WASHINGTON, December 3, 2009—As the Federal Reserve prepares for Ben Bernanke’s confirmation hearing today, a recent Rasmussen poll shows that just 21 percent of Americans believe that President Obama should appoint the chairman to another four-year term. Many criticize Bernanke and the Fed for failing to sufficiently regulate markets in the lead-up to the crisis—a criticism Bernanke accepts.
According to Alex Epstein, a fellow with the Ayn Rand Center, “In Bernanke’s view of the Fed—the same view that is shared by most narratives of the financial crisis—the Fed was a force for good in minimizing the crisis, which was caused fundamentally by greedy, reckless financiers. The only criticism of the Fed in this narrative, is that it did not use its powers strongly enough. Thus, the Fed is a financial firefighter that simply needs more resources to put out fires set by financial arsonists in the free market—and Bernanke is Financial Firefighter in Chief.“
But according to Mr. Epstein, the actual facts tell a radically different tale. “The Fed’s artificially low interest rates (under the regime of Alan Greenspan and deputy Ben Bernanke) were the primary cause of the housing bubble, which combined with other government-induced phenomena (such as Fannie Mae and Freddie Mac) effectively paid people to make reckless investments in real estate.
“In other words, the problem is not that government policies and institutions didn’t do enough to stop the fire, it is that they poured the gasoline and lit the matches.”
Copyright © 2009 Ayn Rand® Institute. All rights reserved.
http://aynrandcenter.org/
Alex Epstein is a fellow at the Ayn Rand Center for Individual Rights, focusing on business issues.
Posted by AynRandInstitute: Alex Epstein on 12/3/09
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