Noodles said:
To an extent. But global situations can cause repercussions (like the global credit crisis) that pull the rug out from under normal hard working people. Without the Government stepping in to temporarily prop them up, they and their business will go under, leading to job losses, lack of spending due to job losses, and in theory recession and a depression.
The credit crisis in the U.S. was caused by the Community Reinvestment Act, invented under Jimmie Carter in 1977 and then reinforced by Bill Clinton. It forced banks to give out home loans to the "underprivileged," read minorities in particular. To a too-low interest. If the banks had been allowed to set an interest corresponding to the risk of these loans, there would have been much fewer of them. But as it was, banks that didn't hand out enough of what we now call "subprime" loans were not granted permission to branch out across state lines, and do many other things. Plus they were exposed as greedy and insensitive to inner-city needs in the media.
Read and learn, an explanation and warning from as early as the year 2000:
http://www.city-journal.org/html/10_1_the_trillion_dollar.html
"Watchdog" groups like ACORN were funded by tax money to check the banks, and when a bank didn't hand out enough subprime loans to the "underprivileged" ACORN could go to the media. This was a profitable shakedown business for them; ACORN knew that if they ran their mouths loudly in the press about banks not doing enough for "black communities," they got millions of dollars in return. Banks are sensitive to bad press and would always cave in.
Bill Clinton changed the CRA so that banks got an even harder deal: no longer would they get any points for having tried to find borrowers that could live up to the standards in troubled areas. No, only numbers mattered now: they
had to fill the quota, or they would have their feet cut out from under them.
In 2003, some Senators, among them John McCain, called for a congressional investigation into the effects of the Community Reinvestment Act, which they feared would cause a financial catastrophe. But other senators, among them Barack Obama, stopped the proposal. Obama had of course had his political career launched by ACORN. That's where he did his "community organizing" that he listed as his job qualification for being president; he was part of the organization that accused banks of being greedy, capitalist and racist if they didn't hand out enough subprime loans. Not that you would hear him mention any of this business once the financial crisis had started.
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Furthermore, the U.S. government kept printing money to prop up vote-buying schemes. Under Bill Clinton, Alan Greenspan in the Federal Reserve made sure to
print more money than in the entire post-war period until then combined. (Note: the Federal Reserve Board members are appointed by the President.) Plus that the government just kept on borrowing from China and Japan. All this money flooding the economy made things look good, and Clinton could be reelected. John Stewart can then tell you on Daily Show how Clinton "ushered in an era of prosperity."
Bush, then, kept up the big spending and borrowing. Some "conservative" he was. Massachusetts family masquerading as Texan.
What happens when there is more money in an economy? No-brainer answer: it will be used. For buying things, and for investing. So the economy came to appear to be in a better state than it was. When people see the upscaling going on around them they want to be part of it, and so loan applications for buying homes increased; you don't want to be in a shabby home when it seems so many others are trading up. With the Community Reinvestment Act still in effect, and the banks having been hounded for decades by ACORN and other political, tax-funded groups working in concert with like-minded media, the loans kept coming.
And when finally the chickens come home to roost, just like conservatives in the Senate warned in 2003, when Barack Obama and others stopped the investigation into the CRA's effects, what happens? Of course, the leftist media proclaim that "capitalism has failed" and that banks had handed out too many loans out of pure greed. (Why did they keep the interest rates at too-low levels for subprime loans, if they were motivated by greed, not pressure? Oops, better not ask about that. Right?)