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The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope Hardcover – September 27, 2012
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Amazon Exclusive: Post-Election Commentary from Author John A. Allison
The 2012 election has reinforced for me that the U.S. has a simple choice – return to the principles that made us great or face economic decay and social unrest. One of the reasons I wrote my book is because it seemed to make sense to have someone who had an inside and comprehensive understanding of the causes of our financial problems to comment on the issue. In the aftermath of the recent election, it’s even more important for the public and policy makers to understand what drove the financial crisis and what choices we must make to revitalize our economy.
The media and other statists have created a myth that the financial crisis was caused by banking deregulation and greed on Wall Street. However, banks were not deregulated. In fact, three major new regulations were passes during the Bush Administration: The Privacy Act, The Patriot Act, and Sarbanes-Oxley. Banks were misregulated, not deregulated. Also, there has always been plenty of greed (and fear) on Wall Street. However, there is not one shred of evidence there was a greed plague that swept the Street.
The financial crisis and failed recovery were primarily caused by government policy. The two main culprits were errors made by the Federal Reserve and government housing policy, specifically as executed by Freddie Mac and Fannie Mae, the giant government-sponsored enterprises that would never have existed in a free market.
My book, The Financial Crisis and The Free Market Cure covers this and other economic myths and misunderstanding such as the “shadow” banking system, fair value accounting, Pick-a-Payment mortgages and the like. However, as interesting as the economic discussion is, the real solution for our financial problems is philosophical and the cure was espoused by Thomas Jefferson in the Declaration of Independence: “Life, Liberty, and the Pursuit of Happiness.”
People on all sides of the political spectrum defend liberty, but few people understand why liberty is essential to human well-being. Government regulations put “balls and chains” on innovators and entrepreneurs and thereby, slow and eventually stop progress. Given man’s nature, socialism and communism are doomed to failure.
So, again, I say, the US has a simple choice: The laws of mother nature and human nature are not subject to popularity or political whim. Capitalism or decline. You choose.
"Seek[s] to set the record straight as to the true origins of the Great Recession." The Washington Times 20130418 "[A] landmark work." The Weekly Standard 20130109 "As Allison is no ordinary public intellectual this is no ordinary book. It is a reform blueprint with deep integrity... Allison brings thoughtful solutions to the problems besetting both the banking industry and the American economy... An excellent resource to advance the renewal of equitable prosperity." Forbes.com 20130107 "The Financial Crisis and the Free Market Cure doesn't shy away from laying bare the alarming details, but it also offers practical advice for today's leaders in the form of an electrifying analysis. In the end, it's a call to arms for a nation on the brink." TheBlaze.com 20130103 "John Allison has written easily one of the most important books of the year. Go out and buy it." Forbes 20121017
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Other reviews criticize his writing style and in the last chapters his partiality to Ayn Rand’s philosophy (I agree that did not advance the subject matter). His writing could have been more polished but I found it down-to-earth and an easy read—as contrasted with other arcane, erudite, and pedantic writings about the crisis. Those who favor big government as master over and regulator of markets obviously disagree with his conclusion. However, to those folks I have asked the following: “Why did community banks in the late 70s depart from prudent lending standards/guidelines and subsequently lend to anyone?”
I think Allison answers that convincingly in an easy-to-understand manner that a layman can understand. His analyses/explanations also confirmed my findings in 2007 of the cause of the meltdown.
The answer is the same as it has been since Austrian academic Ludwig Von Mises stated his economic principles and Ayn Rand produced her re-iteration of that thesis.
Congratulations on "free market cure" as the raisiond'etre for America to be the greatest nation in the history of nations.
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Thousands of misguided articles and dozens of poorly-researched books that have appeared...Read more