Jesús Huerta de Soto


Jesús Huerta de Soto : biography

23 December 1956 –

Economic views

Soto identifies with the Austrian School. He exchanged letters with Murray N. Rothbard for several years Jesús Huerta de Soto, , (). New Journal, No. 42, December 1995, pp. 98–103. An English version of this paper was published in the Journal des Economists et des Etudes Humaines in Volume 6, Number 1, March 1995, pp. 15-20. Another Spanish version was incorporated as "Introductory Note" to the issue "Spanish Book of Murray N. Rothbard: The Ethics of Liberty", published by Union Editorial, Madrid 1995, pp. 13-17 and he states that he follows the tradition of Rothbard and Mises. Two Austrian economists (Yeager and Sechrest) have been critical of Huerta de Soto’s interpretation of Austrian views.

General equilibrium theory

Economist Leland B. Yeager has cited Huerta de Soto as an example of an Austrian School economist who scorns general equilibrium theory. Yeager quotes what Huerta de Soto calls the "pernicious analysis" of price equilibrium at "the intersection of mysterious curves or functions lacking any real existence…even in the minds of the actors involved."

Full reserve and fractional reserve banking

Huerta de Soto advocates full-reserve banking, generally supporting the views of Murray Rothbard on the subject.

In 2006, Huerta de Soto wrote an 876-page book on the subject: Money, Bank Credit, and Economic Cycles. The book was reviewed by Soto’s friend, economist Larry J. Sechrest,Larry Sechrest obituary who stated that Soto attempted to provide "final and decisive proof" that fractional reserve banking is incompatible with private property rights, morality, and a stable economy. Sechrest wrote that although Soto presented a painstaking investigation of legal theory, banking history, business cycles, and medieval theological doctrine, a great deal of it is irrelevant to the book’s thesis. Sechrest stated that reader of Soto’s book "will repeatedly encounter, along with some careful scholarship, ‘straw man’ arguments, non-sequiturs, and question-begging." Sechrest rejects Soto’s description of fractional-reserve depositaries as “legal aberrations” possessing no legal standing, much like human “monsters” with physical deformities" and rejects Soto’s characterization of fractional reserve banking, which Soto describes as “sin” which must lead to monetary inflation, excessive credit creation, malinvestment, and business cycles. Sechrest states that Soto ignores the possibility that they might not be the inevitable result of fractional reserve per se and that Huerta de Soto’s descriptions of government cabals interfering with honest banking sheds little light on the nature of banking itself. He concludes his discussion of Soto’s work: "Above all, Huerta de Soto refuses to even consider the possibility that banks’ customers may have been quite willing to face some risk exposure in exchange for the benefits 100 percent reserve banks are unable to provide…. Instead, he is driven to a heavily conspiratorial interpretation of banking history. In his hands any departure from 100 percent reserve banking is automatically taken to be evidence of malfeasance by bankers, even when there is no clear data on the details of the contractual relations negotiated by depositors." Larry J. Sechrest, , Quorum Books, 1993, Larry J. Sechrest Preface to June 2008 edition published by Ludwig Von Mises Institute, pp. 1-3.


In a Mises Institute blog post, Huerta de Soto contended that the euro should be considered a "second best to the gold standard" because, like the gold standard, the euro prevents national governments from active management of the money supply. German economist Andreas Hoffmann examined Huerta de Soto’s contention and stated his conclusions in a working paper at the University of Leipzig. Hoffmann noted that Huerta de Soto believes the euro prevents national central banks from manipulating exchange rates and issuing currency to pay off government debt. Hoffmann rejects Huerta de Soto’s conclusion that the euro can promote free-market reforms in EU nations with debt and structural problems, stating that "the often discussed move towards fiscal union seems to be even more problematic and risky. Fiscal union might undermine the credibility of the euro area as a whole if, for example, permanent fiscal transfers provide incentives to further delay fiscal consolidation efforts, postpone important (e.g. labor market) reforms and preserve structural distortions."Andreas Hoffmann, , University of Leipzig Institute for Economic Policy Working Paper 119, May 10, 2013.