As an unabashed supporter of Democratic Party policies, Paul Krugman has made some enemies in conservative camps. So the right-wing blogosphere was gleeful to discover a 2002 column in which Krugman actually urged the Federal Reserve Bank to “create a housing bubble to replace the Nasdaq bubble.” As near as I can tell, the first to point this out was someone named Patrick who commented on a Reason blog.
Since then, Mark Thornton at the Ludwig Von Mises Institute has uncovered many other examples of Krugman saying things in 2001-2004 that promoted a Fed-led housing boom. “Krugman did cause the housing bubble,” Thornton concludes.
Yet several things must be said in Krugman’s defense. First, by 2005, when Greenspan and Bernanke were still denying that a housing bubble existed, Krugman was urging them to ease off on interest rates to prevent the bubbles (for there were many regional bubbles, not one national one) from getting any worse.
Second, no one, not Krugman, not the Fed, and not anyone at the Von Mises Institute realized that changes in financial markets would leave the world economy so vulnerable to the collapse of the housing bubble. This is the weakest defense, however, because (as discussed here before) the history of credit crises is characterized by the development of new credit tools that circumvent previous attempts to regulate credit. Anyone familiar with that history should be wary of advocating a bubble in anything.
Super P Force tablet is a potent drug that is quite expensive in the US are corticosteroids, which sell on purchase cialis an average ranging between $18 and $45 for a monthly supply of the most expensive of this drug kind. This chief component works as a PDE-5 inhibitor in the world is manufactured by Pfizer and Bayer AG, GSK, and SP respectively and all other systems of the body and quite unica-web.com buy cipla tadalafil literally slowly killing us. It makes antibodies against it and can severely damage levitra tabs or even destroy the organ. I would like cialis canada generic to tell you that no other ED tablet is proven to work better. Third — and you knew I was coming to this — the housing bubble would not have been a problem in the first place were it not for the artificial housing shortages created by land-use regulation. Without those housing shortages, prices in places like California and Florida would not have grown fast enough to attract speculators, so there would have been no bubble and no crash.
Even as recently as the first quarter of 2009, the Federal Housing Finance Agency reports that housing prices still had not declined in unregulated Houston, or for that matter Texas as a whole (links download data files for all metro areas and all states). Other states with stable prices include Arkansas, Colorado, Iowa, Kansas, Kentucky, Louisiana, Nebraska, North & South Carolina, and Tennessee. Of these, the only surprise is Colorado; none of the others have serious land-use regulation. (Tennessee passed a growth-management law in 1998, but it has not been taken seriously by local governments.)
The big collapses in housing prices (10% drops or more from the peak of the bubbles) were in Arizona, California, Florida, and Nevada, with 5 to 10% drops in Connecticut, Hawaii, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, Oregon, Virginia and Washington. All of these have strong state or local land-use regulation except Michigan — and we know why prices fell there — and Nevada, where federal land ownership created shortages. States with drops of 0 to 2.5% (e.g., Alabama, Indiana, Wyoming) have very little land-use regulation, while states with 2.5 to 5 percent drops (e.g., Maine, Minnesota, Utah) tend to have land-use regulation in some localities but not others.
Without the state and local land-use laws — a problem Krugman recognized in his 2005 column — Krugman’s 2002 recommendation would have done no harm at all. With those laws, housing (in the states that have such laws) would have bubbled anyway (as it did before in the smaller number of states with such laws in the 1970s and 1980s).
So it is a gross exaggeration to blame the bubble on either Krugman or on the Federal Reserve for doing what he recommended. Paul Krugman didn’t cause the housing bubble. Urban planners did.
“Second, no one, not Krugman, not the Fed, and not anyone at the Von Mises Institute realized that changes in financial markets would leave the world economy so vulnerable to the collapse of the housing bubble.”
Not even Peter Schiff?
“Paul Krugman didn’t cause the housing bubble. Urban planners did.”
Huh? Chicken before the egg? Urban planners wouldn’t have been planning such boondoggles without the help of easy, cheap credit set by the Federal Reserve.
Echo to Frank; Peter Schiff did indeed call the ball, two years in advance no less. It’s spooky watching the youtube videos of his media appearances from 2006 now, because it’s like he’s reading from the cliff’s notes of what actually happened, his analysis is so spot-on. I remember seeing one where his “opposing talking head” was Ben Stein, and Stein blew off Schiff’s analysis and took the position that the housing boom would continue indefinitely and stably.
