A Journalist's Archive

Thomas Woods
Reviewed by Kathy Hare

          Warning: "Meltdown," by Thomas Woods, will make your blood boil and head throb. The book offers "a free-market look at why the stock market collapsed, the economy tanked, and government bailouts will make things worse."

          But don't blame the messenger; Woods didn't cause the current economic disaster. However, he does an excellent job of explaining who did. While "Meltdown" is a main selection of the Conservative Book Club, it is not a partisan work. Woods blames both Republican and Democratic administrations over the last 70 years, combined with the missteps of the Federal Reserve, for the current financial nightmare. He gives readers an enlightened history lesson, unlike any you have read in school. However, "Meltdown" does more than review past mistakes, it offers a solution to end the boom and bust cycles that have been cannibalizing private wealth for decades. This is what makes "Meltdown" a must read for everyone who wants the government to stop repeating the same old mistakes that got us into the present monetary debacle.

          Woods is a senior fellow at the Ludwig von Mises Institute. According to the institute's Web site, its purpose is to "advance the Austrian School of economics... defend the market economy, private property, sound money, and peaceful international relations, while opposing government intervention as economically and socially destructive." In a nut-shell the Austrian School of economics is the exact opposite of Keynesian monetary theory that relies on government, instead of the free-market, to control the economy.

          "Meltdown" makes a strong case against the Keynesian school of thought. Let's start with the housing bubble. "At the center of the collapse were the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, better known as Fannie Mae and Freddie Mac," Woods writes. While we are now aware of that fact, few politicians, other than Ron Paul, ever discouraged the irresponsible lending policies these organizations so boldly promoted. At the height of the madness, banks granted mortgages to borrowers who lacked down payments, good credit, and jobs. Then bankers bundled the loans and sold them to Fannie and Freddie. This scheme began under the Clinton administration, which touted it as a way to provide "affordable" housing to people with low and moderate incomes.

          Concerning Wall Street bailouts, Woods points out that both Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke insisted our financial institutions were strong right up to March 2008, when numerous banks started to fail. This led to the first of many bailouts, all conducted during the Bush administration. Readers are all too familiar with the government take-over of Fannie, Freddie, AIG, etc., but I believe we could all benefit from reading what actually occurred behind closed doors from a source other than the mainstream media. This is what "Meltdown" provides.

          Woods also devotes a chapter to debunking myths about the Great Depression. Many U.S. History books blame the Great Depression on "President Hoover's laissez-faire economics favored by big business." Woods debunks this notion, "Hoover was no free-marketeer. His unprecedented intervention took the 1929 downturn and made it into the Great Depression." Woods then illustrates how President Roosevelt's attempt to prop up unsound business practices, while also establishing public works programs and the federal welfare programs, extended the Great Depression. After reading this chapter, even many Democrats may question whether America needs a "new FDR."

           A chapter entitled "Money" is really an economic primer that explains how humans advanced from the barter system to a money economy. It leaves little doubt that a system based on paper money, not backed by anything of substance such as gold or silver, is doomed to fail. Woods also explains how inflation destroys wealth and predicts that hyperinflation will soon gobble up what is left of people's investments and retirement accounts. So long as the government continues to combat indebtedness by creating new debt, he said, there is little hope for a recovery.

          While other economic books rely heavily on graphs and terms many laymen find hard to follow, this is not the case with "Meltdown." Woods writes in easy to understand terms and packs a lot of information into his 160 page endeavor. My only criticism of this work is Wood's sarcastic tone that dominates throughout the first third of the book. Perhaps it's difficult not to be sarcastic when the economy is crashing, especially if you're a writer who warned against the dangers of government intervention for most of your career. However, Wood's sarcasm becomes tiresome, and I believe he would gain a wider audience if it was eliminated.

          Even so, there are not enough books out there that deliver an alternative to the current way of conducting business in this country. "Meltdown" is well worth reading based on that fact alone. Read it and see if you agree.

First published in The New Falcon Herald
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