1. The federal reserve and its serial bubble-blowing
policy, fractional reserve banking, the loss of America’s
manufacturing base, huge debts, spending trillions on imperial
adventures in Iraq and elsewhere, and insane leverage and
speculation using exotic instruments like credit default swaps
were the biggest long-term causes of the crisis
2. The government could have prevented the crisis if it
had heeded the warnings of those speaking the truth, but because
it was politically easier, politicians pretended that they didn’t
understand what was going on, and tried to “kick the can down the
road” so that it would be someone else’s problem
3. Had the government let the markets deleverage, and
let cancer of malinvestment clear itself out of the market, we
would have been through most of the worst by the end of 2009. But
by borrowing, printing and spending many trillions of dollars we
didn’t have, by artificially propping up leverage, and by taking
other counter-productive actions, the government ensured a
full-scale depression, and ensured that it would continue
for years
4. Economies cannot prosper when the rule of law is
destroyed and the government routinely lies. The current crash
would have ended much sooner had the government been honest, and
people trusted the government. The government’s lies about the
Iraq war, torture, spying, 9/11, and just about everything else
destroyed people’s trust that anything the government said was
true. Even with sophisticated propaganda methods, one too many
lies will destroy a government, a country and an economy. In
addition, there were many Madoffs - titans of industry and finance
and investment who were dishonest. Under the weight of dishonesty,
no one trusts each other enough to do business, and the free
market shuts down.
