Dollar, Federal Reserve, Game Theory, Trust

The 7 Habits of Highly Ineffective Economies by Johan Norberg

Johan Norberg, author of In Defense of Global Capitalism and Financial Fiasco, discusses how to ruin your economy in seven simple steps. The steps are as follows:

1. Easy Money
2. Money into Mortgages
3. Mortgages into MBS’s (Mortgage Backed Securities)
4. MBS’s get AAA-ratings
5. MBS’s moved off balance sheets
6. MBS’s are marked to market (valued based on future protections)
7. A safety net to encourage it (FDIC insurance and “too big to fail” doctrine)

Just like I showed in my two-part series on the financial crisis (part 1 and part 2), Johan Norberg illustrates how the government had its fingerprints all over the mortgage meltdown.┬áJohan Norberg’s full discussion can be found here.

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