There are many factors that led to the housing bubble in the 2000s. The federal reserve set the interest rates very low. This led to a huge incentive for people who couldn't afford houses before to now take out loans to buy houses. That is another factor. Loans. The government was essentially making banks lower their standards for loans so the banks were giving out loans to people they normally would not have given the loans to because they were not in a spot financially where they would be able to pay the loans back. Minorities suffered the consequences for this mainly. So, for example, in San Diego in January a house could have been $500k and by December the price was around $300k. So, people were buying these houses for $300k but then when the bubble bursted, they would not be able to afford the mortgages and suffer. Also, this bubble, was more so because of the dot com bubble and 9/11. The recession we should have had in 2001 was pushed back by keynesian economists and the recession then happened in 2008-2009 and it was much worse than it would have been if the government just stepped out of the way and let it happen in 2001.
Great response Brady. I like how you included so many examples. I think the way the government made buying houses seem so easy, just for the prices to skyrocket, is a perfect example of unseen effects, that was talked about in Murphy's video. What you said at the end about the recession is a perfect example of an unseen effect because if the government would not have intervened, it would not have gotten so bad.
Good Job broski. You had a lot of more specific factors that helped prove their points of argument. The use of examples was really nice as well. The idea that the government had their hand in things is a tell tale sign for future harmful affects that are hidden at first. If only the government would just take their hands out of the muck, and stick it somewhere else...