A Fake Banking History of the United States

Mises.org ^ | Thomas J. DiLorenzo

[Oyarsa]

Ask yourself this question: was the housing price bubble, which has burst, caused by (a) a Fed policy of too much liquidity, which caused artificially low interest rates, which in turn caused a great deal of malinvestment, or (b) a Fed policy of too little liquidity which caused high interest rates and a credit-starved economy? If you chose answer b, congratulations, you may have a future as a celebrated author, historian, and Wall Street Journal commentator.

Answer b is a theme of a truly ridiculous article by John Steele Gordon in the October 10 issue of the Wall Street Journal online entitled "A Short Banking History of the United States." The article is an attempt to defend the Fed, its founding father, Alexander Hamilton, and the regime that it finances. (Gordon is the author of a book entitled Hamilton's Blessing which sings the praises of a large public debt, something that Hamilton himself called a "public blessing.")

[Always Right]

The correct answer is A and B.....First there was A which overinflated prices, then B followed in which banks over-reacted which turned a correction into a major crisis.

[Yo-Yo]

I choose (c) reckless lending by institutions more interested in writing mortgages so they could be bundled and sold than they were in the ability of the borrower to pay.

[shuckmaster]

Just don't blame local govs for constantly jacking up assessments to absurd levels to justify higher tax income. They didn't have anything to do with it.

[Vaduz]

Jimmy Carter gave the ok to red line banking and you see what happened it got out of hand with the help of barney Frank.

[Dick Bachert]

[Mark was here]

Too many dollars chasing to few assets drives the price of the assets higher, than the market would other wise value the assets.