Jan 25, 2010

Tom Woods on the cause of the economic meltdown

But even many of those who describe themselves as supporters of the free market have failed to grasp the heart of the problem. To be sure, they have pinpointed legislation like the Community Reinvestment Act that certainly didn't help matters. In pointing fingers at specific programs, however, Republicans have diverted attention to the patient's runny nose and away from his cancer.

Almost nobody in Washington, and precious few elsewhere, has been willing to question the greatest single government intervention in the economy, and the institution whose fingerprints are all over our current mess: America's central bank, the Federal Reserve system. The Fed is hardly ever mentioned in connection with the crisis, except perhaps as our savior. Major newspapers, magazines, and websites purport to dissect the crisis and identify its causes without mentioning the Fed at all. That's nothing new: there has been no serious discussion of the Federal Reserve in public life for the nearly one hundred years since its creation. The Fed is a wonderful thing, and that's that.

... The Fed is the elephant in the living room that everyone pretends not to notice. Even many of those who blame government for the current mess leave the Fed out of the picture altogether. The free market, meanwhile, takes the blame for the destructive consequences of what it does. This charade has gone on long enough. It's time to consider the possibility that maybe the elephant, and not little Johnny, is the one breaking all the furniture.

~ Thomas E. Woods Jr., Meltdown, pp. 2-3, p. 9

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