Friday, February 13, 2009

Understanding Booms & Busts

"The Austrian approach to understanding what has happened to the economy holds far greater explanatory power than does any competing school of thought." So says Thomas Woods in his latest book, Meltdown. I received my copy two days ago and just completed it. In my opinion, everyone needs to read this book, and more importantly, understand Austrian business cycle theory. It's not difficult to understand and it explains exactly the reason why the economy has boom periods, followed by a bust period. Contrary to popular opinion, these periods are not inherent in a free-market economy. They are the direct result of intervention into the economy by the government, specifically a country's central bank. The Federal Reserve is the central bank of the United States.

Numerous articles on Austrian business cycle theory can be found here and here on the Ludwig von Mises Institute website. For an introduction to the Austrian school of economics, and why it matters, read this essay written by Mises Institute founder Llewellyn Rockwell.

Here are a few links to reviews of Thomas Woods' book:

Why the Downturn? - Introduction to his book by Thomas Woods
Tom Wood's Meltdown - Chris Byrnes via LewRockwell.com
Meltdown: New Book by Thomas Woods - Mises.org
Meltdown by Thomas Woods - Amazon.com Customer Reviews

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