The End of the Financial World as We Know It January 3, 2009

To the Editor:

I was intrigued by the title of this op-ed as I've become convinced that our financial system has a significant fundamental problem. Messrs. Lewis and Einhorn seemed to identify the disease when they opined that our handling of money is "madness". They should have written "money supply".

There is a body of economic thought that predicted the Great Depression and the "boom, bust" cycles of the last couple of decades. It is known as the "Austrian School". Unlike Classical or Keynesian Economics it has a demonstrable explanation of the business cycle, the heart of which is interest rates, its manipulation and the affect that has on production and investment. Interest rates should be governed by the free-market; kept artificially low they will inevitably produce market "bubbles".

We found the limitations of the gold standard in the early 30's and may have now found the limitations the "debt" standard. Our debt based fiat monetary system needs to be re-thought. Breton Woods I was disbanded in the early 70's. The system we have now is obviously badly broken. We need a Breton Woods II, NOW.