14 May 2009
In praise of Tom Woods’s Meltdown

Topical books, they’re a bit rubbish aren’t they?  Let’s face it, any book written to cash in on an issue of the day is bound to suffer from the need to get it out before the hot topic starts to cool.

Which was pretty much my thinking when I forked out for Tom Woods’s Meltdown, a free market take on what I like to call the Greater Depression.  I wasn’t buying it in the hope of greater wisdom, more in the way you might buy a Watford replica shirt - to show support, to egg the team on.

Well, I was wrong.  “Meltdown” is a triumph.  It chronicles the boom and the early part of the bust before explaining how it all fits into Austrian Business Cycle Theory.  In doing so it manages to to explain that theory better than I’ve ever seen it explained and (I’m pretty sure) expand on it.  Oh, and it’s short.

One bit I was particularly impressed with was Woods’s description of money.  For him, and now me, money is a claim on real resources. Now, Woods is not being particularly original here - Mises said this - but it’s something - and I regard myself as reasonably au fait with Austrian economics - that I hadn’t heard before.  It’s importance lies in the way it explains why any form of funny money - whether in the form of central bank notes based on nothing or fractional reserve bank notes - er, also based on nothing - are so economically damaging - because they deceive people as to what precise resources they can command.

Or, to put it another way - you think you can build the Empire State Building but actually you can only build half of it.

But that’s only one example and “Meltdown” is full of them.  This really is genius.  To have produced a book that combines topicality, lucidity, and theory is a breathtaking achievement.  If Woods didn’t sweat blood writing this I don’t believe he’s entirely human.

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