During the Republican Presidential primary campaign in 2007 and early 2008, Congressman Ron Paul (R-TX) insisted on talking about such outré topics as the dangers of the Federal Reserve System and fiat money, for which he was widely snickered at. Back then, everybody just knew that the geniuses at the Fed had solved all our fundamental economic problems. Now the only one that remained was (as Barack Obama kept pointing out) how to more equitably divvy up the endless stream of wealth.
Granted, when your kids would ask you why a dollar bill was worth a dollar, you’d start out confidently enough, but soon find yourself waving your hands around and answering their increasingly skeptical questions with "Because Daddy says so!"
Yet, even though you, yourself, might be a little hazy on the details, you could be confident that Alan Greenspan and his protégé Ben Bernanke had this money thing all figured out. So, why listen to Ron Paul talk about something as obviously obsolete as the gold standard?
Early 2008 sure seems like a long time ago now …
Perhaps not surprisingly then, one of the surprise bestsellers of 2009 is Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse by Thomas E. Woods Jr., a historian with the Ludwig von Mises Institute. Despite almost no reviews in what Treasury Secretary Tim Geithner might euphemize as the "legacy press"— Woods’s book (with its Foreword by Rep. Paul) has risen as high as #11 on the New York Times bestseller list.
Woods points to six main causes for the current economic travails, which began with the rise in mortgage defaults in 2007 (largely in the four Sand States). His assessment overlaps considerably with the under-reported aspects that I’ve emphasized:
"Fannie Mae and Freddie Mac": The government-sponsored thingamabobs encouraged lending to lower income and minority homebuyers of increasingly dubious creditworthiness
“The Federal Reserve and artificially cheap credit”: Woods sees the low Fed interest rates that bottomed out at 1 percent in 2003-2004 as the worst culprit
The great sportswriter A. J. Liebling boasted: "I can write better than anybody who can write faster, and I can write faster than anybody who can write better," and Woods does a fine job of hitting Liebling’s sweet spot in lucidly presenting an Austrian School of Economics analysis of our current troubles.
The "Austrians" (most of whom are American these days) have been waiting a long time for an opportunity to make their case.
March 30, 2009
The beginning of my new VDARE.com article: