We Don't Have Free Markets

Regulation of Financial Markets
02/05/09 - Cafehayek.com by Russell Roberts

If we had an “unregulated free market”:

• The banks that made stupid investment decisions would have gone bankrupt and be under new management.
• The investment rating agencies that rated subprime loans as “AAA” would be disgraced, bankrupt and out of business -- no one on earth would deal with them any longer
• No one could force bankers to make risky loans, as is currently done by the Community Reinvestment Act, lawsuits from ACORN, and the Justice Department.
• No central bank would be in charge of the entire money supply.
• - to make credit available at too-low interest rates.
• - to create a permanent inflation that made housing jump in "value".
• - to encourage risk by being a lender of last resort.
• - to condone and support an over-leveraged banking system, where reserves are only 4% of loans outstanding, inviting constant instability.
• No Fannie Mae, Freddie Mac, or FHA could direct trillions of dollars into unaffordable housing construction.
• The government could not borrow $1 trillion for handouts to political interest groups.
• The few elements of remaining capitalism would not struggle under thousands of pages of rules and regulations, and dozens of government agencies.
• The little guy would not have to contribute his funds to a government that saves the incompetent and the dishonest from the consequences of their own actions.

We don’t have an unregulated free market; we have an out-of-control government intent on looting us blind.