Letter to RMN

9/17/08

Dear Editor,

Two absurdly ignorant assessments of the current financial crisis are being made by our two Presidential candidates. Obama identifies under-regulation and McCain blames Wall Street greed for the ongoing financial collapse. Both of these comments are so spectacularly ignorant of economics that they should both be banned from speaking on the subject altogether.

The housing bubble that preceded today’s inevitable crash was a function of regulation- namely the Federal Reserve’s interest rate policy and pro home-ownership subsidies by Congress facilitated through Fannie and Freddie. This governmental tinkering and redirecting of real resources created the real estate mania. Unless they lived in an illusory, Keynesian fantasyland, each new investor knew the crash was looming but hoped that he could sell out to a ‘greater fool’ before the day of reckoning.

Neither Obama’s Newer Deal nor McCain’s assault on the human condition (which he calls greed) will have any impact on the occurrence of future bubbles or their subsequent crashes. The key solution resides in reassessing the role and accountability we have assigned to the Federal Reserve.

Do we really want to continue to enable an un-beholden banker’s bank (The Fed), with unlimited access to money creation, the ability to enable a corporatist system that privatizes profits for Wall Street and socializes losses for you and me?

That is the discussion our economically illiterate candidates should be having.



Troy Grice