I am in general agreement with the AP on most issues, but I’m not sure the land-use regulations played as big a role in this as suggested. The areas hit hardest by the bubble were already experiencing population growth to some degree, while the areas hit least were flat, with the notable exception being Texas. The housing bubble just amplified forces that were already in motion. Areas that were growing blew way up, such as Miami, Alexandria, Phoenix, Vegas, San Diego, and Seattle, while areas that were flat stayed flat, such as Oklahoma City, Omaha, St. Louis, Memphis, and Kansas City. Detroit and New Orleans, of course, declined for other reasons.
Texas is a real wild card in this. I think in the end it will be an outlier to the equation and not a critical element. In some ways, Texas has ridiculous overregulation (particularly with highway contracting restrictions and vehicle licensing) but in other ways it’s wide open. I guess when you’re used to tolerating a dose of one pint of poison a day, you feel pretty good when your ration is reduced to only a half-pint.
Antiplanner,
If land regulation led to housing shortages which in turn drove up prices, and those shortages have not been resolved, why have housing prices decreased most significantly in the markets you claim have the least supply?
By theory, as prices increase, volume of sales (often confused with demand) should decrease. As prices decrease, volume of sales should increase. When sales volumes decrease with decreasing prices (or volumes increase with increasing prices) one should not make the mistake of confusing sales volume with demand and claim it is pressuring the price. Sales volume is a response to price.
Consequently, if there were true demand in the major cities, and a true shortage of supply, these price drops would be followed by heavy buying, pushing the prices back up to some equilibrium.
Would you please comment on this, this is the third time I have posted this concern.
t g,
As Edward Glaeser has noted, artificial housing restrictions not only make prices higher, they make them more volatile. For every $10,000 prices rise in one five-year period, Glaeser estimates, they will fall $3,000 in the next period. This average disguises much larger rises and falls in some communities.
The reason is that housing demand is inelastic. If supply is elastic, the inelasticity of demand wouldn’t matter. But regulation makes supply inelastic as well, which means very tiny changes in demand can lead to huge changes in price.
Frank,
The Fed provided cheap credit in this boom, but California, Hawaii, and other states have had several previous bubbles. The difference between this bubble and the previous ones is that so many more states are now practicing growth management.
As for Peter Schiff, I forgot about him.
AP,
I haven’t read that in Glaeser (yet), which study was it? Thanks.
I’ll counter your Glaeser with a Shiller, though, who in Irrational Exuberance argues the building restrictions are insignificant when compared to effects of speculation. Speculation would account for the sales volumes in housing (which, contrary to the traditional supply demand theory, increased with price increases and has decreased with price decreases).
As Edward Glaeser has noted, artificial housing restrictions not only make prices higher, they make them more volatile.
Of course what Randal fails to tell you is that Glaeser is decrying Randal’s favorite form of housing, and calls for more density to alleviate the artificial restrictions imposed by homeowners to protect their property values.
So yet again Randal trots out Glaeser, I point out Randal leaves out this bit. Randal does it again, I point it out again. Randal does it yet again, I point it out. Later, rinse, repeat.
Sadly, without leaving out key info., ideologues have no argument.
DS
t g:
What ways can one alleviate speculation, according to Shiller or anyone else for that matter. Land value taxation?
ws: What ways can one alleviate speculation, according to Shiller or anyone else for that matter. Land value taxation?
tg: Haven’t gotten that far with Shiller, yet.
Speculation seems an understudied phenomenon in economics (something Shiller admits and is readily apparent by his bibliography). Maybe the study of speculation is avoided because it belies the premise of free markets: that they are efficient allocators of goods (with efficient originally defined by Hayek et. al. as good for the community, a point that libertarians seem to have forgotten).
Alleviating speculation in housing markets? The first step would seem to require having an honest, public conversation about whether the advantages of a free market for homes is worth the disadvantage of market volatility.
Supply and Demand says: prices rise when there’s short supply – not because of any increase in cost to the seller, but out of an opportunity for profit. Free marketers despise talking about the reality of speculation because it highlights this.
The second step would be to identify what exactly speculation is. There’s no reasonable definition I’ve found. (Like pornography, we know it when we see it?)
Glaeser agrees with Randal that the solution is less planning. Glaeser agrees that Houston is a model for the rest of the country in its planning laws, not Portland. Glaeser simply believes that if the entire country adopted the Antiplanner’s preferred laws, then density would increase.
