The Foundation For Economic Education (FEE) presents The House That Uncle Sam Built, an excellent synopsis of the government’s role in the housing boom and bust. Authors are Peter Boettke and Steve Horwitz of The Austrian Economists. Editor is Lawrence Reed, President of FEE and President Emeritus of the Mackinac Center for Public Policy.
From the Introduction by John Allison, one of the few financial CEOs to run a profitable and sound business during the boom and take exception to the financial bailout during the bust in the fall of 2008.
This paper provides a “common sense” and understandable outline of fundamental causes and cures. The analysis is based on long proven economic laws. Despite the wishes and hopes of politicians, economic laws are just as immutable as the laws of physics. If you jump off a ten story building, hitting the ground will not be pleasant. If the Federal Reserve holds interest rates below the natural market rate by rapidly expanding the money supply (“printing” money) as Alan Greenspan did, individuals and businesses will make bad investment decisions and there will be negative consequences to our long term economic well-being. There are no free lunches.