Lew Rockwell Explains the Mortgage Meltdown

Lew Rockwell lays it out:

The sea of inflationary credit is the core problem behind the falling dollar, the subprime crisis, the housing meltdown, not to mention the rise in the national debt and a thousand other problems.

And how do they deal with it? More credit and more calls for controls. No one in Washington seems to understand the reason for the crisis, much less how to fix it. The markets go for this stuff for a while until it looks like Washington is in panic mode. Even Wall Street is starting to sense that something is very wrong.

A good indication is President Bush’s freeze on subprime mortgage rates. It is a classic case that provides serious lessons for all of us. It shows the political penchant for intervening in the market, the market response, and the further interventions that are called forth when the first round doesn’t bring the utopia they imagine.

Here is the great mortal threat that intervention poses to the economy: not the first round, not even the second round, but the relentless dynamic of political rescues that drive us further into the pit of state planning. Under Bush's solution, rate freezes kick in next year and subsidize only part of those affected. His plan is under fire, not for being an intervention but for not bailing out every living soul.

If you aren't worried, you should be.

Read the whole thing here.