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Like the Luddites of two centuries ago, pundits tell us to fear AI because it might put people out of work and create mass unemployment. But AI is not a threat to our jobs, unlike the regulation the government unleashes ostensibly to control AI.

In yesterday’s post, The 21st Century ROAD to Housing Act, I wrote that Trump’s Executive Order “cuts off institutional home investors from FHA insurance, VA guarantees and USDA backing…”. The USDA is of course the United States Department of Agriculture. In the comments, Hazel Meade writes:

USDA? Wait, what????
Why is the USDA in any way involved in housing financing?
Are we humanly capable of organizing anything in a rational way?

It’s a good question. The answer is a great illustration of the March of Dimes syndrome. The USDA got involved with housing in the late 1940s with the Farmers Home Administration. The original rationale was to support farmers, farm workers and agricultural communities with housing assistance on the theory that housing was needed for farming and the purpose of the USDA was to improve farming. Not great economic reasoning but I’ll let it pass.

Well U.S. farm productivity roughly tripled between 1948 and the 1990s as family farms became technologically sophisticated big businesses. So was the program ended? Of course not. Over time the program subtly shifted from farmers to “rural communities”–the shift happened over decades although it was officially recognized in 1994 when the Farmers Home Administration was renamed the Rural Housing Service. Today rural essentially means low population density which no longer has any strong connection to agriculture.

So that’s the story of how the US Department of Agriculture came to run a roughly $10 billion annual housing program for non-farmers in non-agricultural communities. And how does it do this? By supporting no-money-down direct lending and a 90 percent guarantee to approved private lenders. Lovely.

It’s a small program in the national totals, but an amusing example of the US government robbing Peter to pay Paul and then forgetting why Paul needed the money in the first place.

The post Why is the USDA Involved in Housing?! appeared first on Marginal REVOLUTION.

While elites tell us we need to fear artificial intelligence, they continue to approve of the Federal Reserve’s attempts to expand artificial credit, which is the real threat to our economic well-being.

Although Federal Reserve policies are claimed to try to target the neutral rate of interest, it is not possible for that to be accomplished through monetary central planning.

John Maynard Keynes’s General Theory was the “Bible” of economics and Roger was the devil’s advocate.