This file is a single short political-economy essay/chapter. It addresses the 1993 pressure on the French franc within European exchange-rate arrangements, placing it beside recent pound and krona crises. Rothbard's thesis is that currency "attacks" are not mysterious predations by speculators but market corrections of politically overvalued fiat money; governments create the crisis by inflating while trying to command a higher exchange value than markets will pay.
An all-too-familiar melodrama was played out in full on the stage of the world media. It was the same phony story, with the same Heroes and Villains.
The opening's theatrical language names the media frame only to invert it. Officials appear as defenders of a noble franc, while speculators appear as predators. Rothbard recasts them as ordinary sellers of weak money, whereas central banks and governments are the coercive actors spending reserves to sustain a parity.
If national and international statesmen and governments are the Heroes, the Villains are speculators whose “attack” consists simply of selling the currency, the franc or pound, in exchange for currencies they consider “harder” and sounder, in this case the German mark, in other cases the U.S. dollar.
The essay then moves from polemic to elementary price theory. Since gold redeemability disappeared, national monies function as independent fiat commodities; their value depends on supply, demand, and expectations. Inflation lowers both domestic purchasing power and foreign exchange value. Fixed parities do not repeal this logic; they postpone it until reserve losses, devaluation, or widened bands acknowledge the market price.
A currency's value is determined like any commodity: the greater the supply, the lower the value; the greater the demand, the higher the value.
Rothbard's ideal is a world gold money, but his practical second-best under fiat is floating exchange rates that clear markets. The "strong franc" cannot be made strong by speeches or rescue operations. A real franc fort would require monetary restraint rather than official prestige politics.
If France really wants a “franc fort,” the central bank should stop increasing the supply of francs on the market.
His crucial conceptual move is to redescribe fixed exchange rates as price controls. An overvalued franc is a price floor on weak money and a ceiling on harder money, producing a surplus of francs and shortage of marks or dollars. Intervention becomes price support, and speculators have an obvious one-way bet because the artificial value can only fall.
Governments like to pretend that the value of their currency is greater than it really is.
This is why Rothbard reverses the conventional moral accusation. Speculators are not the cause of the crisis; they reveal the contradiction between inflationary policy and an official exchange rate. Blaming them mistakes the symptom for the policy failure.
Blaming speculators for these crises is as absurd as blaming “black marketeers” for higher prices under price controls.
The final third broadens the French episode into a critique of the European Monetary System, Maastricht, the ECU, and the prospect of a single European central bank. Rothbard treats narrow bands and monetary union not as free trade but as centralization through money: a supranational mechanism for coordinated inflation and political control. Germany's Bundesbank is criticized in public, he argues, because it did not inflate enough to let France and Britain enjoy cheap credit and subsidies without exchange-rate embarrassment.
A single European currency and central bank was sold to the world public as a giant “free trade unit,” but it actually was a giant step toward centralized government in Brussels.
The structure is therefore sharply staged: media melodrama, monetary theory, price-control analogy, and institutional critique. Its relevance lies in showing an Austrian-libertarian reading of the pre-euro crises: markets discipline overvaluation, floating rates reveal policy, and speculators perform price discovery even when cast as public enemies. Rothbard closes not with confidence in better management, but with confidence that markets expose unworkable monetary plans.
Free markets, not only in the long run but often in the short run, will triumph over government power.
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