. p. 44.

Private, nonpolitical action alone can provide a true monetary system to
which the peoples of all lands may turn for self preservation. p. 48.

Any sizable group anywhere, any day, could start a nonpolitical monetary
unit and system. There is no law against it, and no legislation need be
invoked. The legal tender provision is gratuitous window dressing, for any
monetary unit that is not acceptable in trade cannot be made so by law and,
if acceptable, needs none. p. 49.

Because trade naturally tends to unify and to adopt a single monetary
language, one of these [personal enterprise monetary systems] systems,
through sheer merit, must sooner or later become universal [i.e., become a
standard]. p. 49.

To avert the utter and complete disorder of a moneyless world, however, such
a system must come into being before the present expires through total
inflation. p. 50.

The Valun System

The function of the banks would be to administer, for an appropriate service
charge, the mutual credit of their account holders. The banks would provide
credit facilities for the issuance and redemption of valuns by personal
enterprisers and would clear checks and render other appropriate banking
services. p. 52.

There would, of course, be no interest charge for lines of credit, since the
banks would take no credit risks. Traders to one another would extend the
credit, and the banks would not be involved except as administrators. Hence,
under the valun system, credit would be free, but not printing, bookkeeping,
insurance and other expenses; service costs would be paid for by the account
holders. p. 54.

Credit Limits

How much money might the banks permit each issuer to issue? As much as he
could redeem, which means, as much as he might need to get a turnover in his
business. This, admittedly, would vary with different lines. All lines,
taken together, average about four turnovers a year. Thus, roughly speaking,
business would need an issue power sufficient to span three months.

The ideal issue policy would be that each customer of the bank be empowered
to purchase equivalent to his capacity to sell and to emit sufficient money
within such limitation.

There is an ideal debit policy, but it may have to be worked out by trial
and error. p. 55.

The best principle can, however, be simply stated thus: Each person or
corporation is entitled to create as much money, by buying, as he or it is
able to redeem by selling. p. 95.

Each valun bank would adopt its own credit policy, and it is on credit
policy that most of the unsolved problems hinge. p. 136.

... exchange can operate only on a trial and error basis... It is better to
allot too much money power than too little. p. 96.

If those who want money and are willing and able to return value to the
market for it are restrained from creating that money, the functioning of
exchange democracy will be impaired. p.65.

Idle man hours are a more serious loss than unredeemed money and must never
be hazarded by overzealously guarding against credit losses. Interrupted
production is the only loss that is a net loss [to the community as a
whole]. p. 101.

Once we have established the principle of debit power [money creating power]
for all, we have released a power for economic stability that does not exist
when this power is restricted to certain "creditworthy" individuals. The
full benefits of the democratization of the money creating power cannot be
forecast, but it is plain that this power could positively prevent
depression. p. 99.

Launching the Valun System

... the valun would have an initial value of one dollar, which would be
equal to the power of the dollar on the day of the valun's launching.
Thereafter, it would be entirely dissociated from the dollar and independent
of any subsequent fluctuations in value that the dollar might have. p. 57.

[This is the main point on which Riegel and I disagree. Sure the dollar
should be the starting point, since that is the value concept that is
ingrained in us in the U. S., but it is unreasonable to expect that the
valun will develop an independent meaning without some help - it needs a
lever to lift it out of the dollar rut. That, in my opinion, must be some
concrete physical reference - a commodity or basket of commodities. This
would allow people to simultaneously hold two value concepts, the dollar
and the valun, and be ever cognizant of the relationship between the two.
Riegel elaborates on this point in Private Enterprise Money; I've written a
retort that will eventually be posted to the web. - t.h.g.]

Existing banks presumably could open valun departments without legal
difficulty or political embarrassment, since under the valun system, they
would extend no credit and therefore take no risks. Banks would merely
administer the credit extended by the account holders to one another. p. 57.

The actual launching of the valun might be accomplished by enlisting a
number of business concerns to pay their bills with valdol checks, which
would offer the payee the option of accepting payment in valuns or dollars.

In the case of a shortage of either valuns or dollars in an account, and
there being an adequate balance of the other, the bank would be authorized
to sell a sufficient amount of the long unit on the money market to offset
the deficit in the short unit.

It is no more necessary for men generally to understand the science of money
than it is for them to understand the science of any other utility. Given a
sufficient number of traders to participate initially, it will take only a
few directing individuals to put the system into operation. p.61.

To whom shall we look to start the valun? We must look to employers, for as
we have seen, it is the buyer and not the seller who creates money. The
common man begins his exchange activities by selling his services. p. 68.

The first buyer in the chain of exchange is the employer. Therefore we must
look to employers to start the valun, and employees have the right to expect
it to be trustworthy. Employees will repose confidence in what employers
profess to be an honest medium of exchange, and they will underwrite that
medium with the basic commodity, the mother of all wealth, namely brain and
brawn and sweat.

If we distribute buying power adequately, the products of industry will be
drawn by the buyer rather than having to be pushed by the seller. With the
equitable distribution of the money power, the distribution of goods and
services will no longer be a problem. p. 69-70.

... the unemployed man can do more harm to the economy by not buying, than
by buying on bank credit, even though his credit remains unliquidated. By
the latter process, he isolates the germ of unemployment; by the former, he
renders it epidemic.


Boom results from an expansion of the genuine money supply. This is not
inflationary, because it justifies itself by an expansion of production and

Inflation, on the other hand, is the result of the injection of monetary
units into the money supply without an offsetting increase of values in the
market place.

Bust results from a reduction of the genuine money supply, which is brought
about by bankers calling or, as they mature, failing to renew, the "loans"
upon which the money is based.

Deflation is not to be confused with bust, for there cannot be deflation
without prior inflation. Just as inflation is not an increase in the genuine
money supply, so deflation is not a reduction. Both are produced by
governments. By deficit financing (through borrowing from banks) water is
injected into the circulation, and by surplus budgets it is extracted, in no
wise affecting in either operation the substance of the money supply.

Omnibus Reform

There are no tyrants among men; there are only tyrannies, and the mother of
tyrannies is money monopoly. p. 73.

Just as the political monetary system trends power toward the state, so the
system based on true money will release the natural forces that trend
society toward private initiative, enterprise and democracy. Pending this
fundamental reversal, all resistance to statism is futile. As long as the
only available monetary system is political, exchange, that process by which
the social order functions, will never accomplish its natural purpose, the
development of prosperity and freedom. p. 73.

To rely on education to reverse the present trend toward statism shows a
want of comprehension of the naturalness of personal enterprise. No one
needs to be educated in private initiative and enterprise. These qualities
arise spontaneously. All that is needed is that the counterfeiting power of
the state, which robs productive effort and rewards parasitism, be removed.
p. 73.

The trouble has arisen from the failure of personal enterprisers to provide
a sound monetary system of, by, and for personal enterprise. In their
default, the state has contrived a socialized system.

... reformers almost universally turn to political rather than economic
means of reform. Thus their reform efforts effected through political
action, actually salute and strengthen the generator of the evils against
which the reforms are directed. p. 74

The state's profession of being an instrument of democracy is pure sham. It
is inherently exploitative and autocratic, because it has no means of
invoking support by appeal to voluntary patronage. It lives by taxation and
functions by edict: To regard the state as the implement of democracy, when
it is itself anti-democratic, is surely the most consummate delusion of man.

Let us have done with the idea that democracy can reside in, or operate
through, the state; nothing can be democratic that is not dependent upon
voluntary patronage. p. 75.

Once the state is denied its power to impose taxes by watering the money
stream and is confronted with an aggressive personal enterprise movement
that will take over services for which there is actual demand, its
disservices will be recognized as such, simply because personal enterprise
will make no bid for them. Public resistance to taxation will then dispose
of them.

Exchange, served by a true monetary system, is a constant reform mechanism.
It is the sifter of proposals and projects, the natural mechanism whereby
all undertakings are measured for public approval. Its constituency votes
early and often, making change and progress facile. Served by an unbiased
monetary system, it will be the perfect instrument of democracy. Here will
democracy function, vindicating its ideal. p. 76.

