Saturday, July 4, 2009

Woods Tells the Story of the Meltdown

[Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. By Thomas E. Woods Jr. Regnery 2009. Xi + 194 pages.]

Tom Woods has made an invaluable contribution with his latest book. The public today looks for an explanation of the current economic crisis and a prescription for recovery. Conflicting accounts abound. Should the collapse of the housing bubble and the accompanying credit crunch be met by increased government spending, as Keynesians aver? Does the key to the mystery lie in maintaining an adequate supply of money, as monetarists think? Those of us inclined to the Austrian School know better: such foolish resorts to the government serve only to worsen matters.

Austrian business-cycle theory is straightforward, for those willing to devote the necessary time to study praxeology. But therein lies a problem. The average person lacks the patience to read Human Action and Man, Economy, and State. How then can he acquire the rudiments of Austrian cycle theory and grasp why the theory is true? To set the question aside, on the grounds that it is unnecessary for the man in the street to bother with such matters, is a counsel of despair. If the public does not understand the economics of depression, there is little hope that we can avoid disastrous government policies. Unless the free market receives sufficient popular support, our economic future is bleak. FULL STORY

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