25Conclusion
GOVERNMENT POLICIES ARE THE PRIMARY CAUSE OF THE RECENT Great Recession and the related slow economic recovery. The Federal Reserve overexpanded the monetary base to avoid the pain of short-term corrections and thereby pushed the problems into the future, creating a bigger misinvestment of human and financial resources.
The misinvestment was focused in the housing market primarily because of the actions of the two giant government-sponsored enterprises (which could not have existed in a free market), Freddie Mac and Fannie Mae. They dominated the affordable-housing/subprime-lending business as a result of mandates forced on them by Congress.
A number of large (and small) financial institutions made serious mistakes and should have ...
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