Community | January 13, 2010 | 9 comments

Moral Hazard & Government Intervention

source: http://www.peacefreedomprosperity.com/?p=3116

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shanklinmike
This CF&P Foundation’s Economics 101 video discusses Moral Hazard, which occurs when bad choices are subsidized. This often happens when government intervention lets people take risks while having little or no skin in the game. Housing policies, for instance, subsidized mortgages, thus enabling irresponsible borrowing, leading to bubbles and bailouts. Politicians may be setting the stage for the next crisis with a too big to fail policy that will subsidize the biggest financial institutions.
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9 comments // Moral Hazard & Government Intervention

  • Mike_Beitler
  • jimmimac
  • CalgarC
    • 0
      CalgarC  

    • imagine going to a casino with your best friend... he borrows some cash for the slots... he borrows more for blackjack... he promises to give it back... all of a sudden your on the phone telling your parents you lost your clothes and your friend needs money for texas holdem...

    • 2 years ago
  • shanklinmike
    • 0
      shanklinmike  
    • Image

    • The booms and busts are explained in the Austrian Theory of the Business Cycle. Central banking and monetary policy has been the root problem for decades, slowly eroding our wealth and liberties. The market operates at harmonization and equilibrium, government negative externalities are what create the booms and busts, not the other way around. The government doesn't "make things better", it made things worse in the first place and then they try to do the same thing again (keeping interest rates low, flooding the market with liquidity) while saying they are fixing the problem. The government is nothing but a middle man...WITH FORCE AND CONTROL.... Heck, the SEC gave Madoff the green light for over 16 years!.....the regulations today only go to the benefit of big business and the politicians, not the People. The two party paradigm is flawed, educate yourself!

      What we live under is government backed corporatism....and the only way to minimize corporatism is to minimize the coercive state.

      Peace

      http://mises.org/store/Home-Study-Course-C59.aspx

    • 2 years ago
  • vicgal
    • 0
      vicgal  

    • so banks went from one extreme to another? lending to anyone with a pulse to not lending at all. i guess the market acts as the Govt oversight mechanism... at our expense by crashing.

    • 2 years ago
  • shanklinmike
    • 0
      shanklinmike  
    • Image
    • vicgal:

      The booms and busts are explained in the Austrian Theory of the Business Cycle. Central banking and monetary policy has been the root problem for decades, slowly eroding our wealth and liberties. The market operates at harmonization and equilibrium, government negative externalities are what create the booms and busts, not the other way around. The government doesn't "make things better", it made things worse in the first place and then they try to do the same thing again (keeping interest rates low, flooding the market with liquidity) while saying they are fixing the problem. The government is nothing but a middle man...WITH FORCE AND CONTROL.... Heck, the SEC gave Madoff the green light for over 16 years!.....the regulations today only go to the benefit of big business and the politicians, not the People. The two party paradigm is flawed, educate yourself!

      What we live under is government backed corporatism....and the only way to minimize corporatism is to minimize the coercive state.

      Peace

      http://mises.org/store/Home-Study-Course-C59.aspx

    • 2 years ago
  • shanklinmike
  • shanklinmike
  • shanklinmike
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