Chapter 1: Monies
Subsections 1 to 4 deal with general economical concepts of little controversy. Cooperation is useful, so is the indirect exchange of goods with money, that allows much more than mere barter. The free market and property rights lead to a more perfect fulfillment of human needs. Considered is also the birth and selection of "natural money", money chosen by free people in a free market, inevitably tending to be precious metals,
Hülsmann notes, that there are two key conditions for a good to become money. It must have the physical properties AND be considered valuable by itself. The price of a good, when employed only for nonmonetary purposes, is a good starting point to estimate its price for use as a money. Also, should the good stop being accepted as money due to whatever reason, it will still have value due its other uses.
There is a honorary mention of credit money, which, unless in special conditions, won't see widespread use. (Similar note for electronic money.) With that, onward to paper.
If gold and silver are supposed to be the best types of money, how comes that everybody uses paper? Before analysing in the detail the supposed advantages, Hülsmann asks whether this money is a product of the free market.
The answer is a No. First off, all paper currencies were forced on the people by their governments. It was never a creature of the free market. But could it conceivably be one? Still a (most likely) No: whatever its perceived advantages, paper notes have one great risk attached to them. Should free people be unwilling to accept it, it has no alternative uses, so its value could plummet to zero. With such a risk, people would be abandoning it until it stops being money.
Therefore, the only way to keep paper money in circulation is through force, by mandating its use in all transactions, or at the very least to pay taxes ("the value of avoiding trouble with the police"). To state, that paper money is incompatible with a free society is a good initial argument.
Chapter 2: Money Certificates
It is noted, that the process of coinage raises the value derived from precious metals used as money. Knowing the exact amount used in a transaction and being certain about it does save time.
In the same breath, Hülsmann notes, that the value of such a coin depends on the trustworthiness of its maker. If trust is lacking, weighing or even melting down the coin may be considered. A trustworthy coin saves this expense and is therefore of greater value; thus a coin costs more than the metal of the same weight (He notes the premium was historically around 0,2% seldom above 0,5%.)
Finally, a coin will be used where its maker is trusted, which can be world-wide in some cases (the Mexican dollar is mentioned as a popular example of its time.)
In the matters of trust are rulers too often a disappointment, competition is much better at preventing fraud.
Hülsmann speaks also about money certificates (or substitutes or "certificates separated from money"), which simplify transactions, as the real money is physically stored in a bank. However, it seems impossible for the banks to resist the temptation to commit fraud with them.
(Note: there is another blog about the same book.)