Free Market Advocates: Meet Thomas Woods and an Audit The Fed update (100 co-sponsors)
For critical thinkers out there, who for the past year have been scratching their heads wondering how in the heck the Right and the Left can blame our problems on "free markets" when we have nothing of the sort, allow me to introduce Thomas Woods. Some may already be familiar with his work, but I feel it is so important it deserves special attention.
Univesity credentials don't make the man, and we've stated that repeatedly, but if you need 'em, he's got 'em. He holds a Bachelor's Degree from Harvard University and a Ph.D. in history from Columbia University. He is now resident scholar and senior faculty member of the Ludwig von Mises Institute, as well as a member of the editorial board for the institute's Journal of Libertarian Studies.
Woods is primarliy a scholar of history, Catholicism, and economics. His often radical views are widely criticized by the mainstream media as partisan, despite his Libertarian belief in both economic freedom (curiously associated with the Right) and civil liberies (curiously associated with the Left). He has authored several books, including the following:
Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse (February 2009)
Who Killed the Constitution?: The Fate of American Liberty from World War I to George W. Bush (co-authored with Kevin Gutzman; 2008)
33 Questions About American History You're Not Supposed to Ask (2007)The Church and the Market: A Catholic Defense of the Free Economy
The Politically Incorrect Guide to American History (2004)
He has been referred to as the second coming of Henry Hazlitt and H.L. Mencken rolled into one. Woods is a fervent defender of the individual and constant thorn in the side of the State. A recent smack-down of Air America host Thom Hartmann (the liberal version of Michael Savage) illustrates his willingness to hold nothing back when uncovering the deceit and hypocrisy of the oligarchy (Hartmann was trying to lay blame for the economic crisis on Hayek and Mises):
Let’s start with the economists whose ideas, according to Hartmann, led us to the current crisis. Why, they’re “Ludwig Von Mises, Freidrich [sic] Von Hayeck [sic], Milton Friedman, Alan Greenspan, Tom Freidman [sic], Robert Rubin, Larry Summers, and Ayn Rand.”
Now I’m sporting enough to look past the fact that Hartmann makes two spelling errors in a single economist’s name. Still, color me skeptical that Hartmann knows a blessed thing about the work of F.A. Hayek. (I assume he thinks these people are more or less interchangeable, that Mises = Friedman = Summers = Rubin, that Mises wouldn’t have denounced at least several of these figures, and that the differences between them are probably just trivial and not worth mentioning.)
Quiz time, Thom! Name one book on economic theory (so The Road to Serfdom, if you happen to have heard of it, doesn’t count) Hayek wrote that you’ve read, flipped through, held in your hand, or even heard of. Stumped? How about one article? Stumped again? Then why not do the decent and honorable thing and shut up until you can speak from authority rather than prejudice and ignorance? Sound fair?
Actually, Thom, I’ll be even more sporting. You can start condemning them again once you can at least competently summarize what someone who has read them tells you they say. How’s that?
He goes on to deconstruct every myth that Hartmann ignorantly repeated. Here we takes Hartmann to task on the Federal Reserve:
This raises another issue about Hartmann’s piece: not a single word about the Federal Reserve System, as if it played no role at all in the crisis. Not one word! Is Hartmann actually ignorant of the Fed’s role? Does he, as I suspect, actually defend the Fed?
How I’d love to hear Thom’s defense of the Fed as a progressive institution. That would be rich. Here’s the guy who claims to oppose the transfer of wealth from the poor to the rich, and yet that is precisely what the Cantillon effects of expansionary monetary policy do. It’s also what the Fed’s role as “lender of last resort” does. If Hartmann thinks that power is exercised in defense of the little guy, he is hopeless. Hopeless with an exponent beside it.
