Austrian Economics: Always Proven Right, Always Soundly Rejected

“The special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital that they could not attract under pure market conditions. 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 investing in housing. Because so many people will invest in housing the damage will be catastrophic.”
  • Ron Paul, 2002, testimony to U.S. House of Representatives, July 16

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