Harry Potter And The Sorceror\'s Bank

2001manxcrownharrypotterallkeysrev240.jpgAs I have read through the entire Harry Potter series, I find that contrary to some opinions that Rowling?s series is a thinly-veiled swipe at Thatcherism (I think the Slate writer is really stretching here), the series is instead filled with a number of libertarian themes (anti-state-authority, pro-civil-society), increasingly so as the books progress. I suppose it is a testimony to the quality of Ms. Rowling?s writing that people can draw such wildly contradictory conclusions.

One aspect of the Potterverse that is admirable from an Austrian point of view is the nature of money and banking in the novels. The monetary system of the wizarding world is based on commodity metals ? Gold, Silver, and Bronze ? and given Mr. Weasley?s difficulties with Muggle (paper) money, one assumes that there aren?t banknotes or other kinds of fiat money floating around. The only bank mentioned in the wizarding world is Gringotts- which isn?t run by wizards at all, but by goblins, who?re known for their exacting bookkeeping and extraordinary security measures. There is no mention of other banks, but it is clear that Gringotts (perhaps by dint of its racial makeup) is independent of the wizard world?s government- which means that the wizarding world operates under free banking. Gringotts appears to be a transnational monopoly, but there do not appear to be barriers to entry in the banking industry- meaning that the bank maintains its ?monopoly? position only by trading on its reputation and by providing superior service, lest competitors enter the market. Gringotts doesn?t seem to pay interest on the deposits kept within its vaults, either- which suggests that it operates under 100% reserve banking and doesn?t lend out other people?s money (in order to maintain its reputation by remaining ever-solvent)). This solitary (but transnational) bank provides the wizarding world with a stable commodity money supply that is unburdened by credit expansions and manipulation by government central bankers.

What a splendid world Ms. Rowling has created!

Share this

When first introduced to

When first introduced to Gringotts, I recall thinking, "Now, THAT'S a REAL bank. Pity we don't have them today."

Thanks for fleshing out the notion.