Then he tells the real story about the S&L crisis:
What actually happened was a little less cartoonish. First, so-called deregulation of the S&Ls began under Jimmy Carter, not Reagan. I say “so-called” because, as with most measures trumpeted as “deregulation,” it was nothing of the kind: all throughout the process of alleged deregulation, the S&Ls’ deposits continued to be covered under government deposit insurance. Deregulation means the removal of government involvement and control. Does this sound like the removal of government involvement and control to you? To the contrary, it gave us the worst of both worlds—though, naturally, Hartmann will blame the consequences on “deregulation” and “capitalism,” terms I doubt he could even define.
Under the government-established rules, the S&Ls could charge 6 percent on loans, and could offer depositors a mere 3 percent. Since most depositors had nowhere else to go, they had to content themselves with a miserable 3 percent return.
With the advent of the money-market mutual fund, ordinary people suddenly had the chance to earn higher returns, and began pulling their money out of S&Ls in droves. Consequently, the S&Ls wanted permission to offer higher interest returns for depositors, so “deregulation” allowed them to do so. Had the original government requirements remained in place, the S&Ls would have gone under then and there.
A consensus began to form that in order to save the S&Ls, their government-established loan and deposit interest-rate requirements, as well as the kind of loans they could make, had to be modified in light of the impossible conditions under which these institutions were forced to operate. The S&Ls needed to be permitted to engage in riskier investments than 30-year mortgages at 6 percent. (Notice: it’s the fault of the free market when the government modifies the government-established rules of a government-established institution, while its deposits continue to be guaranteed by the government. Got it?)
Maybe the S&Ls should have gone under in 1980. Perhaps they really did have an impossible business model. There is no non-arbitrary basis for deciding one way or the other, since the S&Ls were never genuinely subject to a market test. The government husbanded and cartelized the S&Ls, and stood ready to bail them out after that.
Tell Us More About The Federal Reserve, Tom
Professor Woods is relentless in his attacks against the Federal Reserve, our Communist Central Planners of the money supply. His new book Meltdown indentifies the source of our economic crisis, detailing the Fed's involvement in creating the asset bubbles which would later, inevitably, crash. In this excellent interview for Townhall.com, Woods explains the Austrian School position in clear language for the introductory student:
Q: What part of the government would you indict as the major culprit?
A: More than anything else, it's the Federal Reserve System. Now strictly speaking, the Federal Reserve is a private institution. But it was created by Congress. A lot of its personnel are appointed by the government. And it enjoys government-granted monopoly privileges. So for all intents and purposes, it is a government-established central bank.
It is important to understand that at a time when we are being told that free-market economists must have egg on their face because their cherished system has collapsed, it was followers of Ludwig Von Mises, F.A Hayek - the great so-called Austrian economists of the 20th Century - who were mostly likely to have predicted this crisis.
So if this was a failure of the free market, why have the free-market economists predicted it more than anyone else? Obviously there must not have been a free market. Specifically, Hayek won the Noble prize in economics for showing that government-established central banks like the Federal Reserve are an intervention into the free market. They are destabilizing, not stabilizing. And by tampering with interest rates and the free market system they cause entrepreneurs and consumers alike to commit massive errors that eventually hit the economy in the form of a major bust.
So what has happened to us is not a failure of the free market but instead the inevitable working out of the consequences of intervention by government into the free market. So in other words, the problem with Alan Greenspan wasn't that he believed in the free market too much, it's that he didn't believe in it enough. He believed that he could be the monetary central planner, planning money and interest rates. The New York Times called him "the infallible maestro of our financial system." This is just goofy. Why doesn't Alan plan steel and concrete production for us while he is at it?
My Introduction To Thomas Woods
I had known of Woods for quite some time before I first heard him speak at the Rally for the Republic. Here is my introduction to Woods, too good to keep to myself. It's a truly great speech. This is Part 1 of 2:
Thomas Woods is a blessing to all, though few will recognize it, in his steadfast defense of individual liberty and his absolute unwillingness to accept the dogmatic nonsense of State intervention. He even coined his own humorous but sadly truthful "Woods' Law:"
Whenever the private sector introduces an innovation that makes the poor better off than they would have been without it, or that offers benefits or terms that no one else is prepared to offer them, someone—in the name of helping the poor—will call for curbing or abolishing it.
