Thomas E. Woods: Meltdown; A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse

Having already read What Has The Government Done To Our Money?, The Mystery of Banking, and Early Speculative Bubbles and Increases in the Supply of Money, the aspiring student of Austrian Economics will have a clear idea as to why the finances of the western world are in such a calamitous state.

However, we now need to step up a gear. Having absorbed the lessons of why Keynesianism delivered the West into the arms of financial armageddon, we must get onto the front foot to start taking the fight towards the enemy.

The problem with this change of tack is that the economics profession is thoroughly riddled with Keynesianism. As you march grimly forward through the detritus of economic debate, with a Sturmgewehr 90 assault rifle and fixed bayonet gripped firmly in your hand, thousands of blind Keynesian moles will leap up from deep dark holes in the mud to bite your ankles.

What we need to slay these pesky beasts with is some kind of mallet, to accompany our Sturmgewehr 90 assault rifle; this is what Thomas Woods supplies in Meltdown, which is a Whack-A-Keynesian-Mole compendium for Austrians.

The writer Ayn Rand once opined that if you captured the philosophy departments of the world’s universities then eventually you would conquer the entire rational world. I would like to add to this the economics departments, too. Because philosophy is fine if someone is paying you a tenured salary and supplying you with bread and other sustenance. But we need to know where the bread is coming from, otherwise all civilised debate ends in a rugged and potentially lethal scramble for survival, even amongst the philosophy professors, who would perhaps be the first up against the wall.

The Keynesians took this lesson seriously by subverting the economics profession in virtually every university in the world. From this fountainhead, in a waterfall of economic distraction, they then captured most of higher education, then most of the intellectuals, and then most of the general public.

Which means you will have a fight on your hands in virtually every debate you have with anyone about re-introducing hard money and other rigid controls over government spending habits. Rather incredibly, this resistance to common sense gets worse the more financial knowledge someone possesses.

For instance, if you talk to a banker, he will laugh in your face if you mention returning to the gold standard; if you talk to an economist, he will try to blind you with mathematics about why government budget deficits are the only way to achieve economic growth; and if you talk to a professor of finance, he will refuse to admit you to his class or if you are already in his class, he will flunk you for failing to think correctly or for daring to argue with him.

However Meltdown will supply you with all the ammunition you need to deal with these Keynesian counter-insurgency actions.

What is most remarkable about the book is the speed with which Thomas Woods brought it out, following the bursting of the Bernanke Bubble in 2008; Woods beat every rival economic commentator in the Keynesian camp to the field of conflict. Just for this we should applaud him, because his book set the benchmark for the debate and gave the Austrians an offensive platform which has possibly led to a general acceptance, even amongst the general public, that the stimulus programs of the Keynesians have failed to halt this collapse, and that it is now time for government spending to be massively retrenched, in the former style of the Canadians or the New Zealanders.

Obviously, governments will only pay lip service to this idea of retrenchment and will continue to spend as much as they always have, or more, but the myth of Keynesian invincibility has been broken; they are now on the back foot and we can keep pressing them until they finally cave in.

To help do this, arm yourself with Meltdown and join the fray.

Woods begins with an overview of Federal Reserve banking system and then how the US government created the housing bubble, particularly via the machinations of Fannie Mae and Freddie Mac, plus the Community Re-Investment Act.

Woods follows this with a discussion of how and why the US government then bailed out Wall Street, before applying Austrian Business Cycle Theory (ABCT) to Bernanke’s Bubble and the 2008 crash situation.

In the final third of the book, Woods then really gets to work cracking the craniums of those persistent moles with a golden mallet, by revealing and debunking many great Keynesian myths about the ‘Great Depression’, explaining the origin of money, and putting forward an Austrian-based plan for getting us all out of this ongoing fiduciary mess. This strategic plan is based upon the following straightforward concept of “Let The Market Work!”, allied to other common sense suggestions:

  • Let bankrupt businesses go bankrupt — Nobody is too big to fail!
  • Get the government out of the mortgage and house buying business
  • Stop all of the bailouts (and let Schumpeter’s creative destructionism get to work)
  • Cut government consumption spending and stop government borrowing
  • Let’s get back to production and investment, rather than consumption and spending
  • End government manipulation of the monetary system
  • Abolish the central cause of all of this, the central banking system

As Nelson said of the French Fleet, “Always go at ‘em!”

Though just as Nelson’s ideas on fleet manoeuvres were available to all the captains of his age, all of the ideas above appear regularly at The Cobden Centre. However, Mr Woods puts them in such a precise and powerful way that I’m highly suspicious that when the late great Murray N. Rothbard died tragically in 1995, the good professor left behind his secret golden box of rhetorical flourishes, deadly devices, and penetrating wit to a certain Tom Woods, Esquire.

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About Andy Duncan

An Austrian Internet Vigilante trying to live Outside the Asylum
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