https://spectator.org/biden-housing-bust/
For many readers, the above title will conjure up memories of the 2008 housing crash caused by the proliferation of subprime mortgages and the subsequent tsunami of defaults. But a better corollary for the coming Biden bust is the Carter crash that occurred three decades earlier. During the final two years of Carter’s term, sales of existing and new homes collapsed because the Fed was forced to raise interest rates sharply to get double-digit inflation under control. This, in turn, produced double-digit mortgage rates that priced millions of potential buyers out of the market.
Like our current chief executive, Carter was delusional about the threat inflation posed to the economy. When he was elected in November of 1976, it had been slowly waning for some time. The New York Times reported that inflation was at a four-year low of 4.8 percent. This lulled Carter into a false sense of security, and he pushed a disastrous economic stimulus bill through Congress. By the end of 1979, the Washington Post was lamenting that inflation had reached 13.3 percent. In the 1980 election, Carter was defeated by Ronald Reagan, whereupon Fed Chair Paul Volcker wrestled inflation into submission by raising interest rates.
President Biden was a member of the U.S. Senate during Carter’s tenure in office, but he seems to have gleaned no message from the latter’s economic failures. Indeed, Biden is repeating the very same mistakes. He was oblivious to the inflationary potential associated with his $1.9 trillion “stimulus” plan. And, just as Carter ignored the warnings of Milton Friedman in 1977, Biden dismissed the counsel of Obama-era economists such as Lawrence Summers. Meanwhile, Fed Chair Jerome Powell also managed to forget the lessons of the Carter era. As economists Thomas J. Sargent and William L. Silber write in the Wall Street Journal: