If you really want to understand business cycles and the current economic crisis, you have to go to the Austrian School of Economics. Mainstream economists simply do not have the theory to predict or understand the current financial collapse. Rather than approaching economics from a logical or praxeological basis, mainstream economists believe the decisions of people can be modeled by equations - everyone is out trying to maximize their "utiles" (for more on the Austrian method check out this essay by Hoppe).
Because of the fallacious foundation on which they build their economic theory, we are bombarded with so called free market economists (like Larry Kudlow) on TV saying that the bailout is necessary. Thankfully, Mises.org has put together a The Bailout Reader for all those interested in understanding the truth about our economy. There are several articles from years ago illustrating how the Austrian economists predicted the housing bubble and the resulting financial crisis. More recent articles point out some of the take home messages of Austrian economics as applied to the current bailout proposals such as the importance of free market driven interest rates and prices. If you are going to read only one of these articles, I strongly recommend Murray Rothbard's Economic Depressions: Their Cause and Cure. It is important to spread this message of sound economics to those who are willing to learn. When the time comes to revamp the monetary system, the Austrians should have the general public's support in re-instituting a 100% backed gold standard.
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