Thursday, May 19, 2016

Setting E.J. Dionne Straight On the Causes of the 2008 Financial Meltdown

Murray Sabrin sends the following Letter to the Editor of the North Jersey Record:

Regarding “Sanders, Clinton must unite for higher cause” (Other Views, May 19):

E.J. Dionne writes, “(Bernie Sanders’s) showing is a mark of the anger and frustration felt by so many Americans over the abuses of capitalism that led to the crash of 2008.”  Dionne is half right.  “Capitalism” did not cause the financial meltdown in 2008; crony capitalism caused the bust that caused so much pain, suffering and anger throughout America.

The Federal Reserve caused the crash by keeping rates low after the dotcom bust igniting a housing market bubble.  This is the incontrovertible fact that Bernie Sanders—or that matter Hillary Clinton—has failed to acknowledge during the primary campaign. If the democratic socialist senator from Vermont would have done a little homework or listened to his former congressional colleague Ron Paul who ran for president in 2008 and 2012, he would understand that the Federal Reserve was created (1913) during the Progressive Era at the behest of the bankers to prop up the flawed banking system.

What the country needs to restore a sound banking system and end the manipulation of interest rates is to “end the Fed.”   So when the next crash occurs Dionne should not blame “capitalism,” but the zero and near zero interest polices of Ben Bernanke and Janet Yellin, the former and current Federal Reserve chairmen of the Federal Reserve.


  1. There was a crisis because mortgages were securitized in a deceptive manner and then used as collateral. Junk bonds were given AAA ratings and used as collateral. Without this deceptive practice, the housing bubble would have not caused a financial crisis. Notice the dot com crash did not cause a financial crisis.

  2. I think that is an oversimplification. To my knowledge, no other crises were preceded by such practices, but they still happened. It may have been a contributing factor, but not THE cause. A large enough bubble, which the housing bubble was, is enough in itself to cause such problems.