Thursday, February 3, 2011

My Letter to the NY Times re: the Credit Crisis

Subject: The Credit Crisis
Date: Wed, 2 Feb 2011 16:34:08 -0500

Dear Sirs:
Your Friday, January 28, 2011 business section had three major stories on the credit crisis: (1) For Housing, A Quick Fix Or Less Risk, by Floyd Norris, (2) Crisis Panel's Report Parsed Far and Wide, by Sewell Chan, and (3) Few Signs of a United Approach to Financial Regulations, by Jack Ewing. All three major stories have the same theme; that is, the necessity to regulate credit in order to prevent another financial crisis. However, none of the articles consider that government intervention in the credit markets caused the problem with us now or understand that continued intervention cannot prevent another crisis. It was central banks' expansion of the money supply and governments' policy interventions that created an unsustainable credit bubble. No financial regulation or oversight will prevent another crisis as long as these two factors exist. What no one wants to hear is that only a free market can prevent these crises.

Patrick Barron
20 McMullan Farm Lane
West Chester, PA 19382

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