In Review: Meltdown by Thomas Woods

Historian and senior fellow at the Ludwig von Mises Institute, Thomas Woods paints a vivid picture of the origins of fiat money in America. Tracing currency back to the Roosevelt administration, where in 1933 gold was outlawed as currency. This signaled the end of commodity backed money in America, and gave unprecedented clandestine power to the Federal Reserve, that to this day monopolizes our money supply under the tutelage of the federal government.

 

The Federal Reserve is a government created, government run, monopoly that arbitrarily sets interest rates below market standards, and floods the economy with fiat currency that’s tangible value is par with voodoo. Thomas Woods in his current book Meltdown assigns the blame for the fiscal recession, and impending depression, at the feet of the Federal Reserve. He demonstrates how a culpable federal government manipulates economic policy and currency to create a variety of monopolies, paying off constituencies while simultaneously impoverishing Americans and destroying capitalism in an insatiable lust for power and wealth.

 

Woods provides ample historic evidence, demonstrating how every boom-bust cycle in American history was caused and perpetrated by the Federal Reserve. He demonstrates how myopic economic ideologues from both political camps enable fiscal disasters with the blessing of our government.

 

Geed, power, government sponsored enterprises, monopolies, hyperinflation, and flight to real values; these are all inherent afflictions of a kleptocracy that controls our money for its own rapacious spending. Self serving politicians cling to an immoral Keynesian economic fantasy, favoring unsustainable boom time spending to avert the inevitable bust cycle. (See pragmatism). This only prolongs the bust cycle, denying the markets the opportunity for natural adjustment, thus aggravating the inevitable, often painful, market corrections that cannot be denied.

 

By continuously propping up failing industries the government attempts to choose winners and losers, (Chrysler, GM, Bear Stearns, AIG, City Bank, all comes to mind). Government fiscal policy creates moral hazard. For example, guaranteeing bank deposits with FDIC insurance —tax payer money — then encouraging banks to make high risk loans, uncollateralized loans, creates an atmosphere where government bail out is not only inevitable, but normal operating procedure. This misallocation of resources, robs the best and the brightest industries of capital and services that fuel our economy in the private sector.

 

Woods explains how fiat currency is manipulated by government to gain and maintain control over banks, industries, and investment firms. He dispels the prevalent: too big to fail myth and demonstrates how failure of these institutions will reallocate capital and resources into existing productive industries allowing them to thrive and grow our economy back to stability.

 

Woods takes an assertive stance, offering viable alternatives to the economic lunacy of throwing good money after bad, in an effort to spend our way out of recession, a recession caused by the same economic theory government now hails as the cure. He postulates the resurgence of commodity based currency so the Federal Reserve can’t print, spend, and inflate, beyond the means of a fixed commodity.

 

This book is a fascinating read, it strikes a fast pace with invaluable information on every page. Woods has masterfully taken a complex subject making it entertaining and educational for the laymen. This is a must read for all Americans concerned about our future, and economic survival.

Advertisements

Tea Anyone?

I was the keynote speaker yesterday at a tea party in my little town of Cortez Co. I awoke today to discover the Cortez Journal had misquoted me, and ruined an otherwise perfectly good metaphor. Then the paper went on to say that I was “arguing against many policies recently initiated by President Barack Obama.”

 

Not once did I invoke the president’s name or his policies in my entire speech. If they can paint me anti-Obama, then they can paint me a racist. Doesn’t this sound all too familiar coming from the left these days? (To uncover the true racists in America see my blog entitled: Is Government Spending Moral)?

 

The real thrust of my speech was about the morality of capitalism, and the profligate government spending of tax payer money; none of my message fell on deaf ears.

 

So now we move forward; it is time to be proactive and defend capitalism; it is time to let the inherent market forces of capitalism work for a change. Make no mistake about it; our government has manipulated capitalism in an effort to reap the rewards, while avoiding the painful causality of the market forces that command capitalism. (One can’t have his cake and eat it too).

