The Wall Street Journal ran a great piece this past weekend on the ghost towns that have sprung up across America because of the housing bust. Rows and rows of new houses, all for sale and never lived in. It’s a sight to see. If you drive through Rocklin and Lincoln it’s just “For Sale” sign after “For Sale” sign. There are tons of new three bedroom homes with granite countertops and sparkling new appliances.
 
If anybody ever doubted that politics and ideas mattered, here’s the proof:
 
* There are lost of ghost towns containing people stranded from human contact who are susceptible to criminals springing up all over the country.
* Construction workers, realtors, mortgage brokers and loan officers are losing their jobs.
* Real estate speculators are going bankrupt.
* Many new homes are standing empty because they were built without considering the real demand.
 
These are all the consequences of the United States Federal Reserve and its disastrous easy money policies. The great Austrian economist Ludwig von Mises laid it all bare almost a century ago in his The Theory of Money and Credit (1912).
 
On this blog and Wall Street, we’re focused on the economic costs: the bank failures, the writedowns, the lost jobs, the collapsing value of single-family homes, etc. However, there’s also a human cost. People made decisions during the boom, to switch jobs into a real estate related career, to buy a new home, to take out a risky mortgage, that are now taking a toll on their lives. Johny Cutter, and thousands like him, lost his down payment and his home. People are losing their jobs, their equity in their homes, and they’re scared because they don’t know when it will end or understand why it’s all happening.
 
Believe it or not, it doesn’t have to be this way. The boom and bust cycle is entirely a function of the easy money policies of our central bank. For most of human history, the precious metals served as money precisely because their supply in nature was limited and their inherent scarcity and value made them suitable as mediums of exchange. A central bank couldn’t just print paper and use it as money. People actually had to find metal deposits and mine them. But in the modern world, it’s a paper money system. This is a fascinating intellectual and political history.
 
It doesn’t have to be this way, though, and it shouldn’t be this way. However, what can we do? A few of us know better, understand how it really works. However, we have no power. The people in power benefit from having control of the money, even if the human and economic costs to the average man are disastrous:
 
{Life} is a tale told by an idiot, full of sound and fury, signifying nothing.
 
- Shakespeare, Macbeth, Act V, Scene V.
 
What a spectacle. It’s happened before. And it will continue to happen - again and again and again. As George Santayana said:
 
Those who do not understand history are doomed to repeat it.