Thursday, May 8, 2008

Ron Paul Predicted Housing Crash

Housing Market Crash Predicted By Ron Paul And Alan Greenspan
Published 05/08/2008 - 1:40 a.m. GMT

The inflation and subsequent collapse of the residential real estate market was facilitated by the Federal Reserve over nearly a decade. ...

The leader of the Fed and manipulator-in-chief of the economy during the primary boom years was Alan Greenspan, who once believed in things such as the gold standard, the impossibility of sustaining a housing bubble, and speaking to Congress in riddles and financial jargon. His main adversary in the Congress was Ron Paul, who still believes in things such as the gold standard, the impossibility of sustaining any manufactured market bubble, and is a master riddle-solver himself with a strong Austrian economics background.


Ron Paul, as well, understood the consequences of the housing bubble. In a speech made into the Congressional Record on September 6, 2001, he stated, "Refinancing especially helped the consumers to continue spending even in a slowing economy." The same monetization of rising property values that Greenspan was concerned about became Greenspan's policy when looking for a new bubble.
Neither Paul nor Greenspan believed that a continual cycle of rising home prices and refinancing could continue, however. As Greenspan himself claimed in his doctoral thesis, "There is no perpetual motion machine which generates an ever-rising path for the prices of homes." Paul, in the same entry into the Congressional Record as referenced above, agreed: "This, too, will burst as all bubbles do." And the more inflated the bubble became, and the more capital was misdirected into it, the greater would be its fall.