Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to “buy” houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in they long run they do not increase overall national production but encourage malinvestment.Presume he was referring to the VA Loan Program which began in 1944. I'd sure like to see an analysis of the lifetime of the program. For an in depth analysis of Free Market/Mixed Market: Ayn Rand Center for Individual Rights.
(via Carpe Diem)