Skip to main content

NC Libertarian Senate candidate Chris Cole on the mortgage bail-out

When you're running on a shoestring in the margins between Libby Dole and Kay Hagan, any notice is good notice, and I can only hope that Chris Cole's piece in the Huntersville Herald gets picked up by more North Carolina media.

Not being a gold bug, I am ambivalent about Cole's belief in the gold standard, but his analysis of the current Fannie Mae/Freddie Mac bail-out is right on point:

No wonder the government no longer issues gold certificates, and no wonder our savings rate has fallen to about one-half of one percent. It is against self-interest to hold money that is worth less the longer you hold onto it.

Thus, we have the setup for our current credit and foreclosure crisis.

When money is saved, its owner intends its use in the future, and the bank uses it to make loans, which are used for tasks such as the creation of new businesses. More savings mean lower interest rates, which, in turn, send a market signal for businesses and individuals to invest for future demand. The real interest rates based on savings have been replaced by artificial signals from Federal Reserve-set interest rates, along with home- and land-ownership incentives by government. The result has been a market expectation of future increases in demand for homes and land, and thus, a real-estate price bubble. All of which was fine, as long as there was an actual demand in the future. What has happened is that demand no longer matches the fake interest signal, and the housing bubble has burst.

The solution offered by politicians, such as Republican Sen. Elizabeth Dole, is to pump Federal Reserve loans into Fannie Mae and Freddie Mac companies to finance more loans for folks who couldn't otherwise qualify for them, setting up another housing bubble and more foreclosures rather than fewer. Quick fixes can always be expected to result in long-term problems.

The long-term solutions are harder.


And I'm also in complete agreement with one of his preferred solutions:

Phase out government programs that subsidize home ownership. This must include setting a date for the revocation of the charters of Fannie Mae and Freddie Mac (I suggest four years), so that they will cease sending false market signals, without stranding current buyers and sellers.


That one's tough medicine. A lot of people will have the knee-jerk reaction that first-time home-buyers wouldn't be able to get into houses without government subsidies. But that's primarily because they have to compete with other buyers using government subsidized loan instruments.

None of that is the point, however. The point is: Chris Cole is yet another Libertarian candidate in North Carolina who is broadening the political debate. Even voters and candidates who disagree with his solutions have a better range of choices because he's there.

Comments

Brian Shields said…
Why not just separate Freddie and Fannie, and sell them.

Privatization will save jobs and not make the person doing it sound evil.

Popular posts from this blog

A Libertarian Martin Luther King Jr. Day post

In which we travel into interesting waters . . . (for a fairly long trip, so be prepared) Dr. King's 1968 book, Where do we go from here:  chaos or community? , is profound in that it criticizes anti-poverty programs for their piecemeal approach, as John Schlosberg of the Center for a Stateless Society  [C4SS] observes: King noted that the antipoverty programs of the time “proceeded from a premise that poverty is a consequence of multiple evils,” with separate programs each dedicated to individual issues such as education and housing. Though in his view “none of these remedies in itself is unsound,” they “all have a fatal disadvantage” of being “piecemeal,” with their implementation having “fluctuated at the whims of legislative bodies” or been “entangled in bureaucratic stalling.”   The result is that “fragmentary and spasmodic reforms have failed to reach down to the profoundest needs of the poor.” Such single-issue approaches also have “another common failing — ...

More of This, Please

Or perhaps I should say, "Less of this one, please." Or how about just, "None of them. Ever again. Please....For the Love of God." Sunshine State Poll: Grayson In Trouble The latest Sunshine State/VSS poll shows controversial Democratic incumbent Alan Grayson trailing former state Senator Dan Webster by seven points, 43 percent to 36 percent. A majority of respondents -- 51 percent -- disapprove of the job that Grayson is doing. Independents have an unfavorable view of him as well, by a 36/47 margin. Grayson has ignored the conventional wisdom that a freshman should be a quiet member who carefully tends to the home fires. The latest controversy involves his " Taliban Dan " advertisement, where he explicitly compares his opponent to the Taliban, and shows a clip of Webster paraphrasing Ephesians 5:22 -- "wives, submit to your husbands." An unedited version of the clip shows that Webster was actually suggesting that husba...

A reply to Salon's R. J. Eskrow, and his 11 stupid questions about Libertarians

Posts here have been in short supply as I have been living life and trying to get a campaign off the ground. But "11 questions to see if Libertarians are hypocrites" by R. J. Eskrow, picked up at Salon , was just so freaking lame that I spent half an hour answering them. In the end (but I'll leave it to your judgment), it is not that Libertarians or Libertarian theory looks hypocritical, but that the best that can be said for Mr. Eskrow is that he doesn't have the faintest clue what he's talking about. That's ok, because even ill-informed attacks by people like this make an important point:  Libertarian ideas (as opposed to Conservative ideas, which are completely different) are making a comeback as the dynamic counterpoint to "politics as usual," and so every hack you can imagine must be dragged out to refute them. Ergo:  Mr. Eskrow's 11 questions, with answers: 1.       Are unions, political parties, elections, and ...