5 ms·
When a market is flooded with easy, cheap money distortions occur. Witness the housing excesses in the U.S. prior to 2008. This is a phenomenon of human natur
by yequalsx 14y ago
When a market is flooded with easy, cheap money distortions occur. Witness the housing excesses in the U.S. prior to 2008. This is a phenomenon of human nature. Excess credit inevitably leads to too many bad loans.
- cafard 14y agoThis stuff is cyclical. The deregulation of S&L rates in the 1980s led to huge problems.
- nickik 14y agoI have studyed this stuff quite a bit. The deregulatian probebly had some effect but compaired with the effect the easy money had it was not that imprtend. There where other things like that the taxcode favers buying instead of renting. Asian saving lowered long term lones ..... Most importendly Fanny Mea and Fredy Mac could borrow cheap money from the Fed and went below equillibrium prices for a long time.
- sunir 14y agoBusiness cycles and political (mis)intervention in the market are orthogonal concepts.