The Subprime Crisis

The Quarterly Journal of Austrian Economics, Vol. 15, No. 1, Spring 2012, pp. 45-74

30 Pages Posted: 12 Mar 2013 Last revised: 21 Mar 2013

See all articles by Adrian O. Ravier

Adrian O. Ravier

Universidad Francisco Marroquín

Peter Lewin

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Date Written: March 20, 2012

Abstract

This article offers an analysis of the causes of the subprime crisis, explaining that it is not an isolated incident and that we should concentrate our attention on the Fed’s monetary policy and pressures on the banking system received from the U.S. government for flexible lending. It also critically examines the Fed’s exit strategy and fiscal policies that the government is taking to create jobs and stimulate the economy. We conclude that it should be no surprise if the U.S. economy should fall into a new cycle in the coming years, even though economics does not provides the tools to predict the precise timing of it.

Keywords: housing bubble, Federal Reserve, savings, deregulation, Austrian, business cycle, Keynes, Leijonhufvud

JEL Classification: B25, E32, E58, N12

Suggested Citation

Ravier, Adrian O. and Lewin, Peter, The Subprime Crisis (March 20, 2012). The Quarterly Journal of Austrian Economics, Vol. 15, No. 1, Spring 2012, pp. 45-74, Available at SSRN: https://ssrn.com/abstract=2232247

Adrian O. Ravier (Contact Author)

Universidad Francisco Marroquín ( email )

Escuela de Negocios
Calle Manuel F. Ayau (6 Calle final), zona 10
Guatemala, 01010
Guatemala

HOME PAGE: http://www.adrianravier.com

Peter Lewin

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States

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