We told you so
"Credit is frozen." "Interbank lending has frozen." "The government must do something to free up credit." "The bailout will free up credit and get this economy going."
We have heard it all. And we at NPRI warned it was all bogus. The bailout didn't even work.
And the evidence that is beginning to come in is suggesting we were right.
A few weeks ago, we published a blog post showing that interbank lending and credit had not frozen during this financial crisis. And now, three economists for the Fed in Minneapolis have released a paper saying the same thing. Unfortunately, the American news media, politicians, and many policy wonks accepted at face value the bogus claims being advanced on this subject.
In light of this new evidence, then, those folks may now want to revisit their claims about the cause of the crisis, because they got that wrong, too.
Members of the media have let their eagerness to see the collapse of "free-market capitalism" (even though we haven't actually had anything resembling free-market capitalism of late) cloud their judgment. Politicians have seized on an opportunity to satisfy their hunger for greater control over our affairs, while wonks have rushed to claim the opinions of the media and the politicians as their own.
Hopefully, rationality will return soon – because we free-market capitalists are starting to get sore throats from repeating "we told you so."