Meltdown 1

                                                                     

The fixes are based on the false belief that the free-market economy has failed. The Federal Reserve and its manipulation of money and interest rates have failed. None of these can be blamed on the free-market, but that is not stopping news-paper columnists from doing so anyway.

Keynesian so-called economists, led by Paul Krugman, are vainly reaching into their usual bag of tricks to try to solve intervention with more intervention, and nothing is working. But they are persistent. They will keep scrounging around in that bag all throughout the Obama administration. The slump will continue, since none of these tricks has the slightest thing to do with the underlying problems in the economy. And there are still a lot of unpayable debts. Meanwhile, who is being ignored during this crisis? The free-market economists of the Austrian School of Economic thought, the very people who predicted not only the Great Depression, but also the Calamity we are dealing with today.

The good news is that Austrian School economists are gaining more acceptance every day, and have greater chance of influencing our future than they have had for a long time. Woods elegantly discovers in the tradition of Austrian School of Economics of Ludwig von Mises and Friedrich von Hayek (Nobel Laureate, 1974), that the main culprit for the creation of crises or as economists explain the boom bust cycle – is the monetary system’s nature. As he goes, it is a system that allows a process of artificially expanded money supply which necessarily ends in a general increase in the level prices inflation which erodes the purchasing power of people’s money. Who actually allows this process is, as the author states, the institution that has a monopoly power on money production and setting interest rates, namely the central bank! This institution puts in practice a functional reserve banking system which is enforced to all the commercial banks in the market.