The free market did not cause the financial crisis, and the tape and glue our wise leaders have applied to the economy are only prolonging the agony. That’s the thesis of my 2009 New York Times bestseller, “Meltdown.”

That’s not a popular thing to say in Bloomington, I learned several months ago.

When Young Americans for Liberty at Indiana University hit a bureaucratic stonewall in trying to invite me to campus — a problem I can’t say I’ve run into at any other university — the local media took notice. But it was the comment sections that were a particular hoot.

It was as though I had insulted Joseph Stalin in the old Soviet Union. Who does this idiot think he is? How dare he speak of our wise overlords that way! Why, they’re just looking out for the good of the people! And so on, as if I’d stumbled into some kind of cliché competition.

Then, when the University reversed itself and even helped fund my appearance, the comments switched to, “If I had time, I’d go over there and set this guy straight!”

Uh-huh.

The large crowd that came to hear me a couple weeks ago couldn’t have been friendlier.

When visiting IU, I explained that asset bubbles, like the housing bubble we’ve just lived through, do not occur spontaneously. If people bought lots of houses on the free market, interest rates would rise as the banks’ loanable funds were depleted. That would put an end to speculation in real estate.

But thanks to the Federal Reserve System (or simply the “Fed”), which is not part of the free market, large infusions of money created out of thin air kept interest rates low and thus perpetuated the bubble.

During an asset bubble, the asset in question rises, as does its price. Where would people get the money to keep buying an increasingly costly asset if the government’s officially approved money machine wasn’t there to flood the economy with cash?

It was this interference with interest rates, pushing them well below where the free market would have set them, that set in motion the classic boom-bust cycle we’ve just witnessed.

F.A. Hayek won the Nobel Prize for showing how central banks like the Federal Reserve, by interfering with interest rates and not allowing them to tell entrepreneurs the truth about economic conditions, divert the economy into unsustainable configurations that inevitably come undone in a crash. (Hayek belongs to a tradition of free-market thought called the Austrian School of economics.)

None of this has anything to do with the free market.

Adding fuel to the fire was the so-called Greenspan putt, the unofficial policy of the Greenspan Fed that promised assistance to private firms in the event of risky investments gone badly. What kind of incentives do you suppose that created?

The point of being in college is to learn how to think beyond clichés. Forget the quacks who cluelessly told us that everything was fine with the economy in 2007.

Look instead to modern spokesmen of the Austrian School like Peter Schiff, Ron Paul and Jim Grant. You know, the people who, unlike your professors (who, by the way, tried to keep a dissident voice from speaking on campus), predicted the recent crash to a T.

Want to know what really happened to the economy, and why your job prospects are so bleak? Watch Peter Schiff’s YouTube video titled, “Why the Meltdown Should Have Surprised No One.” That’s the first step toward becoming the independent thinker that four years at IU are supposed to make of you.

Dr. Thomas Woods, Jr., Ph.D is a columnist for the Indiana Daily Student.