Three cheers for Thomas Woods!
Audit the Fed Update - H.R. 1207 Now Has 100 Co-Sponsors
H.R. 1207 continues to build momentum, thanks to the tremendous grass roots support of liberty lovers like you. Let's keep up the pressure on our Representatives to fight the Inflation Engine Congress created in 1913.
Sponsor: Rep Paul, Ron [TX-14] (introduced 2/26/2009) Cosponsors (100)
Related Bills: S.604
Latest Major Action: 2/26/2009 Referred to House committee. Status: Referred to the House Committee on Financial Services.
100 CO-SPONSORS ALPHABETICALLY:
HR 1207 Co-Sponsors (as of 4/29/2009)
Rep Kagen, Steve [WI-8] - 2/26/2009
Rep Bachmann, Michele [MN-6] - 2/26/2009
Rep Bartlett, Roscoe G. [MD-6] - 2/26/2009
Rep Jones, Walter B., Jr. [NC-3] - 2/26/2009
Rep Rehberg, Denny [MT] - 2/26/2009
Rep Posey, Bill [FL-15] - 2/26/2009
Rep Broun, Paul C. [GA-10] - 2/26/2009
Rep Poe, Ted [TX-2] - 2/26/2009
Rep Burton, Dan [IN-5] - 2/26/2009
Rep Abercrombie, Neil [HI-1] - 2/26/2009
Rep Woolsey, Lynn C. [CA-6] - 2/26/2009
Rep Garrett, Scott [NJ-5] - 3/5/2009
Rep Chaffetz, Jason [UT-3] - 3/6/2009
Rep Kingston, Jack [GA-1] - 3/6/2009
Rep Young, Don [AK] - 3/6/2009
Rep Rohrabacher, Dana [CA-46] - 3/6/2009
Rep Stearns, Cliff [FL-6] - 3/6/2009
Rep McClintock, Tom [CA-4] - 3/6/2009
Rep Heller, Dean [NV-2] - 3/6/2009
Rep Duncan, John J., Jr. [TN-2] - 3/6/2009
Rep Taylor, Gene [MS-4] - 3/6/2009
Rep DeFazio, Peter A. [OR-4] - 3/9/2009
Rep Alexander, Rodney [LA-5] - 3/10/2009
Rep Price, Tom [GA-6] - 3/10/2009
Rep Petri, Thomas E. [WI-6] - 3/10/2009
Rep Foxx, Virginia [NC-5] - 3/10/2009
Rep Grayson, Alan [FL-8] - 3/11/2009
Rep Marchant, Kenny [TX-24] - 3/11/2009
Rep Wamp, Zach [TN-3] - 3/16/2009
Rep Blackburn, Marsha [TN-7] - 3/16/2009
Rep Buchanan, Vern [FL-13] - 3/17/2009
Rep Castle, Michael N. [DE] - 3/17/2009
Rep Fleming, John [LA-4] - 3/18/2009
Rep Akin, W. Todd [MO-2] - 3/19/2009
Rep Platts, Todd Russell [PA-19] - 3/19/2009
Rep Peterson, Collin C. [MN-7] - 3/19/2009
Rep McCotter, Thaddeus G. [MI-11] - 3/19/2009
Rep Lummis, Cynthia M. [WY] - 3/19/2009
Rep Burgess, Michael C. [TX-26] - 3/19/2009
Rep Sessions, Pete [TX-32] - 3/23/2009
Rep Deal, Nathan [GA-9] - 3/23/2009
Rep Franks, Trent [AZ-2] - 3/23/2009
Rep Miller, Jeff [FL-1] - 3/24/2009
Rep Blunt, Roy [MO-7] - 3/24/2009
Rep Stark, Fortney Pete [CA-13] - 3/26/2009
Rep Culberson, John Abney [TX-7] - 3/26/2009
