The financial system is collapsing, the stock market is crashing, and retirement funds are evaporating. The auto industry verges on extinction. Home prices have spiraled downwards. Gas prices recently were the highest they have ever been. Jobs are being lost rapidly and unemployment is shooting up. Healthcare costs are reducing some to bankruptcy and even death. Wages are not keeping up with inflation, which until recently has been increasing rapidly. There is fear of a second Great Depression. What in the world is happening?

PART ONE

Chapter 1

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Chapter 2

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PART TWO

Chapter 3

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Consumers blame greedy oil companies for high gas prices, mercenary Wall Street moguls for the decline of the markets, biofuel crops for higher food prices, mortgage lenders for falling home prices, and profit-hungry businesses for other rising prices. All this blame is misdirected: the real culprits are governments and the printing of money.

Chapter 4:

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PART THREE

Chapter 5:

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Chapter 6:

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The last chapter discussed, in part, how the economy functions in direct accordance with consumers’ desires: production is based on what consumers signal that they want, as determined by their purchases. These desires are transmitted through prices they pay and the costs and profits associated with those prices. Profits and the price system lead to a smoothly functioning economy where most things desired exist,177 but shortages don’t.