Quote Originally Posted by wufwugy View Post
*This is a chief criticism of mainstream economists' political claims from a subset of economists (and others) who favor free markets. Both of my macro professors, both of whom are mainstream, claimed that the Great Depression was an example of failure of the free market; therefore regulation is needed. But they are wrong that the Great Depression happened in a system of free markets. It was the most intensely regulated market in American history up to that point. And not only that, but free market economists have since detailed extensively exactly how the system collapsed due to what regulators did (namely, the Fed). That view has since become consensus by the Fed since. At least it was until 2008, when the Fed made the same damn mistake, which resulted in crisis that sent many economists scrambling to rationalize in the same false way their erstwhile colleagues did regarding the Great Depression.
Explain to me how the 2008 housing crisis could have been avoided if the US had a fully free market system instead, because I was under the impression that it happened, was led to happen and was allowed to happen precisely because there was no real regulation about what was going on there; noone knew what exactly was going on except the big banks devising their "financial instruments", which afterwards led to cries by the masses to actually start putting MORE regulations on the big banks to prevent this from happening ever again

And whichever little regulation was passed, in turn Trump and Cohn swiftly banhammered it