 

The auto industry and organized labor are about to feel the wrath of these market forces, market forces that have been hijacked for years by special interest in Washington. The fight for capitalism is just beginning and with this fiscal war there will be financial casualties. An economic renaissance is waiting, but only after a cadmean victory liberates capitalism from government bondage.

 

It’s time to start flexing our fiscal muscles. Why bolster the economy when the government preys on the productivity of free men? Why support a regime that attacks our liberty, and destroys our constitution with such reckless disregard for our individual rights.

 

What I advocate is this:

 

Cancel your subscription to any newspaper or magazine that abandons journalism to enhance the pragmatic ideology of the progressive movement.

 

Boycott Hollywood. Any actor, studio, musician, performing artist, that opens his political pie hole only to stick his elitist foot in his mouth is unworthy of our financial patronage. Stop watching bias network news or television programs that advance the progressive ideology. Sit your family down and read a book for a change, pass it around so every one can read. (You may just rediscover your family).

 

Build a data base of companies with affiliates that lobby Washington with bribes and political campaign contributions to manipulate our markets to their own ends. And don’t buy their durable goods! (GE comes to mind).

 

Barter for goods and services. Buy local and pay cash whenever possible,

So that business men and women can keep that income off the tax role.

 

Have a plan to survive the economic collapse of a nation should it occur. Before capitalism can flourish the markets have to repair themselves, and there is a reckoning to pay for the irreparable damage government has inflicted on the marketplace.

If this is the antidote, I prefer the poison. (Review)

 

 

Economics at best is a soft science. Put fifty economists in a room and you will get fifty different opinions on economic theory, they seldom agree unless the conversation turns to free trade, it’s only then they sing harmoniously the virtues of free trade.

 

Jagdish Bhagwati, In Defense of Globalization shows us the human face of globalization. He dispels the myth that poor countries attract human rights violators. He presents objective data to support the argument that globalization benefits underdeveloped countries, improves standards of living, minimizes xenophobia, enhances peaceful relations, and advances civilizations toward the common goal of human prosperity

 

The attributes he extols are the inherent nature of free market capitalism. They are the desirable qualities of capitalistic economies. Mr. Bhagwati dissects the causality of multinational corporate influences on developing countries. He praises multinational corporations that preserve human rights while improving the standard of living in underdeveloped countries.

 

He addresses a constellation of false accusations from NGO’s, human rights groups, environmental consortiums, and organized labor. The loudest opponents here are special interest groups with covert agendas hiding behind the familiar facade of altruism. He dispels these myths as misdirected nationalism, neo-imperialism, and protectionism. In spite of the opposition an overwhelming theme emerges; globalization enhances the standard of living in underdeveloped countries; capitalism advances civilization in the most constructive means possible: free trade.

 

It is Mr. Bahgwati’s contention that the problem with globalization is a poor public relations image. Globalization, with all its apparent benefits and moral virtues needs a public relations face lift, so it becomes more socially acceptable to the NGOs and special interest consortiums. He postulates that to perform this make over, globalization needs to come under more international and governmental scrutiny, complete with controls — safety nets if you will — to prevent harmful market forces associated with fluctuating commodity prices and lost market share. He advocates adjustment assistance programs to appease labor unions for trade agreements. He contends these interventions are necessary to reduce the asymmetry between developing countries.

 

If this is the antidote, I prefer the poison. Anytime a governing body creates economic law or institutes a policy, a new special interest is born. Multinational corporations move to countries of asymmetry to enhance profits, avoid burdensome taxes and the demands of organized labor and special interest groups. There is no reason to move globally if the constraints of government and international bodies are there to shackle production and pray on the profits. The real tragedy here is underdeveloped countries lose opportunities to employ their people and raise their standards of living; unwarranted constraints on multinationals will bar developing countries from the global market place, denying them entry into the world economy.

 

With all due respect to Mr. Bhagwati, from a literary standpoint I found this book very easy to put down and walk away from. At times it reads like creative non-fiction, but those moments are few. Overall the writing stuck me as academic. I wouldn’t recommend this book to a lay person who hasn’t previously read Milton Friedman and Adam Smith.