Above: Highlights from Dr. Thomas Woods’ lecture. Scroll down to the bottom of this article to watch the full speech.

In an era of economic unrest and financial instability on the federal level, New York Times best selling author Dr. Thomas Woods offered his perspective on the failure of the Federal Reserve and its responsibility for recent financial calamities. 

University of Wisconsin Young Americans for Liberty hosted Woods’ lecture. Woods is a historian and author who has appeared on MSNBC, Fox News and over 150 radio programs.

He questioned why fluctuations in business follow in a cyclical fashion that causes the economy to go up and down.

“Strictly speaking, the recession is not where the damage is done. The damage is done when we get on this unsustainable trajectory in the first place,” Woods said.

Woods compared the natural pattern of interest rates to the government intervention in interest rates, and said the former causes business to succeed and the latter causes them to fail.

He said when the public saves more, interest rates decrease, an action that stimulates long-term investment by businesses.

Woods said the government and its intervention in the economy is pushing down interest rates, which makes investors put funds into the wrong companies at the wrong time and the conclusion is a market crash.

He added the artificial interest rates provide false feelings of prosperity for people to speculate in real estate and invest, when the real interest rates would have provided a red light.

According to Woods, Americans hold a myth that the free market needs the Federal Reserve in order to prevent disasters, when in actuality they cause the instability.

He said if one compares the economic cycles before the Federal Reserve was created and afterward, the cycles with the Federal Reserve are less dramatic and on average three months shorter.

Woods suggested the way to fix the crisis is to reverse the damage done by the Federal Reserve by saving money, allowing interest rates to go down naturally and letting entrepreneurs and businesses invest in becoming more physically productive, thereby increasing the purchasing power of money.

He added this measure is not an area that should be taxed, but instead should be encouraged in order to improve the situation for all stakeholders. He said the situation would be as similarly ineffective as robbing someone and giving the proceeds to someone else in the way that only a select few would benefit from the transaction.

Some experts say the government assistance can be viewed as a boost for society rather than a hindrance.

UW public affairs professor Menzie Chinn said in an e-mail to The Badger Herald he believes the United States would be in the middle of the “Great Depression 2.0” if the government had not bailed out the banks and undertaken measures to assist the economy in 2009.

Andrew Reschovsky, another UW professor of public affairs, said discussions about how big governments should be will always exist. He cited Gov. Scott Walker as a current example of politicians working for less government intervention.

“No government intervention would be chaos. We generally think it’s a good thing when people aren’t sick or dying in the street,” he said.