Libertarians and Objectivistst are the greatest proponents of deregulation, and it is deregulation such as vitiating the Glass-Steagall Act that allowed the banks to engage in the tactics that led to the current situation. Quoting Ron Paul as the visionary whose policies would have prevented this is therefore laughable, given his libertarianism.
Well, you are right about one thing: the Financial Services Modernization Act of 1999, which lifted restrictions from the the New Deal era Glass-Steagall Act, was a disastrous mistake and one of the causes of the current horrors. But it was not disastrous because it was deregulation but because it occurred in the context of a system in which the feds insure these institutions against their mistakes. Telling them that they can do what they want with their assets, plus telling them the the taxpayer will clean up resulting messes is a recipe for catastrophe. Its a situation where profit is private and risk is socialized. You might was well command them, "Go thou and be wreckless." Note that Paul did not say to lift just any old restriction. He said "reform the system." The key word of course is system. The myth that this was caused by "deregulation" if it persists is bound to cause yet more mischief in the long run.
As to whether Ron Paul is a "visionary" or not, here is what he said about the housing market almost exactly five years ago:"Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing. Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts."
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