Tuesday, March 25, 2008

Our Financial House of Cards and How to Start Replacing It With Solid Gold (George Reisman)

George Reisman on the financial mess we're in and how a partial gold standard could help end it without the dangers of deflation:

A credit crisis has been spreading through the economic system. It began with the collapse of the housing bubble, which was the result of years of Federal Reserve–sponsored credit expansion. This credit expansion poured hundreds of billions of dollars into the purchase of homes largely by subprime borrowers who never had a realistic capability of repaying their mortgage debts in the first place. And, not surprisingly, large numbers of them in fact stopped making the payments required by their mortgages.

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