Path to growth: ""free markets and free people"

The Surest Path Back to Prosperity

Excerpts:

This crisis did not develop overnight, and it's not going to be solved overnight. There's going to be difficult days ahead.

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History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market. We saw this in the case of Fannie Mae and Freddie Mac.

Because these firms were chartered by the U.S. Congress, many believed they were backed by the full faith and credit of the U. S. government. Investors put huge amounts of money into Fannie and Freddie, which they used to build up irresponsibly large portfolios of mortgage-backed securities. When the housing market declined, these securities, of course, plummeted in value. It took a taxpayer-funded rescue to keep Fannie and Freddie from collapsing in a way that would have devastated the global financial system. There is a clear lesson: Our aim should not be more government -- it should be smarter government.

All this leads to the most important principle that should guide our work: While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people.