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About the Speech

As the longest serving CEO of a major financial institution in the U.S., Mr. Allison had an insider perspective on both the causes and consequences of the recent financial crisis and ensuing Great Recession. He will explain how government policy, not market failure, was the primary cause of the crisis. The Federal Reserve's monetary policy, including negative real interest rates, created a massive misinvestment (a bubble) in the economy. This misinvestment was concentrated in the residential real estate market (housing) because of the government's affordable housing policy (subprime lending) as implemented primarily by Freddie Mac and Fannie Mae, the giant GSE's (Government Sponsored Enterprises) who would not exist in a free market. As the real estate bubble burst (as all bubbles do), the foundation was laid for a deep economic correction.

 

Unfortunately, almost all of the actions taken by governmental policy makers since the financial crisis started will reduce our long term standard of living, even those actions that may help in the short term. We are probably going to experience a short term recovery (possible stagflation), but 20 years in the future the U.S. faces very serious economic issues unless we change direction soon.

At a deeper level, the causes and cures of the financial crisis are philosophic. To restore the U.S. to long term economic vitality, we must return to the fundamental principles that made America great: Life, Liberty, and the Pursuit of Happiness.

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