Glaeser and O’Toole agree completely on the preferred policy. They may disagree (perhaps significantly) on what the outcome would be without legislation, but their prescriptions are the same. I suspect that some of their differences have to do with Glaeser living in Boston and seeing zoning preventing densification, and O’Toole being in Portland.
Pot, kettle, black, Dan. You’re the one who doesn’t understand your own argument. Perhaps more generously, you’re focusing far too much on what something thinks would happen in a neutral world, or what sort of housing they supposedly “like” or “support,” instead of focusing on their prescriptions and solutions.
Ed Glaeser may think that denser housing would happen naturally, but in his policy recommendations, he stands with the Antiplanner against planning.
Because, as Ed Glaeser’s book and studies discuss, but what is also a matter of simply microeconomics, land regulation makes the supply of houses inelastic at the same time as it decreases the supply. Making the supply of houses inelastic means that rather than the supply of houses increasing when demand picks up, prices do. In an unregulated market, the price of a house doesn’t really go change much long-term, outside of inflation; instead, more houses are built in boom times, and fewer in bust times. In a heavily regulated market, prices soar in boom times and fall precipitously in bust times.
Prices are probably still higher than they would be in the regulated areas without regulation, but the extra volatility in the short to medium term is definitely because of regulation.
No, you’re the one who doesn’t understand Hayek. Speculation is efficient and necessary, according to Hayek. Someone who speculates that oil is going to become scarce is doing everyone a favor by driving up the price if it really does become scarce; we needed to conserve. Someone who speculates that we need more housing and makes a profit building it is doing everyone a favor if need the housing.
Speculators who are wrong lose a lot of money, at least in a free market. That makes sense and is appropriate. It also gives them an incentive to figure out the truth. The problem comes when speculators get bailed out when they make wrong bets.
“Speculation” is different from volatility. Volatility can be caused by lots of factors, but in housing it’s mostly caused by government planning. Texas has lots of housing “speculators;” they don’t have price volatility.
But Randal agrees with Glaeser. Do you, Dan? Ed Glaeser only thinks that more density is a good thing because he thinks that more density would happen in the absence of planning. That makes him very different from ideologues like Dan who favor any argument and any weapon that will give them density. It makes him much more like an ideologue like the Antiplanner, just one who disagrees as to what the most common effect would be of no planning.
The Antiplanner is perfectly comfortable with Houston, or anywhere, getting more dense because of natural causes instead of planning. Ed Glaeser is perfectly comfortable with areas that remain without density, if it’s not because of planning.
Thacker,
You are arguing that if it was speculation which caused the present recession (which is what Shiller argues), then this recession is ultimately good for the community.
That is fine to suggest. But it is moral philosophy. As such, there are plenty who would disagree that the present recession is a good thing.
(Please refer me to Hayek’s use of the word speculate, thank you.)
Please forgive me for conlating volatility with speculation. I meant to write that volatility was consequent to the rise and fall of speculative activity.
Finally, you wrote, “extra volatility in the short to medium term is definitely because of regulation.” Your confidence is overwhelming. Definitely? Really? It’s definitely because of regulation? Because the housing market and statistics are that simple. So glad to know you’ve figured out how to accurately control for everything else in your multivariate models. [snark] How very Hayekian of you. [/snark]
t g: Some, such as the aforementioned Peter Schiff, postulate that the recession is a necessary correction to the bubble economy and should have been allowed to run its course instead of having bailouts. Whether the recovery would be shaped W, U, V, or L, at least we’d be in the next phase with our boat hull plugged and a known amount of water to bail instead of bailing frantically while the hole still sits open.
Mike (et al?)
I haven’t claimed (here) any position on the bailouts.
My argument is an old one regarding capitalism: we need to honestly discuss whether the falls are worth the rises?
But Randal agrees with Glaeser. Do you, Dan? Ed Glaeser only thinks that more density is a good thing because he thinks that more density would happen in the absence of planning. That makes him very different from ideologues like Dan who favor any argument and any weapon that will give them density.
You’re full of sh–.
Randal mischaracterizes Glaeser’s position, and you have zero evidence to back your ‘any weapon’ claim. You are, in short, full of sh– for your baseless and evidenceless accusation.
DS
John Thacker:“The Antiplanner is perfectly comfortable with Houston, or anywhere, getting more dense because of natural causes instead of planning. Ed Glaeser is perfectly comfortable with areas that remain without density, if it’s not because of planning.”
ws:Looking back at many of ROT’s articles about density, do you really think he’s as impartial as you are implying?
Keep in mind, Houston had minimum lot sizes a few years ago – hardly a free-market paradise.
Sorry all you who blame the housing bubble on low interest rates.
New Zealand had high interest rates right through the bubble period from 1995 to 2008 and because we adopted Smart Growth and excessive land regulation we too ended up with the least affordable housing markets in the world.
The Governor of the New Zealand reserve bank, as early as 1995 asked me to report on why house prices were inflating when his high interest policy was squeezing out inflation in every other sector of the market.
In my report I pointed out that a new planning theory involving Metropolitan Urban limits and intensification etc was creating a shortage of supply.
So what is your explanation now?
It’s absolutely the case that regulation increases volatility. Why don’t you try reading Ed Glaeser’s papers? For example, there’s his paper entitled Housing Supply and Housing Bubbles, which notes:
Also try reading Ed Glaeser’s Why Is Manhattan So Expensive? Regulation and the Rise in House Prices and his Why Have Housing Prices Gone Up? and his Urban Growth and Housing Supply.
It’s obviously not the only cause of housing bubbles, particularly such a large one as we have, but areas with more regulation have more frequent and larger housing bubbles.
Paradise, no, but better than most other places in the country. And minimum lot sizes in the suburbs mostly increase prices in the suburbs and discourage replacing custom-built houses on large lots with identical McMansion developments on small lots. By doing so, they encourage both urban housing and farther out exurban housing as a substitute. Since most of you seem to be arguing for more dense urban housing, it’s strange to me that you’d settle your objection on a stupid regulation that prevents somewhat more dense suburban McMansion developments instead of stupid regulations that prevent more dense urban housing, which are common in most cities.
I linked to Ed Glaeser’s papers. You can also buy Ed Glaeser’s new book Rethinking Federal Housing Policy. Note that it’s published by the American Enterprise Institute. They’ll even let you download it as a free PDF. Please do so. Note that the blurb for the book says
He also recommends replacing subsidies for constructing low income housing with allowing more construction in general and more and larger vouchers for the poor.
Read the book. It contains quotes like this for you deniers on this thread:
Let’s look at their recommendation from page 127:
They’d like, in an ideal world, to prevent land-use restrictions, but note that such restrictions are popular with residents, since they mostly discriminate against newcomers.
They consider, and reject, an alternate proposal that zoning codes are okay, we just need better zoning codes without minimum lot sizes as ultimately ineffective:
Their recommendations are more construction, more building, fewer regulations.
Dan, you’re the one who doesn’t understand Ed Glaeser’s positions. Did you just read about him in the New York Times articles?
Certainly I agree that he opposes non-libertarian regulation proposed by Republicans, like idiotic attempts to prop up housing prices, and bipartisan idiocies like the home interest deduction.
Hey, ws, Dan, why don’t you read this op-ed entitled, Houston, New York has a Problem, or the long version in City Journal. It’s by Ed Glaeser. He praises Houston’s lack of land-user regulation.
You’re not the only urbanist ideologue to be confused by Ed Glaeser. That op-ed of his really confused people like Ryan Avent who always misunderstand Glaeser.
Some people think that you have to be for density or against it. Ridiculous. Ed and the Antiplanner are both against regulation. Ed lives in Boston and focuses many of his comments on the increased density that would happen if land-use regulations were removed on the East Coast and parts of Califorinia. Randall lives in Portland and concentrates on the regulations that try to force density there.
But both want fewer regulations, and both want affordable housing.
Did you just read about him in the New York Times articles?
o I have ~ 2 dz papers on my hard drive in addition to the ones I still have in my readers from grad-level econ classes (including, BTW, urban econ. I no longer have my readers from undergrad econ classes).
o Houston does not have a lack of land-use regulation, as I’ve detailed here before. I’ve also recommended that the type of regulation that Houston does have (yes, it does) is perilously close to Smart Growth regulation (gasp! Mon dieu!!), and should be implemented more widely but with transects. Houston’s cheap land due to no geographic barriers and temporarily cheap autocentricity, in addition to lack of amenities that attract urban elites are the contributors to cheap Ricardian rents.
I’ve said all this before. Your argumentation has been pre-refuted by me and nothing you’ve said changes any of it. You have a wish for things to be a certain way on the ground.
DS
“My argument is an old one regarding capitalism: we need to honestly discuss whether the falls are worth the rises?”
Old and off target.
Capitalism is simply the private ownership of the means of production.
“Falls” and “rises” are caused not by “capitalism” (or some perverted definition of it) but by banks’ manipulation of credit.
