According to this article, the 1.5 trillion subprime mortgages that created the bubble were not backed by freddie and fannie. What do you think about this? Isn’t this a major blow to the austrian perpsective?
For the record, the “Josh” posting above is not me.
The “Austrian perspective” of the bubble is based on Austrian Business Cycle Theory. It states that booms, or bubbles, are created by increases in the supply of money without a corresponding increase of the demand for it; inflation. So in the case of the housing bubble that popped in '08, they’d blame that on the Federal Reserve’s policies. That article isn’t even a “blow to the austrian perspective”, much less a major one.
But there’s no doubt that Fannie and Freddie added to the problem.
Most relevant evidence begins at 7:51…