Here's living memory, something you don't necessarily learn out of books, although I presume you could also find it in the histories, if not the textbooks. Maybe I heard it because my father was a numbers guy who was there, and who learned much of his numbers stuff - statistics - from an economics professor. But I always thought it was common knowledge. The stock market crash of '29 came out of 'buying on margin' and 'pyramiding'. Not only did the market bubble, you could buy stock on a percentage value, a tiny fractional down-payment. And you could buy it on any kind of equity, including equity in stock. You could buy the stock for a single digit percentage of its face value and turn around and use the face value for a loan to buy more stock - on percentage. This is what 'pyramiding' meant at that time. So, of course, when the margins got called, it all collapsed.
            Now we got new-fangled. And of course, it's all supposed to be in the housing bubble. Un-huh. Finally, Paul Krugman says the dreaded phrase - one of any number of possible variants - 'the 30s'.
            Woo-woo.
            Children, it's only in the housing  'cause the housing was the last place all this 'extra' money could hide. It's like power. We're all children in paradise. Oh. Oh. Mr. Camelot man gonna come fix my booboo. Kennedy held up his arm, after a day of campaigning, in front of a witness who recorded it. The arm was red, scratched and obviously swollen. From 'shaking hands'. And now we have people going through a minimum of two years of this, or some equivalent. And we think they're all just wonderful nice guys, doing it for the benefit of god and country. When are we gonna wise up?
            What is money, children? Old Ez tried to tell you. But he was a crazy fascist, right? Yes, unfortunately. But at ground zero, what he was trying to say - and this ain't no lie, children - is WHAT IS MONEY? Answer: (real simple:) MONEY IS CREDIT. This is the 'big secret' that the 'big shots' (mostly twisted little idiots who have learned this secret) don't want you to know. Credit / debit. It all depends on which side of the ledger you place the number. