What Caused The Global Financial Crisis according to Fred Foldvary

The Global Financial Crisis according to Fred Foldvary

Fred Foldvary is a Professor at the University of Santa Clara and publicly predicted the crisis in advance on several occassions. In An Award for Calling the Crash (May of 2011) in Econ Journal Watch, Mason Gaffney argues that Foldvary should have been one of the Revere Award finalists and states that "Foldvary stands out as the person who called the 2008 crash." He published The Business Cycle in the October 1997 issue of the American Journal of Economics and Sociology wherein he concluded "The 18-year cycle in the US and similar cycles in other countries gives the geo-Austrian cycle theory predictive power: the next major bust, 18 years after the 1990 downturn, will be around 2008, if there is no major interruption such as a global war." More recently he published California’s Real Estate Bubble in 2005 and The Depression of 2008 in 2007. He blogs at The Foldvarium.

1. Which FCIC View best represents the causes of the Financial Crisis?

Dissenting Views By Hennessey, Holtz-Eakin & Thomas

2. Which narrative presented by Douglas Elliott and Martin Baily of the Brookings Institute in Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble best represents the causes of the Financial Crisis?

It was the fault of the government.

3. The Global Financial Crisis
effectively ended in the year 2010.

4. What were the primary causes of the Global Financial Crisis?
The primary cause was massive subsidies to real estate, including cheap credit, favorable tax treatment, mortgage guarantees, Fannie Mae and Freddie Mac, and public works that increase land values.

5. What still should change as a result of the crisis?
Taxes on wages should be replaced by taxes on land value. The money supply and interest rates should be set by the market rather than by the Fed. Fannie Mae and Freddie Mac should be completely privatized. The government should eliminate mortgage guarantees.

Compiled by Gary Karz, CFA
Host of InvestorHome

Global Financial Crisis Survey

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