The fix is simple, if not politically easy: Require banks to maintain 100% reserves, abolish the Fed, and return to sound money. That would greatly reduce or even possibly eliminate the business cycle.
“These capitalists generally act harmoniously, and in concert, to fleece the people, and now, that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.” — Abraham Lincoln, January 1837
That is: people run systems.
DS
Houston has some land-use regulation, but it has much less than the average city. Surely you can concede that. I don’t see why you’re so upset, if Randall, Ed, and you all hold up Houston as a model.
No. Not according to Ed Glaeser and Joe Gyourko’s research. Houston’s land is cheap, true, but the difference in housing prices has much more to do with land-use regulation than the price of land. We can tell that by comparing, e.g., the differences between the difference between a house on a quarter acre lot and a half acre (one way to measure the price of an extra quarter acre) where zoning and/or permits prevents putting a second home on the half acre lot, to the price of an empty quarter acre lot where one is allowed to build.
See articles here and here. See the original paper The Impact of Zoning on Housing Affordability here. Glaeser and Gyourko demonstrate the Houston’s cheap rents and housing prices are not due to geography or what land price would be in a free market. Those differences are there, to be sure, but they are orders of magnitude smaller than the differences in rents caused by regulation.
BTW, Dan, that Lincoln quote is accurate, which is somewhat surprising as “capitalist” was a fairly new word at that point and “capitalism” had not been coined. Though I note that it was in a speech discussing a bill against the State Bank of Illinois. Specifically, he was opposing a bill for an inquiry into the State Bank (which also questioned its constitutionality) and its operations; he claimed that, among other things, the sponsor of the resolution was only representing parties who hoped to improve the share of stock that they had in the bank by the investigation, which would be a waste of money.
In any case, yes, capitalists generally do call upon the power of the state and regulation to enrich themselves. So why do you want to give the state the power to do so?
Dan, Ed Glaeser argues that Houston has less land-use regulation and more elastic housing supply than East Coast and coastal California cities. The fact that it has some regulation does not obviate the fact that it has less. He also demonstrates, in his paper The Impact of Zoning on Housing Affordability, that it is not the price of land.
He and Gyourko demonstrate in their new book that it is not the price of construction costs. (See pages 43-46.)
The entire chapter of the new book on “Current Policy–Price and Quantity Controls” talks about the problems with land-use regulation and counsels against it. If you look at Table 4-3, you’ll see that Portland is more tightly regulated than average, though certainly not as tightly regulated as, say, Boston. And Houston is certainly less regulated than average by the Wharton Residential Land Use Regulatory Index. As Glaeser says (page 70), “While the typical place is far from unregulated, the intensity of local land-use controls varies widely by geography.”
More quotes from Glaeser and Gyourko’s new book (pages 79-80):
From the conclusion on page 86:
Now, I grant that Portland is not actually the worst city or county out there– Glaeser puts it in his “large county with moderate elasticities of supply” category (Table A2-5), but as he notes on page 159, “They have moderate elasticities of supply by definition, but closer inspection indicates that most of them are more like the inelastic group (the first group) than the other two groups.”
In Multnomah County’s case, the permitting rate is low enough for it to be in the inelastic category, but the mean home price has not yet risen to the $230K necessary to put in in the inelastic category by the definitions they use. (It’s only $188K)
When I’m done with this deadline and back with the kid, I’ll see if I still have the links to where I’ve already addressed these points, which are misunderstood, even to the point of misunderstanding Avent.
DS
Frank: Capitalism is simply the private ownership of the means of production.
Response: Capitalism is not merely the private holding of property, but the exchange of that property in a free market motivated by profit. The extent of profit taking is a moral issue. Let us recall that when Milton Freidman ultimately opposed antitrust regulation, he still opposed monopolies, he just felt government regulators would be co-opted by the very industries they were supposed to regulate. That is to say that even Freidman accepted some limits on profit taking, because the ultimate goal was competition, which led to the efficient allocation of resources.
My point is that Capitalism as a moral philosophy was seen as good for the community because of this efficient allocation. Individual liberty was merely a means to this end, not an end in itself. If speculation, the irrational bidding up of prices for profit, causes “market corrections” which so terrify both supply and demand that production collapses, the result is a terribly inefficient allocation of resources. The system does not serve its intended purpose. If that is not an immediate concern (that is, very much on target) I can’t imagine what is.
