Slate Interview: Its hard living on food stamps

In this case, "they got greedy" directly translates to "people respond to the incentives in front of them."

Did people take out loans to buy houses they couldn't afford, because they got low teaser rates that made it possible? Sure.

Did banks make those loans without checking whether borrowers were lying about their incomes or how much they were leveraging themselves? Sure.

Did speculators buy packaged securities of those assets without understanding their risks because rates had been rigged? Sure.

Did others insure those securities without the risk-premium that would have been built in in an environment in which rates weren't rigged? Sure.

And to look for whatever bad guy you feel the need to make responsible that way, still ignores the fact that an actual marketplace is the best insurance against debt/credit bubbles.

When interest rates reflect reality there aren't skewed incentives -- instead of being manipulated intentionally toward zero so we can monetize a massive cultural spending problem.

Interest rates don't reflect a market reality in this country, because they are controlled by a bunch of bureaucrats who, since the 1970s (except for a period in the late 70s when they let rates rise because of the mess they created backed them into a corner similar to the one we have created today on a bigger scale) have suppressed rates to varying degrees depending on how much of a debt mess our government was making.

We can either live within our means (something that as a country nobody seems to want to accept) or we can look for ways to live on credit. You can only roll up so much debt before people will stop lending to you. Which is why we have a central bank that exists in practice to import inflation by debasing our currency (to reduce our debt in real terms) so we can keep borrowing.

That central bank made credit cheap for our government (to roll up debt -- $1 trillion a year on top of an accumulated debt in the 10s of trillions) and sold the lie that it was creating economic prosperity for everyone else in the process by making credit cheap.

So everyone responded to that incentive and borrowed.

And it created a massive credit bubble that still exists and has gotten worse since the housing collapse. When you finance wars and entitlement programs and other government spending programs and consumer home purchases and iPhones by borrowing and debasing your currency to try to keep borrowing more and more, you are living an unsustainable lie.

When the next collapse comes -- in the student-loan market, in the housing market (which still hasn't been allowed to correct), in the stock market, in the art market, or any and all of a bunch of other overinflated marketplaces that are being propped up because of skewed incentives that begin with interest rate manipulation (and that isn't the end of it, because you can't make rates lower than zero, so they actually went on this insane experiment buying up debt securities from their markets and creating a massive balance sheet to inject more and more liquidity into our banks) -- will you be looking for the greedy guy (whichever one in particular you want to demonize) that caused it all, rather than looking at the manipulation at the heart of it, which created the incentives everyone was responding to?