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 (see chart above, data here).
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% of loan officers said they had "tightened considerably" on extending such loans, while 28% said their practices had not changed at all. About 47% said they had "tightened somewhat."
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.
~Richard Ebeling
MP: The chart above shows the volume of business loans, real estate loans and consumer loan volume, based on an index that is equal to 100 in January of 2004 for each series (data here).
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