348 of 378 people found the following review helpful
Buy a second copy to throw at the TV,
This review is from: Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse (Hardcover)
In discussions of today's economic meltdown and what to do about it, the Federal Reserve is a stealth helicopter: it never shows up on the radar. With the exception of a few esoteric specialists and those Ron Paul Revolutionaries who burst into chants of "Abolish the Fed!" during campus rallies last year, it's like something has been put in our water to cause our eyes to glaze over and our minds to wander off at the very mention of centralized banking.
Which is, of course, a Problem, since as historian Thomas Woods notes in this important book, the Federal Reserve bears a large part of the blame for the mess we're in. In the first part of "Meltdown," Woods shows how both in theory (the Austrian School, to be precise) and in practice, Fed policy fueled an artificial boom and instead of allowing the necessary, if unpleasant, short-term bust that will lead to recovery, is pursuing policies guaranteed to drive us deeper into the abyss. Little of this finds its way into the popular or business press, suggesting that the people who know the truth aren't talking, and the people who are talking either don't know or are deliberately trying to keep the helicopter hidden. As Woods writes, "critics of the market who ignore the arguments raised in this chapter are, to say the least, not being honest" (p. 86).
But to paraphrase Will Rogers (no relation), it's not so much the things we don't know that are a problem, it's the things we DO know that aren't really true. That's why every bit as important as Woods' explanation of the role of the Federal Reserve in the unnecessary cycle of boom and bust is his taking down of decades' worth of myths about the government's role in the economy. As the author points out, historians have more or less abandoned the idea that New Deal intervention "got us out of the Depression," but the myth remains stronger than ever among journalists and the public. The result of this is not only a profound misunderstanding of American history, but more to the point, a widespread delusion that "history proves" massive government spending promoting consumer demand is the way out of a recession. Here again we see the apocalyptic power of bad ideas.
All this suggests the economic crisis, and particularly the stimulus-driven response to it on the part of the Bush and Obama administrations, are a domestic equivalent of the Iraq War (I want to note that this is my metaphor, not Woods'): an over-reaction to a situation by and large of our own creation, and sold to the American people through a series of lies, the plan largely benefits those who argue for it most strongly while the rest of us end up poorer. The "opposition" is arguing over details while conceding the fundamental principle -- an intervention that gives the government a foothold of occupation it will probably never relinquish.
That's why "Meltdown" is so important -- and why the Austrian School, which alone not only foresaw the coming crash but understood why it was going to happen, deserves so much wider attention. If I could improve anything about "Meltdown," I would have made even more prominent the citations of thinkers and books interested readers should pursue. Woods does do this in an appendix, and I strongly recommend you read the footnotes closely. But something like the "additional reading" or "books they don't want you to read" call-outs of the author's The Politically Incorrect Guide to American History would, I think, have been even more useful.
If "respectable opinion" does pay attention to this book and the ideas it promotes, it will do so with the same combination of pity and contempt that earlier book received. As Woods writes, "You do not win friends in the political and media establishments by proposing a monetary system that cannot be exploited by governments to enrich their friends, enable their addiction to spending and looting, and fund their bailouts" (p. 134). But out here among the non-establishment, you DO make friends by telling the truth. And Tom Woods has a lot of friends.
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Showing 1-10 of 39 posts in this discussion
Initial post: Feb 9, 2009 1:30:53 PM PST
M. Alagna says:
In reply to an earlier post on Feb 9, 2009 10:08:23 PM PST
Andrew S. Rogers says:
Wow. I've been denounced as a granola-eating commie! This will give me all sorts of credibility I've never had before. Thank you!
In reply to an earlier post on Feb 12, 2009 1:03:35 PM PST
[Deleted by the author on Feb 19, 2009 7:08:46 AM PST]
Posted on Feb 19, 2009 12:59:50 PM PST
Last edited by the author on Feb 19, 2009 1:11:25 PM PST
In reply to an earlier post on Feb 19, 2009 1:38:58 PM PST
Last edited by the author on Feb 19, 2009 1:43:50 PM PST
M.K. Reiner says:
So what's your solution, Owen? An $800 billion pork-laden "stimulus" bill? And way to twist Mr. Woods' words to satisfy your own self-loathing and political leanings.
