''Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and the Government Bailout Will Make Things Worse'' is a book on the global

financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...

by historian

Thomas Woods Thomas Ernest Woods Jr. (born August 1, 1972) is an American author and libertarian commentator who is currently a senior fellow at the Mises Institute.Naji FilaliInterview with Thomas E. Woods, Jr. Harvard Political Review, August 16, 2011. Wo ...

, with a foreword by

Ron Paul Ronald Ernest Paul (born August 20, 1935) is an American author, activist, physician and retired politician who served as the U.S. representative for Texas's 22nd congressional district from 1976 to 1977 and again from 1979 to 1985, as well ...

. The book was published on February 9, 2009 by

Regnery Publishing Regnery Publishing is a politically conservative book publisher based in Washington, D.C. The company was founded by Henry Regnery in 1947, and is now a division of radio broadcaster Salem Media Group. It is led by President & Publisher Thomas Sp ...

Overview

Woods is a follower of the

Austrian School The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...

of economics and believes in allowing the market to freely compete in

currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...

, which he believes would lead to mostly gold-based currency. The book is dedicated to

Murray Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School, economic historian, political theorist, and activist. Rothbard was a central figure in the 20th-century American libertarian m ...

and

. The book debuted at #16 on the "Hardcover, non-fiction" ''New York Times'' Best Seller list, and advanced to the #11 spot in its second week on the list. According to the author's official website, ''Meltdown'' was on the ''NYT'' Best Seller list for 10 week

Woods' thesis maintains that:

deflation In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but sudden deflation ...

of prices neither causes nor prolongs depressions; deflation may be necessary to prevent depressions or to bring depressions to an end; the Fed is the primary cause of

business cycles Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examini ...

via its arbitrary and coercive control of the

money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...

; and trying to cure these

credit cycle The credit cycle is the expansion and contraction of access to credit over time. Some economists, including Barry Eichengreen, Hyman Minsky, and other Post-Keynesian economists, and some members of the Austrian school, regard credit cycles as the f ...

s with more government intervention will not work. Woods argues that government intervention in the form of support for housing and excessive monetary expansion caused the current crisis. By creating an illusion of wealth (that certain resources exist which do not exist), interventions encourage wasteful investments and unsustainable consumption, instead of productive investments. The proposed cures (

bailout A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global sys ...

s, more money creation, and stimulus spending) will just make matters worse. No business is really

too big to fail "Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the great ...

, he says, even large financial institutions. For them, as for other businesses,

liquidation Liquidation is the process in accounting by which a company is brought to an end in Canada, United Kingdom, United States, Ireland, Australia, New Zealand, Italy, and many other countries. The assets and property of the company are redistrib ...

is preferable to a bailout from the perspective of the larger economy. According to Woods, the depressions of the 19th century were caused by banks (various state banks and the

Second Bank of the United States The Second Bank of the United States was the second federally authorized Hamiltonian national bank in the United States. Located in Philadelphia, Pennsylvania, the bank was chartered from February 1816 to January 1836.. The Bank's formal name, ac ...

) issuing paper money, supposedly convertible to gold, in amounts greatly exceeding their gold reserves.See section "Boom and bust before the Fed" on pages 88 to 94.

Notes

References

* ''Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse'' (2009) & {{ISBN, 978-1-59698-587-2

External links

Washington Times review

Woods at Mises.org

Source of some statistics used in Meltdown

Another free market view of the crisis
2009 non-fiction books Bank failures Finance books Austrian School publications Non-fiction books about the Great Recession

Overview

See also

Notes

References

External links