Sometimes I feel like we’re watching the evolution of economics in real time. My view of the entire picture is this:

  1. Government involvement, though well-intentioned,  distorted price signals for housing, causing a housing bubble.
  2. The bubble burst and chaos assumed for the usual Austrian reasons, i.e. correction of malinvestment.
  3. The persistence of the economic woes continues for Keynesian reasons, i.e. the multipliers. I think some modern thinkers might call this a network effect, but whatever you call it, the impact is devastating.

The question remains: can anything be done about it? Without creating further distortions and bubbles? I doubt it.


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