Government to Blame for Housing and Financial Crisis
July 21, 2008
Irvine, CA--In "The Government Did It," an opinion piece published last Friday on Forbes.com, Dr. Yaron Brook, president and executive director of the Ayn Rand Institute, argued that our government's massive control over the housing and financial markets has led to many of the problems being blamed on the free market today.
"The financial peril of Fannie Mae and Freddie Mac," Dr. Brook pointed out, "should help expose the lie that today's financial problems are the result of an insufficiently regulated market."
Citing the government's hand in the creation of Fannie Mae and Freddie Mac, the Federal Reserve Board's inflationary policy of keeping interest rates artificially low, the irrational lending standards forced on lenders by the federal Community Reinvestment Act, and the quasi-official policy of bailing out large financial institutions deemed too big to fail, Dr. Brook argued that "our government contributed to creating a situation in which millions of people were buying homes they could not afford, in which the participants experienced the illusion of prosperity, in which billions upon billions of dollars were going into bad investments. Eventually," Brook concluded, "the bubble burst."
"We do not need more regulation or economic 'steering.' What we need to do," said Brook, "is remove the government's power to coerce, bribe, reward and bail out irrational decisions. The unfree market has failed. It's time for a truly free market."
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