Geithner also acknowledged that years of easy money, ahem, low interest rates, contributed to the financial crisis. Ron Paul reminded Geithner that he had warned of the unsustainable housing bubble already in 2002 in a bill and the Treasury Secretary also agreed that easy money had fuelled moral hazard.
Which leaves me with the question, why did the then Fed NY board member not act?
All this is especially hilarious as Ron Paul correctly claims that this could not have happened if Austrian economics would have been applied in the first place.
Take 5 minutes time, it's worth it.
It is also amusing to hear Geithner say
that private institutions should not be able to take advantage from a subsidy of the government that leaves taxpayers exposed to the risk of substantial losses. So what the hell did the private Federal Reserve do other than exactly pile up potential losses by buying asset backed securities (ABS) at mark-to-comfort prices no other market participant was willing to pay?
I end with repeating my still unanswered question, "Who Owns the Federal Reserve?" Once a light is shed on this it will be much easier to understand the motivation of the Fed to feed the bubble despite all timely warnings. Fed Chairman Ben Bernanke is after all liable to his shareholders too.
Nothing has changed in 300 years of fiat currency (not money in the Austrian sense.) Follow the