Woods Blames Feds for Economy Problems
Speaker and author says governmental intervention is to blame.
Students for Liberty held a lecture by author and historian Thomas Woods on the possible causes of America’s current economic failure at UWM.
His latest book, “Meltdown: A Free Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse,” is a New York Times bestseller. It was available for sale at the event.
“I was concerned that in the mainstream press and in most of the books that were gonna come out on the subject, you wouldn’t hear any of the types of arguments that I would be making… that the economists who predicted the crisis have been making. So I thought maybe the American people should have a diversity of opinion presented to them so they can make an informed judgment,” said Woods.
Woods said that governmental intervention is the cause of our economic downfall. He blamed the Federal Reserve and its manipulation of money supply for our current recession.
He said the Federal Reserve encourages risky investments through artificially low interest rates and the excessive creation of credit.
The Fed has left its short-term interest rate at the 0 to 0.25 percent target range since Dec. 2008 to help repair the worst economic downturn since the Great Depression.
Woods said that investments motivated by printing money create a boom where companies expand and jobs are created. However, they eventual fail and “the boom becomes a bust.”
He suggests cutting spending and putting a halt on the bailouts. Woods also said that the market should be left along to make its own adjustments.
Different Way of Thinking
Woods based his arguments on the beliefs of the Austrian School of Economics. Some beliefs of this school of thought are:
• Free markets and avoiding government intervention
• Central Banks encourage excessive growth of credit by keeping interest rates too low for too long
• Central Banks can cause recessions, but cannot overcome them
• Central Banks create inflation by printing money
Austrian economics tends to examine people’s behavior rather than using statistics, which is one reason why they are not in the mainstream of economics. But Woods said that it correctly predicted the economic downturn America is experiencing today.
Dr. Yuri Maltsev, an economics professor at Carthage College and past adviser to former Soviet Union president, Mikhail Gorbachev, said that Woods offers a “very refreshing alternative to the thinking which led us into this crisis.”
Professor Maltsev attended the lecture with 14 of his students.
“I came from Moscow… from the country which could be the richest country in the world… completely ruined by bureaucrats and politicians in Soviet Union. With eleven time zones, the country is desperately poor. Now I see the repetition of the same scenario here when people decided that they can make money out of thin air… that they can mortgage the future of their children and on and on like that,” said Maltsev.
Idea of Liberty
Students for Liberty is a libertarian group. Libertarians support free market capitalism, limited government and minimal taxations. Taylor Thompson is the vice president of the UWM organization. He is a sophomore majoring in journalism.
“Someone’s gotta stand up and talk against this fiscal insanity going on in Washington and all the spending and printing of money by the Federal Reserve. And it’s just insanity going on. And people have gotta stand up and take their country back. Otherwise, we’re going to be headed down a very dangerous road, I believe,” said Thompson.
When asked if how he feels about the Federal Reserve, he said, “They could take a hike.”
Texas Congressman Ron Paul wrote the foreword to “Meltdown.” He ran for presidency as the nominee of the Libertarian Party in 1988 and as a Republican in 2008.
When asked what inspired Woods to write the book he said, “My conviction of the overwhelming likelihood that the conventional wisdom of the crisis would ossify into this idea that it all occurred because of the unfettered free market and so we need to put more constraints on the free market. And I think the evidence that that version of the story is untrue is so overwhelming.”
Woods has written another New York Times bestseller titled, “The Politically Incorrect Guide to American History.” He is a senior fellow at the Mises Institute in Auburn, Ala., a group that upholds the Austrian business cycle theory and supports libertarian thought.