... our whole society is tainted with paternalism. The blame for the
political perversion of the monetary system must be placed upon society. For
it has tried to escape the task of rationalizing the subject and has thrust
the problem upon the Great White Father, who is just as ignorant as to what
constitutes money but is, of course, glad to grasp power. p. 153.

The so-called academic or conservative or classical teachers and writers are
merely different categories of socialists, because they all accept the
socialization of the monetary system [i.e., state control of the monetary
system.]. p. 153.


Human aspirations for freedom can never be gratified as long as there is a
veto power over self expression, whether imposed by a man on horseback or by
means of the ballot box.

Yet the democratic state has no means of functioning other than by popular
elections. That being so, the functions of the state must be limited to
those public services which are desired by all. Consider the folly of
undertaking to express the people's will in all human affairs by an
occasional election at which, in one confused shout, we sound our yeas and
nays on a multitude of questions. At the same time, we select
representatives to guess what it all means, and to divine from it how to
execute our will on hundreds of issues that arise after we have given our
confused "mandate." ... Can we have self-government, and at the same time
delegate the power to govern? p. 78.

[Quoting Arthur Kitson in "A Scientific Solution of the Money Question,"
1894 ...] "The issuance of money must be free, in order that industry and
commerce may be free; and commerce must be free in order that people may be
free. Freedom to life necessitates freedom to maintain life, and this
involves freedom of exchanges. Denial of free money is, therefore, a denial
of freedom to life."

It is astounding to me that Kitson, after thinking so clearly and
fundamentally on money, should have since lapsed into a political money
reformer instead of devoting his life to promulgating private enterprise
money. p. 131.

It is through the preservation and perfection of the monetary system that
economic democracy will demonstrate its potential for human welfare.... The
establishment of a nonpolitical monetary system is but an undertaking in
accountancy. p. 80. [This has be amply demonstrated by the emergence of LETS
and other mutual credit clearing systems.]

None will be coerced to participate. None will be barred. There will be but
one monetary language for the world, and a democratic monetary system will
unite people everywhere in the universal freedom of exchange. p. 81.

New Vistas

Ideas have wings. There is no transportation problem in the export of an
idea, and one may give an idea without losing it. Both the giver and the
receiver are benefited if the idea is sound. Let us give the peoples of the
world an idea, a liberating idea, a constructive idea that involves no
sacrifice on our part and no obligation or embarrassment on the part of

The authentic approach to realizing man's dream of world union is through
the vehicle of a nonpolitical monetary system.

We are approaching the universal collapse of the political monetary system.
With such collapse will come revolutions, unless an alternative monetary
system shall first come into existence. A true monetary system could avert
the chaos and forestall revolution, thereby preserving the existing national
states even while gradually rendering them harmless. For the political
monetary system is the principal instrument of state separatism. Once it is
gone, all other interferences with production and exchange will recede.
Denied power over the economy through their respective monetary systems,
the states will be obliged to abandon their paternalistic pose and stand
before the people in their true light, as dependents without productive
powers, and utterly devoid of any powers of largess. The trend of human
affairs will then be as irresistibly toward individualism and self
determination as the present trend is toward socialism and domination by the
state. p. 84.

Since no social order has heretofore been predicated upon the principle of a
nonpolitical monetary system, it follows that its promulgation will require
a revolution in thought and action and that it will be many years before its
full implications can be comprehended. ...When he [the natural person]
asserts that the creation of money is within his own powers, he will
surmount the last major barrier to self advancement and a limitless horizon
will open before him. p. 85.

I see no need for international relations, and I am sure there is no demand
for it, except from special interests that have no respect for the rights of
others. It is the provocateur of war. "A decent respect for the opinions of
mankind " dictates that no national government have any opinions or policies
pertaining to the affairs of other governments or peoples. The conscience
and culture of one people should be allowed to react directly upon other
people without the intervention of governments. p. 132.

From a letter to Mildred Loomis (May 21, 1949)

Social reformers are divided into many movements, and each has its pro and
con. None of these issues can be resolved under the existing political
monetary system; which frustrates the operation of economic democracy, a
process that can operate only by means of a true monetary system. If one
tenth of the energy expended in attaining ends could be consolidated upon
realizing the means, the world's problems could be quickly solved.

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