
Part of the Federal Reserve's stated mission is "conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates." Clearly, the volatility in the housing market is clear evidence the federal reserve is failing its mission. The federal reserve's failure with regards to house prices was two-fold. First, they failed to identify the housing bubble and take any measures to prevent its inflation. Second, when house prices crashed back down to stable levels supportable by the incomes of ordinary citizens at "moderate long-term interest rates," they lowered mortgage rates to record low levels with the goal of creating upward price volatility in the housing…[READ MORE]