A Tale of Two Meltdowns

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quite different books on the economic crisis share the same one-word
title: Meltdown.
The first is a collection of articles from The Nation –
"America’s leading progressive weekly." The second was
written by Ludwig von Mises Institute senior fellow Thomas E. Woods
Jr., and includes a foreword by libertarian Rep. Ron Paul of Texas.

I found Meltdown II a must-read. Writing with remarkable
clarity and occasional mordant humor, Thomas Woods makes a compelling
argument for a radical turn to the free market as the only way to
prevent meltdowns from recurring. Not that The Nation reporters
don’t contribute a few nuggets. For example, their general feeling
that something radical should be done about the way the Federal
Reserve operates – that we should no longer be "subservient
to the Fed mystique" – is surely progressive in spirit.
But when they go on to urge that the Fed make itself subservient
to "democratic discourse," we have to remind ourselves
that the term "progressive" is a code word for greater
government control of the economy, which generally leads to retrogression.

As Woods says, in creating the housing bubble, the Fed was already
far too subservient to pressure from Democratic congressmen like
Barney Frank, mentioned favorably in Meltdown I. At the same
time Frank was disavowing "any kind of financial crisis,"
Ron Paul was warning of "the long-term damage" from "the
government’s interference in the housing market."

What Paul understood, and The Nation reporters clearly
don’t, is that the Fed isn’t a product, as they declare, of "market
ideology," but of a very different way of thinking. "Instead
of planning the production of steel and concrete," writes Woods,
the central bank "plans money and interest rates, with consequences
that necessarily reverberate throughout the economy."

the rest of the article

24, 2009

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