What’s going on at Reason and why are they putting out things like this:
“Most of our problems stem from the bursting of the housing bubble. That sent home prices plunging, which reduced the value of mortgages and mortgage-backed securities, which caused losses at banks, which forced a cutback in lending, which squelched consumer spending, which brought the economy to a halt. Which started the whole miserable cycle over again.
But if the crisis stems from declining real estate values, why not stop them from declining? A spell of inflation would arrest the slide by pushing up the price of everything. As home prices stabilize, mortgage-backed securities would regain value, banks would get financially stronger, and loan officers would stop hiding in the vault.
Once inflation has performed its useful role, it will have to be tamed. But the Fed has a lot of experience doing that. What it doesn’t have is experience bringing the economy out of a deep recession or a depression.”
Looks like someone needs to spend some time on the Mises site.
