“Is the Federal Reserve Insane?”
“We now have extensive evidence that the wanton borrowing that fueled the recent housing bubble made the economy vulnerable to the devastating downturn the U.S. endured. This shouldn’t have been surprising. After studying every business cycle experienced by 14 rich countries since 1870, Oscar Jorda, Moritz Schularick and Alan Taylor found that excessive private credit growth systematically predicts deeper downturns and slower recoveries,” quoting Matthew C. Klein for Bloomberg.
City of Yelm officials fed on this “insane” binge by allowing the Thurston Highlands and Tahoma Terra developments to have building permits without proving water at the time of plat approval, with sugar-plum Fairies dancing in their heads from the proposed 6,200 homes’ permit revenue. The lender also loaned funds to the developers on the hype that these two developments were sound (effectively quadrupling Yelm’s population with no added jobs from industry, come on? A new sustainable bedroom community of nearly 15,000 + people) and because the bank’s lending was not based on sound banking principles, they also went bankrupt.