The Impending Housing Crisis No One is Talking About
At some point we must recognize that economic disasters don’t occur randomly.
They’re the product of reckless interventionist policies.
Remember the 2007-2008 housing market collapse? Public policy created that.
Let’s refresh our historical memory. In 1977, the administration of Jimmy Carter signed the Community Reinvestment Act. This law let community activist groups pressure banks into handing out loans to minority groups that had allegedly been discriminated against in the past.
Like many policies implemented after the Great Society, the CRA was created under the pretext of fighting “racism” and reducing inequality.
Subsequent presidential administrations used the CRA to extend home ownership to people with dubious credit standards.
Add in the artificially low interest rates that the Federal Reserve set, banks were incentivized to make loans to people who were in no position to pay off their mortgages. The low interest rates combined with lax lending standards created an environment where people who normally wouldn’t qualify for home ownership, could now obtain homes without having the resources to do so. This placed upward pressure on housing, eventually creating the conditions for a large housing bubble.
Once a large segment of homeowners began defaulting on their mortgage payments, the entire economic house of card soon collapsed. The US’s housing collapse then metastasized into a global financial crisis once investment bank Lehman Brothers went under in September 2008.
And the rest was history….
While the GFC is behind us, America is currently facing an inflationary crisis that comes with a unique set of problems.
How the US will handle this problem is anyone’s guess.
One thing that’s becoming abundantly clear as the days go by is that the US may be facing another housing crisis.
And it may be the product of the Fed’s shenanigans… surprise, surprise!!
Our very own George Gammon discussed this in one of his recent videos.
Is America going to experience another housing collapse in the next year?
Tune in here to find out!
—Team Rebel Capitalist