''Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and the Government Bailout Will Make Things Worse'' is a book on the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

by historian

Tom Woods Thomas Ernest Woods Jr. (born August 1, 1972) is an American author, podcast host, and Libertarianism in the United States, libertarian commentator who is currently a senior fellow at the Mises Institute.Naji FilaliInterview with Thomas E. Woo ...

, with a foreword by

Ron Paul Ronald Ernest Paul (born August 20, 1935) is an American author, activist, and politician who served as the U.S. representative for Texas's 22nd congressional district from 1976 to 1977, and again from 1979 to 1985, as well as for Texas' ...

. The book was published on February 9, 2009 by

Regnery Publishing Regnery Publishing is a politically conservative book publisher based in Washington, D.C. The company was founded by Henry Regnery in 1947. In December 2023, Regnery was acquired from Salem Media Group by Skyhorse Publishing, with Skyhorse ...

Overview

Woods is a follower of the

Austrian school of economics The Austrian school is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivations and actions of individuals along with their ...

and believes in allowing the market to freely compete in

currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...

, which he believes would lead to mostly to implementation of the

gold standard A gold standard is a backed currency, monetary system in which the standard economics, economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the ...

. The book is dedicated to

Murray Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School,Ronald Hamowy, ed., 2008, The Encyclopedia of Libertarianism', Cato Institute, Sage, , p. 62: "a leading economist of the Austri ...

and

. The book debuted at #16 on the "Hardcover, non-fiction"

New York Times Best Seller list ''The New York Times'' Best Seller list is widely considered the preeminent list of best-selling books in the United States. John Bear, ''The #1 New York Times Best Seller: intriguing facts about the 484 books that have been #1 New York Times ...

, and advanced to the #11 spot in its second week on the list. According to the author's official website, ''Meltdown'' was on the ''NYT'' Best Seller list for 10 week

Woods' thesis maintains that:

deflation In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% and becomes negative. While inflation reduces the value of currency over time, deflation increases i ...

of prices neither causes nor prolongs depressions; deflation may be necessary to prevent depressions or to bring depressions to an end; the

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...

is the primary cause of

business cycles Business cycles are intervals of general expansion followed by recession in economic performance. The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, governmen ...

(in Austrian Business Cycle Theory) via its arbitrary and coercive control of the

money supply In macroeconomics, money supply (or money stock) refers to the total volume of money held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation (i ...

; and trying to cure these

credit cycle The credit cycle is the expansion and contraction of access to credit over time. Some economists, including Barry Eichengreen, Hyman Minsky, and other Post-Keynesian economists, and members of the Austrian school, regard credit cycles as the fund ...

s with more government intervention will not work. Woods argues that government intervention in the form of support for housing and excessive monetary expansion caused the current crisis. By creating an illusion of wealth (that certain resources exist which do not exist), interventions encourage wasteful investments and unsustainable consumption, instead of productive investments. The proposed cures (

bailout A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global syst ...

s, more

money creation Money creation, or money issuance, is the process by which the money supply of a country, or an economic or monetary region,Such as the Eurozone or ECCAS is increased. In most modern economies, money is created by both central banks and comm ...

, and stimulus spending) will just make matters worse. No business is really

too big to fail "Too big to fail" (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected with an economy that their failure would be disastrous to the greater e ...

, he says, even large financial institutions. For them, as for other businesses,

liquidation Liquidation is the process in accounting by which a Company (law), company is brought to an end. The assets and property of the business are redistributed. When a firm has been liquidated, it is sometimes referred to as :wikt:wind up#Noun, w ...

is preferable to a bailout from the perspective of the larger economy. According to Woods, the depressions of the 19th century were caused by banks (various state banks and the

Second Bank of the United States The Second Bank of the United States was the second federally authorized Second Report on Public Credit, Hamiltonian national bank in the United States. Located in Philadelphia, Pennsylvania, the bank was chartered from February 1816 to January ...

) issuing paper money, supposedly convertible to gold, in amounts greatly exceeding their gold reserves.See section "Boom and bust before the Fed" on pages 88 to 94.

Notes

References

* ''Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse'' (2009) & {{ISBN, 978-1-59698-587-2 2009 non-fiction books Bank failures Austrian School publications Non-fiction books about the subprime mortgage crisis

Overview

See also

Notes

References