Arnold Kling

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Arnold Kling

  • Mercatus Center Affiliated Senior Scholar
  • Member, Financial Markets Working Group
  • Former Economist, Federal Reserve and Freddie Mac

Arnold Kling is an affiliated senior scholar at the Mercatus Center at George Mason University where he is also a member of the Financial Markets Working Group. As a member of the working group, Dr. Kling draws on his experience at Freddie Mac and the Federal Reserve to increase understanding of monetary policy, the regulation “anomaly,” and the inside workings of America's federal financial institutions.

Dr. Kling served as a senior economist at Freddie Mac from 1986 to 1994. He was an economist on the staff of the Board of Governors of the Federal Reserve System from 1980 to 1986. Previously, he started Homefair, one of the first commercial websites on the Internet. He has taught economics and statistics at Berman Hebrew Academy in Rockville, MD, and economics for the citizen at George Mason University.

Dr. Kling has authored five books, Learning Economics, a collection of essays on economic issues, Under the Radar, and Crisis of Abundance: Rethinking How We Pay for Health Care, Invisible Wealth (with Nick Sculz) and Unchecked and Unbalanced. For ten years he contributed to the popular economics blog, EconLog. His essays appear at American.com and EconLib.org. He has testified before Congress on the collapse of Fannie Mae and Freddie Mac. 

Dr. Kling received his PhD in economics from the Massachusetts Institute of Technology.

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Published Research

House of Cards: Reforming America's Housing Finance System

Dwight M. Jaffee, Arnold Kling, Peter Wallison, Lawrence J. White, Michael Lea, Anthony B. Sanders, Edward Glaeser | Feb 29, 2012
This research compendium presents a variety of articles that discuss the problems with housing finance in the U.S. and presents alternative reforms to the current GSE model.

Not What They Had in Mind: A History of Policies that Produced the Financial Crisis of 2008

Arnold Kling | Sep 2009
This paper looks at the roots of the current crisis through an analytical framework of bad bets, excessive leverage, domino effects, and 21st-century bank runs. It shows that broad policy areas—including housing policy, capital regulations for banks, industry structure and competition, autonomous financial innovation, and monetary policy—affected elements of this framework to varying, but important degrees.

Working Papers

Five Proposals for a New Housing Finance System in the United States

Dwight M. Jaffee, Lawrence J. White, Peter Wallison, Arnold Kling, Anthony B. Sanders, Michael Lea | Mar 2011
Some commentators suggest that a private market for U.S. mortgages is no longer possible. Others argue that heavily subsidized government programs have crowded out private providers, making actual competition impossible. The five papers presented here look beyond the housing crisis to present various proposals for the long-term reform of government-sponsored enterprises (GSEs) and the U.S. mortgage market.

The Truth About Entitlements

Arnold Kling | Nov 09, 2010
This paper looks at the feasibility of alternatives to scaling back spending promised for seniors.

Guessing the Trigger Point for a U.S. Debt Crisis

Arnold Kling | Aug 24, 2010
This paper explores the possibility of the U.S. experiencing a debt crisis in the medium run, meaning somewhere between 2015 and 2035. It is impossible to state precisely the trigger point for a…

Simple Solutions to America’s Long-Term Budgetary Challenges

Arnold Kling | Mar 26, 2010
In light of the looming fiscal problems facing the United States, there will have to be changes to entitlement programs. The proposals in this paper will be designed to keep the total of Social…

Policy Briefs

The Unintended Consequences of International Bank Capital Standards

Arnold Kling | Apr 2009
This Mercatus on Policy reviews the unintended consequences of the Basel capital standards, as well as the failure of those standards to achieve the desired result of systemic stability. The…

Testimony & Comments

Building a Sustainable Housing Finance System: Examining Regulatory Impediments to Private Investment Capital

Arnold Kling | Apr 24, 2013
I do not believe that the 30-year fixed-rate mortgage can be issued in large volume without taxpay- ers becoming liable for interest-rate risk. Conversely, if we reform the housing system so that the private sector truly bears the risk, then borrowers would encounter a large differential between the cost of a 30-year fixed-rate mortgage and the cost of a loan with an interest rate that is fixed for only 5 years. Borrowers should be making their choices based on this true cost differential.

