Who should we fault?
I remember how the recent housing bubble started - the low interest rate that the Federal Reserve instituted after the high tech bubble burst made it very compelling to people to refinance their home, or to move to more expensive homes. from that point it was simply crazy.
It is will not be surprising, however, that when the bubble will burst - and it is happening now - that people will forget the Federal Reserve role in its creation. As many time the general blame will be at the "unregulated free market" instead the lack of it. Therefore it is important to start to point as early as possible the finger at the real cause, as Dr. Ron Paul does:
But capitalism is not to blame for the housing bubble, the Federal Reserve is. Specifically, Fed intervention in the economy– through the manipulation of interest rates and the creation of money– caused the artificial boom in mortgage lending.
The Fed has roughly tripled the amount of dollars and credit in circulation just since 1990. Housing prices have risen dramatically not because of simple supply and demand, but because the Fed literally created demand by making the cost of borrowing money artificially cheap. When credit is cheap, individuals tend to borrow too much and spend recklessly.
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