So it bears repeating, almost every time the subject comes up, because someone inevitably comes along to blame businessmen and consumers:

The boom and its consequent bust could not have happened without the creation of money and debt by the Federal Reserve Bank and the government that formed it to finance deficit spending. The reason the latest boom got out of hand was because the banks figured out a way to get around the limitations of fractional reserve requirements. They set up a positive feedback loop – as their loans bid prices up, the derivatives were used as basis money to loan multiples of the value right back into the market, creating money out of thin air.

It’s a new twist on a very ancient game. Even the Roman Empire blamed inflation on greed as they debased their coins and destroyed their economy.

We don’t have a free market. We have central economic planning. Central planning fails. The central planners are not in the government. They are in the Federal Reserve, and they are not under the control of government. In fact, they pretty much own the government.

The innocent are going to pay, but not through taxes. They are going to pay with the loss of their jobs, their homes, their savings, and the value of their labor.

The strategy of the administration and the Fed is to pour rocket fuel on the fire to put it out.

Anyone not familiar with this line of reasoning and not inclined to read arcane books on economics can view “Money As Debt” for free on Google. It poses solutions I disagree with, but it is an excellent exposition of how money is created. Knowing how the money is created, I hesitate to blame the victims.