The Federal Reserve System In Thomas Woods Meltdown
1332 Words6 Pages
Thomas Woods’ Meltdown offers an insight and critical analysis of the events leading up to the recent global financial process. In this book, Woods emphasizes the impact Keynesian economics had on the economy, and explains how recent financial crises were caused by the government’s inability to harbor a true free market economy. Woods immediately begins to explain the economic meltdown by focusing on the theories of Keynesian economics. Although many favor Keynesian theories, the adoration has led to the downfall of the economic system. The many issues surrounding the Federal Reserve System, which he deems as “The Elephant in Living room,” are addressed to provide the reader with an understanding of how much meddling the government does.…show more content… The boom and bust of the economy, Woods believes, was only truly the fault of a regulated economy. Instead of leaning towards more of an Austrian Economic structure, the American economy relied on regulation, increased spending, and an increased money supply as a remedy to a horrendous problem. Woods notes, however; that the “remedy” is actually the problem itself. The fact that the economic and governmental issues we have faced are blamed on anything else besides the government is challenged. Despite the seemingly obvious, economists nor politicians want to address the issues that the Federal Reserve System, as well as other branches of the government play the largest role in the destruction of the American economic…show more content… The dot.com era was a 5-year period in which Internet stock prices soared, only to crash and burn due to a Keynesian economics frame of mind. During this time frame, Alan Greenspan believes the “New Economy” had arrived, and the enormous boom would not end in a bust (93). It seemed as though people were obsessed with the Keynesian thought of an “eternal boom,” and did not stop to reevaluate the current state of the economy. The warning signs, however, were apparent: artificially low interest rates, an increase in money supply, and a rise in prices for specific things. The dot.com bust could not be contained due to these issues, and as predicted by the Austrian business cycle theory, mistaken investment and excess consumption had