Two 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."
March 24, 2009