In reply to an earlier post on Feb 19, 2009 2:33:15 PM PST
Last edited by the author on Feb 19, 2009 2:43:18 PM PST
Thomas E. Woods Jr. says:
Our friend Mr. Hatteras has not read the book, which spends a very tiny amount of space on the Community Reinvestment Act. On top of that distortion, though, Mr. Hatteras (surprise!) doesn't know the first thing about the CRA. What is relevant is that it was only under the Clinton Administration that the Act really got enforcement teeth. This aspect of things he leaves unmentioned, in order to make me seem frivolous for bringing it up.
Still more proof he hasn't read the book: in the conclusion I expressly say that blaming the crisis on the CRA is a dead end, and that such an explanation cannot possibly account for the devastation we are seeing.
Therefore, Mr. Hatteras is a liar.
It's a shame, though, that we don't get to learn more about Mr. Hatteras' profound reading of the economic literature, his insights into capital theory, and all the other areas in which he is so obviously learned. He's heard Paul Krugman refer to Austrians as "liquidationists," and, well, that's all he needs to know. Not the slightest idea what the Austrian position actually is, of course -- he's Owen Hatteras, after all, and need not trouble himself with minor technicalities like reading the people he criticizes or knowing what he's talking about.
Instead, he jumps right into character assassination, and attempts to destroy people who disagree with him. That, unfortunately, is typical of the totalitarian behavior of those who claim to be so very open minded, but who seek to utterly ruin those who have a different point of view. Thankfully, most people have IQs above 60, and don't fall for stupid tricks like that.
In reply to an earlier post on Feb 19, 2009 2:45:53 PM PST
Last edited by the author on Jul 2, 2009 11:10:32 AM PDT
In reply to an earlier post on Feb 19, 2009 3:35:55 PM PST
Last edited by the author on Feb 19, 2009 4:58:00 PM PST
"I blush to find it fame", that Mr. Woods should favor me with a reply. If Mr. Woods concedes that the Community Reinvestment Act had nothing to do with the current downturn; then why does he mention it at all; and what then, does the Act "really [getting] its enforcement teeth" have to do with anything? Perhaps his true argument is with Regnery Press' publicity department, which seems to have trumpeted, and perhaps misrepresented what Mr. Woods calls "a very tiny amount of space". Far from viewing surreptitious attempts to rub racial wounds sorer as "frivolous", I take them with deadly seriousness.
Starting in the 1950's, a now-deceased gentleman named Immanuel Velikovsky published a slew of popular books on astrophysics which attempted to explain various events described in the Old Testament as being due to natural occurrences (e.g., the Sun holding still in the sky for Joshua while he fought the Philistines, etc.) Reviewing one of Velikovsky's book, an astronomer wrote: "A fairly complete textbook of physics would serve as part of an adequate refutation of Velikovsky." Mutatis mutandis, the same applies to Mr. Woods. While economics is not physics, eighty years of econometric analysis has not been kind to conservative Legends of the Fall. But one would have to study the subject seriously to know this, and not just glean bits that support one views. Incidentally, when Mr. Woods states in his book that the New Deal did not succeed in pulling the nation completely out of the Depression, he forgets why economic historians conclude this: the New Deal probably did not spend enough to offset the collapse in demand. It was the Second World War that did that. Regnery Press once specialized in books critical of U.S. entry into World War II. Somehow, I doubt even Mr. Woods would be willing to go quite that far.
In reply to an earlier post on Feb 19, 2009 4:57:42 PM PST
M.K. Reiner says:
..."the New Deal probably did not spend enough to offset the collapse in demand." Then perhaps the wonderful new bill passed by Congress will do the trick. When that happens, let me know. Meanwhile, I'll be asleep dreaming of your unsustainable utopian vision.