The media and the political interventionists have insisted that a huge credit crunch is going on that “proves” the failure of financial capitalism and the free market in general.
What is a work is another political “fast one” to rationalize and justify the growth of the interventionist-welfare state.
The Federal Reserve’s own data shows this to be another big government lie. Throughout 2008 bank loans have been increasing compared to a year earlier, both in absolute dollar terms and as a percentage increase over a year ago.
In the early months of 2008, in fact, commercial and industrial loans were growing at more than 20 percent over a year earlier. And between July and November these types of loans were still expanding in the rate of 13 to 15 percent over a year before.
In addition, the Fed’s survey of bank lending practices found that in October (the last month for which the data is available), only 25 percent of loan officers said they had “tightened considerably” on extending such loans, while 28 percent said their practices had not changed at all. About 47 percent said they had “tightened somewhat.”
The facts and figures can be found in a new piece that I’ve written on, “The Financial Crisis and Business Loans: The ‘Credit Crunch’ That Isn’t.”
There is no financial “deflation,” there is no “collapse” of banking and borrowing.
What is at work is the creation of a new version of the “myth of the failure of capitalism” to serve as the justification for why the straightjacket of even more government controls and regulations must be extended over what remains of the market economy.
And it serves as the rationale for why government spending must grow in a big way — and fast — to “save capitalism” from itself.
Yes, it is beginning to be a “replay” of the 1930s: bigger government, huge budget deficits, and more monetary manipulation. Welcome to the world of the planned and managed economy redux.