“Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans. Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.” – Congressman Ron Paul, in Fannie Mae and Freddie Mac Subsidies Distort the Housing Market, September 10, 2003
The Editors’ Quote of the Day:
Another data point showing gubberment intervention picks winners and losers, distorting the marketplace. Get Teh Gubberment out of the marketplace, make it free again.
If only we could of had him for President for eight years,I voted and campaigned for him, how about the rest of you. I hold the republicans responsible for our current mess.
Republican presidential candidate Ron Paul in 2012 was liberty’s last best chance. But the Republicans destroyed his campaign. And six years later most ‘conservatives’ still cling to the evil Republican part. If you don’t know your enemy you don’t know jack.