Public Proposals for the Future of the Housing Finance System

Arnold Kling | Mar 29, 2011
Arnold Kling testified before the Senate Banking Committee about the future of the housing finance system.

Hearing on the Home Affordable Modification Program

Arnold Kling | Apr 14, 2010
Since the financial crisis in 2008, fueled by the bubble in the housing market, many homeowners are still facing foreclosures, as they can no longer afford their monthly mortgage payments. The…

Collapse of Fannie Mae and Freddie Mac

Arnold Kling | Dec 09, 2008
Arnold Kling, a member of Mercatus's Financial Markets Working Group, testified on the role of Fannie Mae and Freddie Mac in the current financial crisis before the House Committee on Oversight and Government Reform on December 9, 2008. In his testimony, Dr. Kling offered a series of lessons from the collapse of the secondary mortgage market.

Research Summaries & Toolkits

Simple Solutions for the Long-Term Budget Challenge

Arnold Kling | Jul 12, 2010
The United States long-term fiscal outlook is considered by many experts to be unsustainable. If no policy changes are made, the projections beyond 2030 are not really plausible, because by then the…

Media Clippings

Which Education Technology Innovations are Winners? Losers?

Arnold Kling | Sep 19, 2012
Outlet: Education News

Tampering or Experiments?

Arnold Kling | May 29, 2012
Outlet: National Review Online

The Tribal Mind: Moral Reasoning and Public Discourse

Arnold Kling | Apr 26, 2012
Outlet: The American

If Warren Buffett Wants to Pay More Taxes Why Doesn't Warren Buffett Just Pay More Taxes?

Arnold Kling | Apr 23, 2012
Outlet: Forbes
More Media Clippings

Expert Commentary

It’s All or Nothing. I Prefer Nothing

The New York Times Room for Debate
By Arnold Kling |
Oct 17, 2012

At a time when low rates have led to a boom in new and refinanced mortgages, recent moves by the Federal Reserve have allowed banks to make even more profit off mortgage-backed bonds than they did previously. And those rates could be a half-point lower if banks were satisfied with the profit margins of just a few years ago. But should the government consider cutting out the middleman, as it does with student loans, and issue mortgages itself?

Dodd-Frank Turns Two

By Hester Peirce, J. W. Verret, Anthony B. Sanders, Todd Zywicki, Arnold Kling |
Jul 20, 2012

Two years later, after being praised by politicians as the financial system’s magic bullet, Dodd-Frank is, in effect, riddled with half-baked solutions, corrupted by special interests, and poised to create, not prevent, the next financial crisis.

Once Again, Break Up the Banks

By Arnold Kling |
May 15, 2012

We do not need the thousands of pages of regulation represented by Dodd-Frank. We do not need to ask regulators to divine the difference between speculation and “real banking,” as envisioned by the Volcker Rule. Instead, we should seek limits on the asset size of individual banks.

President's Budget Still Focusing on Short-Term Instead of Long-Term

By Jason J. Fichtner, Arnold Kling, Bruce Yandle, David M. Primo |
Feb 13, 2012

Mercatus scholars comment on the president's FY2012 budget proposal.
More Expert Commentary

Research Areas

Economic Regulation, Financial Regulation, Housing & Real Estate, Financial Markets

Links

Videos

Destination Unknown: The Future of GSEs In America

Lawrence J. White, Anthony B. Sanders, Arnold Kling, Hester Peirce | May 02, 2012

Reforming GSE's - Fannie, Freddie, and the Future

Arnold Kling, Anthony B. Sanders | April 26, 2011
More Videos

Podcasts

How Likely is a Sovereign Debt Crisis?

Arnold Kling | January 27, 2012
Arnold Kling, Nick Schulz, Joseph Minarik, and Peter Wallison discuss the likelihood of a sovereign debt crisis occurring in the United States. Their discussion is based on a recent symposium hosted by Econ Journal Watch and Mercatus.