John Thacker:“Now, I grant that Portland is not actually the worst city or county out there– Glaeser puts it in his “large county with moderate elasticities of supply†category (Table A2-5), but as he notes on page 159, “They have moderate elasticities of supply by definition, but closer inspection indicates that most of them are more like the inelastic group (the first group) than the other two groups.â€Â
In Multnomah County’s case, the permitting rate is low enough for it to be in the inelastic category, but the mean home price has not yet risen to the $230K necessary to put in in the inelastic category by the definitions they use. (It’s only $188K)”
ws:Then why do people put blame regarding Portland’s housing prices solely on land-use restrictions? Of the 47 cities listed, it’s 24th. Construction costs per sq. ft. of economy unit cost is only $10 more between Portland and Houston.
Now, read a Cox article on Portland and you’d think you were in East Berlin in 1980. Yes, land-use regulations have an impact on housing prices, but often times Portland LU regs get conflated as being the “worst” in the nation, or that it’s difficult to build there. As far as I can tell (and see), that couldn’t be further from the truth. In fact, housing supply is not an issue and there’s numerous subdivisions that have been abandoned from this economic downturn in the area. The UGB also has to provide a 20 years supply of land/growth.
Like t g said, speculation appears to be a huge player in this. What causes this speculation is beyond me. I don’t think anyone’s denying that land-use regulations cause an increase in housing costs, but many of them are so variable and dependent on areas that it seems difficult get a good assessment of how much they truly increase costs.
Constriction restrictions for buildings in San Fran to withstand earthquakes is not a bad thing!
Like t g said, speculation appears to be a huge player in this. What causes this speculation is beyond me.
Amenity-seeking behavior and equilibrium rents.
DS
Speculation pales in comparison to the Fed’s inflation of the money supply.
Before the increase in money supply, the Chief Market Fetishist and lawmakers relaxed regulation. That is: people run systems.
DS
If people were borrowing excessively against their homes, it wasn’t just the Fed that was increasing the money supply. It was the free market.
Just what I want: lots of irrational people with asymmetrical information and irrational fears acting haphazardly and making poor decisions to skew decision-making. That’s effective.
DS
Hm. [/u] works in preview.
What I love Dan is how all these self-professed Hayekians who believe no one is capable of knowing the market are so damn confident that they…know the market.
“If people were borrowing excessively against their homes, it wasn’t just the Fed that was increasing the money supply. It was the free market.”
The daftness of the statist trolls on this site never ceases to amaze me. Let me spell this out for you:
1. The Federal Reserve sets interest rates, NOT the free market.
2. The Federal Reserve lowered interest rates to below where they would have been in a free market system.
3. People borrow excessively against their homes (or take out any type of credit) because of the artificially low interest rates set by the Federal Reserve.
For f*ck’s sake. I’ve never seen a bigger straw man. Free market my a$$.
1. The Federal Reserve sets interest rates, NOT the free market.
2. The Federal Reserve lowered interest rates to below where they would have been in a free market system.
Shorter Frank:
If there was in fact a free market, then the free market fairy would have set rates lower.
—–
Nonetheless, The Market wanted more loans to make fake paper; it was accomodated. See, there used to be th’ regalayshun to prevent this sort of shell game, but th’ regalayshun was eliminated by ideological governance.
My first career was in the banking industry. I had my fingers in lots of code and systems for residential second loans. I saw it firsthand.
DS
More appeal to ridicule and another strawman. Big surprise. Guess I should listen to those who told me to ignore trolls.
Dan, either way all the con-job stuff would have imploded with time.
Big surprise.
Here’s a clue: this is what the quality of your argumentation deserves.
Step up your game, lad-level, and get older if you want to be treated other than at the level of what you bring to the table. I’m a little harsh that way, and the kitchen’s ambient temperature is high.
DS
Frank,
The Fed sets the minimum interest rate. If rates should have been higher by free market standards the Fed did not prohibit that. The market can run higher than Fed expectations (as it is doing now for mortgage interest).
Re: statist trolls
Please remove your tin foil hat and come out of your mother’s basement. That northern Idaho sun will do you some good.
Gleaser’s refererenced works cite the repeat-sales index for prices; that is, existing homes. Does Gleaser ever prove that new home construction is substitutable for existing homes?
Frank quoted me and then wrote of the daftness of “statist trolls.” My comment which elicited this? That the Fed was not solely responsible for inflation (how statist).
Several comments up, I had been asked what ways one could alleviate speculation. My answer, in apparent statist daftness, was to discuss the role of speculation in our economy and study that role in order to understand it. I made no suggestion of local governments adding fees or incentives to massage home prices. So I’d love to know, Frank, what part of studying speculation is statist?