Quote Originally Posted by JakeMartinez
Interest rates are controlled by the Fed, not by the government. We have no say whatsoever in what the Fed does. And, if they did cause this by making interest lates too low, it wouldn't be the first time they created a financial crisis.
The fed must answer to congress...

We let the free markets do what they want for most of 20 years. They don't regulate themselves. Greenspan, who shared the same idealistic philosophy as you do, admitted recently that he was wrong in deregulating the markets.
Markets were never deregulated, please do not buy into that BS. Under Greenspan, the markets were "differently" regulated.

Banking interests own our government and have owned it since the establishment of the Federal Reserve. They've engineered their system so that they have us by the balls, and most people don't even care how bad the banks fuck us over. If Ron Paul HAD been elected, he would have been approached by these interests and either corrupted, or they would lobby against him in Congress.
That is quite an assumption, especially on the character of the good doctor...

The problems we're seeing now are systemic. Our system is designed to work in favor of banks (all money starts in a bank, and inevitably ends up in a bank). In that system, we can never be free of debt. Ever. And, as I said before, if we pay off our debts, we have no money supply.
That is not necessarily true. It is true that 25% of the government issued debt is held by foreign entities, but the other 75% is held by the US. What this means is that 25% of the debt will need to be repayed via the transfer of GDP (or production). As for the other 75%, leakages = injections...

If government doesn't interfere with the free markets, the government will fail. What else could it possibly do? Our military is already being marginalized by private security forces. Without government interference, the free markets will eventually take over as government, and that is not a particularly pleasant thought.
Then why did this country survive until 1913? There was very little market interference until then...

Oh, and one last thing, if the interest rates hadn't been so low, this crisis would have been a lot worse when it hit. Like I said, the system we live in operates on debt. Our money supply would have hit contraction by now if interest rates had been higher than they already were.
The problem is misappropriated money flowing into the real estate market, more specifically the commercial real estate market. This was ushered by government interference, both in the form of promoting lax borrowing practices, as well as tax incentives for real estate holdings.

The interest rates that are commonly referred to as creating the bubble are those from late 2001 until the end of 2004 (under 2%). As of 2007, the federal funds target rate was as high as 5.25%.