Dean Baker, fraud

Baker suggests that the rise in GSE activities were a minor problem in the housin  boom. The facts argue that Dean is a fraud.  Here afe the facts;

AEI: Over the last several decades, we have engaged in a financial experiment, or adventure, of exploding agency debt relative to Treasury securities.

In 1970, Treasury debt held by the public was $290 billion. Agency debt totaled only $44 billion. At the height of the housing bubble in 2006, Treasury debt was up to $4.9 trillion, but agency debt has inflated to $6.5 trillion. While Treasury debt had increased 17 times during these years, agency debt had multiplied 148 times.

At the end of 2010, Treasury debt was $9.4 trillion, and agency debt was $7.5 trillion.

In 1970, agency debt represented only 15% of Treasuries. By the peak of the housing bubble in 2006, this had inflated to 133%. At the end of 2010, agencies were 81% of Treasuries, or about the level of 1997-98, just before the housing bubble, still a notably high level.

Dean is telling us that the rise in  GSE debt prior to the bubble bust is not a symptom or cause! Complete horseshit, that kind of debt growth impacts markets.  The results speak for themselves, Fanny and Freddie went belly up.