EconLog blogger Arnold Kling has a new paper published by the Mercatus Center which is worth reading. It is a history of the policies that led to the current financial crisis. The interesting underlying theme of the paper is a story about unintended consequences of government actions, which is a story rarely acknowledged by lawmakers and never taken under consideration when these geniuses are planning new sets of regulations.

The lesson:

To fully understand the current crisis, one must account for the complex history, evolution, and integrated nature of financial regulations. Without this evolutionary history, there will be no meaningful lessons for today’s policy makers. Unless the United States comes to terms with the fact that the actions of policy makers and regulators contribute to financial fragility, it has little hope of moving in the direction of a less fragile system for the future.

The whole thing is here.