Rep Paulsen, Erik [MN-3] - 3/30/2009
Rep Gingrey, Phil [GA-11] - 3/30/2009
Rep Terry, Lee [NE-2] - 3/30/2009
Rep Carter, John R. [TX-31] - 3/31/2009
Rep Capito, Shelley Moore [WV-2] - 4/1/2009
Rep Wittman, Robert J. [VA-1] - 4/1/2009
Rep Fallin, Mary [OK-5] - 4/2/2009
Rep Smith, Lamar [TX-21] - 4/2/2009
Rep Westmoreland, Lynn A. [GA-3] - 4/2/2009
Rep Lucas, Frank D. [OK-3] - 4/21/2009
Rep Lamborn, Doug [CO-5] - 4/21/2009
Rep Ehlers, Vernon J. [MI-3] - 4/21/2009
Rep Bilbray, Brian P. [CA-50] - 4/21/2009
Rep Pence, Mike [IN-6] - 4/21/2009
Rep Manzullo, Donald A. [IL-16] - 4/21/2009
Rep McCaul, Michael T. [TX-10] - 4/21/2009
Rep Cole, Tom [OK-4] - 4/21/2009
Rep Roe, David P. [TN-1] - 4/21/2009
Rep Herger, Wally [CA-2] - 4/21/2009
Rep Bishop, Rob [UT-1] - 4/21/2009
Rep Baldwin, Tammy [WI-2] - 4/21/2009
Rep Olson, Pete [TX-22] - 4/21/2009
Rep Latham, Tom [IA-4] - 4/21/2009
Rep Luetkemeyer, Blaine [MO-9] - 4/21/2009
Rep Doggett, Lloyd [TX-25] - 4/21/2009
Rep Rooney, Thomas J. [FL-16] - 4/22/2009
Rep Massa, Eric J. J. [NY-29] - 4/22/2009
Rep Johnson, Sam [TX-3] - 4/22/2009
Rep Thompson, Glenn [PA-5] - 4/22/2009
Rep Brady, Kevin [TX-8] - 4/22/2009
Rep Smith, Adam [WA-9] - 4/22/2009
Rep Shimkus, John [IL-19] - 4/22/2009
Rep Graves, Sam [MO-6] - 4/22/2009
Rep Jenkins, Lynn [KS-2] - 4/23/2009
Rep Gohmert, Louie [TX-1] - 4/23/2009
Rep Inglis, Bob [SC-4] - 4/23/2009
Rep Kaptur, Marcy [OH-9] - 4/23/2009
Rep Johnson, Timothy V. [IL-15] - 4/23/2009
Rep Brown, Henry E., Jr. [SC-1] - 4/28/2009
Rep Biggert, Judy [IL-13] - 4/28/2009
Rep Pitts, Joseph R. [PA-16] - 4/28/2009
Rep Tiahrt, Todd [KS-4] - 4/28/2009
Rep Myrick, Sue Wilkins [NC-9] - 4/28/2009
Rep Putnam, Adam H. [FL-12] - 4/28/2009
Rep LaTourette, Steven C. [OH-14] - 4/28/2009
Rep Tiberi, Patrick J. [OH-12] - 4/28/2009
Rep Ros-Lehtinen, Ileana [FL-18] - 4/28/2009
Rep Hoekstra, Peter [MI-2] - 4/28/2009
Rep Miller, Candice S. [MI-10] - 4/28/2009
Rep Granger, Kay [TX-12] - 4/28/2009
Rep Simpson, Michael K. [ID-2] - 4/28/2009
Rep Barrett, J. Gresham [SC-3] - 4/28/2009
Rep Goodlatte, Bob [VA-6] - 4/28/2009
Rep Smith, Adrian [NE-3] - 4/28/2009
If you don't see your Representative on this list, please contact them and demand their support for H.R. 1207.
Ron Paul gives an update (from 4/27):
Instructions on contacting your Representative can be found here.
David in Qatar