How to Prolong a Depression June 9, 2010

by Will

Will Grigg?s Liberty Minute

June 9, 2010

It sometimes seems as if incurable economic illiteracy is a prerequisite of a political career. North Carolina Congressman Brad Miller offers a splendid example of this disability in his proposed ?Residential Construction Lending Act.?

By providing cheap credit and encouraging lenders to offer mortgages to unqualified buyers, the recent Federal Reserve-engineered housing boom produced an unprecedented housing glut.
Recovery in the residential real estate sector requires the liquidation of that over-supply. Warren Buffet suggested, semi-facetiously, that the first step to recovery would be to ?blow up a lot of houses.? The city government of Detroit intends to act on that principle by demolishing at least 10,000 vacant houses over the next three years.

A much better approach to liquidation would be to permit prices to fall in order for the present housing inventory to be sold. But Rep. Miller, in classic Keynesian fashion, seeks government intervention to keep prices inflated. This approach, which is typical of government ?stimulus? programs, will simply prolong and deepen the depression.

Let us take back the liberty wherewith Christ has made us free.

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