- The Washington Times - Thursday, March 3, 2011


In “Financial terrorism suspected in crash” (Page 1, Tuesday), Bill Gertz writes that terrorists and/or hostile nations may have caused the 2008 economic crash. The U.S. economy consists of millions of interactions among U.S. citizens and others, and those create $14.2 trillion in goods and services each year. As such, they cannot simply be blown up, disrupted for long or otherwise be destroyed.

Blaming terrorism for the crash seems to be part of the continuing effort to find scapegoats for the residential real estate bubble that burst in 2008. The real culprits can be found at the Federal Reserve, the White House and in Congress.

The Federal Reserve, through its expansive monetary policies in the 1990s and 2000s, created the classic situation in which too many investable funds chased too few good investment opportunities. This expansive monetary policy first created the dot-com stock boom that, when it burst, fueled the boom in residential real estate values.

Congress and the president, in their wisdom and magnanimity with other people’s money, created tax benefits and other subsidies that caused artificial demand and led to huge investments in residential real estate. Fannie Mae and Freddie Mac reduced their lending standards while significantly increasing their investment in subprime mortgages, which caused many private-sector lenders to follow suit.

Economic reality eventually is recognized even where markets are significantly distorted in favor of political considerations by massive federal government intervention. Economic policies, not terrorists or hostile nations, caused the economic crisis of 2008.

I am confident that other culprits will be identified as the federal government tries to avoid responsibility for its well-intentioned but otherwise idiotic policies. It is only a matter of time before space aliens are reported to have caused the 2008 economic crisis.


Memphis, Tenn.



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