can anyone provide me a nice layman's metaphor to easily explain what happened to cause the housing market crisis (and maybe put in brackets what each player in the mataphor represents)? I do understand it somewhat, but i am looking to understand it better and a way to easily explain it to others. Im hoping for a metaphor that is similar to Bastiat's metaphor of the broken window to explain that which is not seen. Thanks
I suggest reading Meltdown by Tom Woods
http://www.youtube.com/watch?v=5K4Os5eXPw4
wesker, I understand Austrian business cycle, at least to this degree and probably more. What I want to understand, and be able to succinctly explain to others in parable form, are the following: how exactly can the Fed set interest rates, what were the roles of Fannie mae and Freddie Mac, specifically, how are they tied to the government, and why did the housing market bubble vs other markets? The main question I have always had is why are some markets over valued? Why the tech bubble, the housing bubble, and the coming education bubble. I understand how manipulating interest rates makes things go funky for entrepreneurs' time preference signals. What I don't understand is how the Fed pin points certain industries over others, or do they at all?
Hope these help:
http://www.youtube.com/watch?v=TE4HN4fvmiA
http://www.fff.org/freedom/fd0911g.asp