Book Review: Meltdown

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

What happened to the economy and what are the necessary steps restore it are complex questions. Amazingly, Thomas Woods’ has the ability to answer these questions in simple laymen’s terms. He begins with the big picture of how the economy works and then provides the two main philosophies of regulating the economy. Only reading the newspapers and watching CNN, will lead you to believe that the diagnosis is greedy Wall Street employees and real estate financers, and the treatment is an artificial stimulus. This is the Keynesian school’s perspective which believes in the marriage of economics and politics.

According to Woods, this is incorrect on both accounts, and we are currently on the wrong course. Woods is the anti-Paul Krugman and from the Austrian school of economics which advocates the separation of money and state. In contrast, he blames the problems on government programs interfering with the natural business cycle of boom, bust, and recovery. The Federal Reserve, Fannie, and Freddie created the programs leading to an artificial boom and then the economic indicators became unrealistic. This resulted is hyperinflation, people purchasing homes they can not afford, and then losing their jobs.

In contrast to Obama’s bailouts through massive government spending, Wood’s prescription for the road back to prosperity is to stop manipulating the money supply and go through the business cycle and let the markets forces correct themselves. I highly recommend you read Meltdown and decide for yourself which school to root for.

Guest Reviewer Randy Mayes is a Duke Alumni, author, science writer and science policy analyst, and a Fellow at the Institute for Ethics and Emerging Technologies.

© Reviewer: Randall Mayes & Ford Library – Fuqua School of Business.

All rights reserved.

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