The $400 EpiPen

Indeed. Interest rates were artificially suppressed in the early to mid 2000s, creating a housing boom. Then Alan Greenspan freaked at what he had done and tried to undo it by pushing rates back up. He created a boom. And then precipitated the inevitable bust -- arrogantly thinking he could do what was the equivalent of dribbling a football and avoid the bust he made necessary.

Then, rather than paying the price for that stupidity. ... The reaction to the bust they caused was to double down with radical actions that make the previous debt / default mess look quaint. We have had their overnight lending rate pinned at zero for close to 8 years now and counting (because they administer prices in that market, they don't allow price discovery), and when that wasn't enough to encourage more and more debt creation (what they need to do to try to avoid all the toxicity they created in the first place to flush out -- they have to keep digging the hole deeper and deeper for as long as they can to avoid having to pay the price), they went to the extreme lengths of actually stepping into debt markets and becoming a buyer of trillions of dollars worth of debt (having to overpay by definition) via money they created out of thin air (to push prices up and rates down). It is insanity defined -- except most people have no clue that is what they have done.

We have debt-induced bubbles now all around us now as a result. More than a trillion dollars of student loans, for example. A subprime auto bubble. People gambling on risk assets to the tune of hundreds of millions of dollars on margin. Corporate debt in the trillions of dollars, much of it lent in wa much scarier way than the subprime mortgages you are talking about (with that money being malinvested -- the buybacks we were posting about that started this, for example). Sovereign debt around the world in the trillions of dollars (while other central banks have resorted to inducing negative rates to push people into indebtedness). I can go on if you like.

The artificial "boom" they created by necessity comes with a corresponding bust. So when trillions of dollars of student loans or car loans that were made to people earning little but were being enabled to buy $40,000 cars default. ... or when any of the other catalysts (pick an area that is drowning in debt now) that are going to cause the fantasy to come to an end and have people wondering how a crisis happened. ... I will look forward to your post about, "You don't borrow $30K for a cosmetology degree that you will never be able to pay back." Or "You didn't have the income for that BMW. You shouldn't have gotten a loan. Period." And we can ignore the forest to talk about a tree, and do simplistic "greed" posts rather than acknowledging the obvious cause and effects that should have surprised no one.