Meltdown- by Thomas E. Woods

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. frames the most important secular debate of our time. Woods is a senior fellow at the Ludwig von Mises Institute, which studies and promotes Austrian Economics. It is the most comprehensive and easily-understood examination of America’s current economic health as well as practical solutions. Woods, who neither endorses Democrats nor Republicans, evaluates the housing crisis, how the government created the housing bubble, the bailout mentality, myths about the Great Depression and money itself. He introduces Austrian Economics and explains the fallacies of Keynesian Economics and Keynes’ ideas of a permanent boom.


The mark of a genius is the ability to explain complex ideas in simple terms. Woods, while explaining money and why the Federal Reserve should not “inject credit” explains:

Imagine Robinson Crusoe living in isolation on his island. He decides one day that if he fashioned a net to catch fish he would be more efficient than if he kept trying to catch them with his bare hands. Suppose it will take him three days to assemble the net. How will he support himself during the time he spends working on it? Before embarking on the project he will have to catch more fish than usual, so he will have some left over to sustain him during the several days he plans to devote to the net. Put another way, a pool of savings, which in this case takes the form of extra fish, has to exist in order for any production process, including this very simple one, to be completed.

Crusoe is just one individual, but the principle he illustrates here applies to countries as well. Crusoe economics teaches us that if one individual engaged in an investment project, like Crusoe and his net, needs a pool of savings to see him through to its completion, than by extension an aggregate of capitalists spread over an entire economy likewise needs a pool of savings to support them during their time-consuming production processes. Otherwise, they cannot complete their projects as planned. (Meltdown, pg. 127)

He goes on to explain how artificial credit (including fractional reserve banking) damages the economy. Woods challenges arguments against a gold standard, instead promoting it as a tool of accountability and transparency for government. He gives a brilliant explanation of interest rates and the business cycle and puts in plain words why allowing the free market to name interest rates is in the best interest of all people. Woods explains why the Federal Reserve is an immoral and impractical institution which steals from the middle class and how it has destroyed the dollar. (The dollar has lost 95% purchasing power since the inception of the Federal Reserve.)

If you believe in the free market, you cannot support the Fed, one of the most intrusive interventions into the market. If you believe in the free market, you cannot support central planning of money, the very lifeblood of the economy. If you believe in the free market, you cannot support government price-fixing, including the fixing of interest rates. (Meltdown, pg. 157)

Austrian economists are the only economists who predicted the Great Depression and this current meltdown. It is urgent that in the coming election, we elect individuals who are trained in this school of thought. The majority of Republicans and Democrats are ignorant of anything but Keynesian economics, and America’s continuation of this perpetual cycle will be the end of America. “Consider the Austrian School, which offers the only intellectually coherent free-market position in light of the present crisis.” (Meltdown, p. 157) It is crucial that we abandon those who failed to predict these crises and examine those who predicted them and can point us the way to freedom and prosperity.