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Eric H. Landuyt
landuyt.eric@bls.gov
Eric H. Landuyt is an IT specialist in the Office of
Technology and Survey Processing, U.S. Bureau
of Labor Statistics.
Credit markets and federal policy: studying history
to guide the future
Modern economists are aware of the power of John
Maynard Keynes’s ideas about public investment, and they
study Milton Friedman’s views on the proper use of
monetary policy. Indeed, both public investment and
monetary policy contribute to the fundamental structure of
economic policy. Yet if we look at the patterns
characterizing the U.S. economy over the last two
centuries, we can identify an additional means of
supporting that structure and achieving economic balance.
In American Bonds: How Credit Markets Shaped a Nation,
Sarah L. Quinn examines the historical development of
financial instruments and federal credit policy, emphasizing
the “sheer magnitude of America’s mortgage markets.”
Policy related to credit has caused markets to, on the one
hand, grow and become unmanageable and, on the other,
adjust and take off again in the hope of meeting the needs
and expectations of each new era.
Quinn identifies the federal government and its interaction
with credit markets as a third means of implementing
economic policy. In her book, we see mortgage and credit
markets developing alongside railroad investment, farming,
and the exploration of the American west. As the United
States became a modern nation, its farmers had to face
formidable challenges: land speculators, swindlers, loans
based on inflated land valuations, and, finally, a bursting
economic bubble as grand promises faded away. Over
time, fear grew among small farmers and investors as they
saw interference from domestic and foreign big-money
interests concerned solely with windfall profits and other
lucrative financial returns. In coping with these realities,
farmers adopted new means of protecting themselves by
inventing new financial instruments, and politicians liked the
idea of protecting far