Thomas Sowell talks economics sense on Housing

On the birthday of Ludwig von Mises it is appropriate that the greatest living economist and philosopher, Thomas Sowell, takes out his rapier and puts a few holes in the old canard of government promoted affordable housing.

Many years ago, when I first started reading Sowell, he made rent controls and housing supply and price manipulation a target of his ire. He can still do it because the government and finance/banking apparatchiks and mandarins still think they can make a silk purse from a sow’s ear.

You might have forgotten rent control and the Community Reinvestment Act and eliminating red lining and proper lending practices–you might have forgotten, if you are an idiot and were asleep when hell broke loose in the capital and investment markets less than 10 years ago. Well government slugs never learn. The Fed never learns–they are political and irresponsible and debt can be kicked down the road. So can the cost of bailouts. Currency debauchery–what currency debauchery?

As Sowell has always pointed out, markets are manipulated to our dismay and harm.

The housing and mortgage nonsense and the misconduct of the bankers and lenders, urged on by the government cheap housing push created the crash of 2008. So Freddie and Fannie are still in business and the socialists still believe in the free lunch or loose credit and lending to create the illusion of prosperity.

Did you know that the economy is great and unemployment is back down. Sure it is.


3 responses to “Thomas Sowell talks economics sense on Housing

  1. I think we are getting to the point where the promotion of medical care and education in a big way by the Feds is taking a big bite out of housing. The rising cost of Medicaid for most states is one of the things that led to sharp cuts in state support for public colleges and universities. This led to higher tuition and fees. The Fed responded to this by making money available for anyone wanting to go to college without regard to the income that might be made from their field of study. So we now have millennials coming of age but they’re holding off starting families and buying houses because they have so much student loan debt. Their salaries are held down by the high cost of health insurance that proportionately a very big part of entry level salaries. So with fewer entry level buyers, the housing markets are in the doldrums although is likely great for those who have rental properties. The imbalances created by government social engineering has created problems that will percolate through the US economy for a long time to come.

  2. Market distortions, manias and cyclical economics, that’s all you need to know. Here, have some reading:

    -Extraordinary Popular Delusions & the Madness of Crowds

    -Doctor Housing Bubble

    -Kondratiev Waves

    Strauss–Howe generational theory

    Hope this helps.

    Just a thought.


  3. Low interest rates have created the next bubble. The Fed’s eventual raising of rates will crash things all over again because far too much debt has been wracked up under these low rate conditions. This will occur on two levels. First, the government deficits will shoot up having everyone finger-pointing spending when the reality is that it will be the increasingly larger service on the debt figure. Second, private sector/community will see a resurgence in bankruptcy and strategic defaults when debt servicing costs shoot up there as well. Anyone still being suckered into ARMs will see their houses become problems while anyone milking rotating debt (credit cards) for buying power now will find it far more difficult to live their current lifestyle. Of course, the lemmings will buy into the class warfare about evil corporations not raising wages and that we need a higher minimum wage — all the while being oblivious to the root cause which is the Fed’s 0% interest rates and printing presses.

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