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The easy credit spigot was turned on in earnest post-9/11 to avoid serious economic setback as a result of that attack as well as others not so readily recalled. It was arguably necessary to do so. It was allowed to flow far too long by Alan Greenspan, whose reputation is quite a bit overblown in my estimation; he then promptly over-corrected and exacerbated the problem.

It's not all the Fed, though, and it's not all the Democrats. Deregulation, particularly the loss of Glass-Steagall, combined with an increasing propensity for “novel” financial instruments created a high velocity, poorly understood monster as well, one that furthermore rode the back of the asset bubble created by all those years of easy credit.

It was going to unravel eventually and there was no one willing or able to clamp down on abuses that were readily apparent to even laymen observers. Revisit FR in the 2005-2006 time frame and you'll see quite a bit of “prescience” that was actually just the common sense so sorely lacking in those individuals entrusted with authority and responsibility.

It's no mystery why so many people are prone to accepting wild theories as to just why this occurred as it did. All the so-called smartest people in the room made out like bandits and left the financial system of the world in a complete shambles, with the US in particular being bled dry and still being bled dry.

Deregulation, particularly the loss of Glass-Steagall, combined with an increasing propensity for “novel” financial instruments created a high velocity, poorly understood monster

the so-called smartest people in the room made out like bandits and left the financial system of the world in a complete shambles,

Kind of sounds like Barney Frank saying the free market caused the problem and the government has to solve it. My take is the other way around, that government regulation (eg. affirmative housing action) caused the problem and the free market (eg. less tax'n'spending) is the answer.