You’ll probably hear different points of view, but the evidence that I’ve seen and that we’ve done within the Fed suggests that monetary policy did not play an important role in raising house prices during the upswing,” Bernanke said.
I have let a lot of lies from Washington go by over the last 10 years or so. We all have. But I refuse to let this one go. Mr. Bernanke you are either delusional or lying, either way you have no business running the Federal Reserve.
The Fed created the meltdown, flat out. The US government and other governments did much to help it blow up the world through programs such as the Community Reinvestment Act and all sorts of FHA and HUD programs before that. But the reason you are underwater right now is because you bought the house, and because the Federal Reserve flooded the world economy with cheap money to help make sure you could buy the house.
I speak from experience. I rode the housing bubble beast the whole way. I bought a house in 2002 in the exurbs of Washington DC. I remember first, when there were still some underwriting guidelines and just as the really cheap money was hitting the system, my wife and I were the anomaly. We had a bit of money to put down on a new home and so in the first phase of our neighborhood we were one of the youngest families around (we were in our mid-20s.) By the time the neighborhood was finished 4 years later the newer parts of the neighborhood were filled with people in their 20s who bought their homes with no money down, and with adjustable rate mortgages. Then they refinanced and bought SUVs. This was suburban America on both coasts prior to the bust.
People who had absolutely no business buying a house, bought a house because the Fed kept rates artificially low which induced all sorts of distortions into the housing market. It is the Federal Reserve, and no other entity that is most at fault for the housing bust and the recession/depression we see today. And the thing is they are still screwing it up! By trying to prop the market they refuse to let the market clear. Let houses sell for much lower prices. Once we find the market floor we can think about growth again.
Ben, I don’t care if Atlantic Magazine put you on the cover and called you a hero. You (in your heart of hearts) and the Austrians both know the score. It looks like the most recent bubble the Fed has created is in Bernanke’s ego.