Accurate Predictions

Senator Bernie Sanders wants a congressional investigation of what caused the economic meltdown. His investigation, even if it happens, will not uncover what caused the meltdown due to the intrinsic conflict of interest in a politician investigation the political causes of the meltdown.

The popping of the housing bubble, the devaluation of the mortgage backed securities, the defaults and foreclosures of the mortgages, were all predicted accurately. Given that those were predicted accurately it is fair to say that the cause of each of those is already known.

It is important to say "predicted accurately" because simply saying "predicted" will get the response of "if you predict doom and gloom often enough, eventually you will be right." The meltdown was predicted accurately on the pages of Lew Rockwell and other libertarian websites. The details were all laid out for those willing to read what would happen.

Back in 2004, it was noted that there was a housing bubble and that the bubble would pop and prices would fall dramatically. People responded with "oh no, this is a normal market condition." Later, when it was obvious that the rise in prices was unusual, people responded with "oh no, this is a new economy." Then people said "maybe the rise in prices will slow down but prices will continue to rise." Then people said "prices will level off, but they won't fall." Then they said "they'll only fall a little, not a lot." Then the prices fell, a lot.

Fancy subprime loans were identified as a problem. Not to worry, since prices will always rise, and of course the banks know what they are doing. Prices dropped and the fancy mortgages went into default. These fed into accurately predicting that mortgage backed securities would be a problem as the banks would lack sufficient assets to maintain their value. It was considered "doom and gloom" and nobody would listen.

The underlying cause, the inflationary policies of the Federal Reserve, were identified as an ultimate culprit. People proclaimed Greenspan a genius for bringing permanent prosperity. Greenspan was wise enough to leave office before the consequences of his policies caught upwith him.

At every stage, and for every factor of the recession, people saw it coming. So the causes of this are known. Those who saw it coming weren't believe then and they aren't credited now, even though the proof is available in the archives of several libertarian websites. That's why it is important to say "predicted accurately" because that accurately describes what happened.

Those who foresaw this accurately know what caused the meltdown, therefore there is no need for an official investigation. Those who wish to know what happened only need to ask those who were proven right.

So why an official investigation from a Senator? Several possible reasons present themselves.

First, the government is responsible for this, so the investigation is meant to clear the government of responsibility for its actions.

Second, very few people in government know anything about Austrian Economics, and those who actually are seeking answers are completely ignorant of how to find them.

Third, there is a strong desire for an external scapegoat, with more concern for finding someone to blame than to find someone to accurately blame. This is the most dangerous because people are already blaming the free market for actions caused by an absense of the free market.

It is very unlikely that the investigation will find those actually responsible, since very few congressmen enjoy investigating themselves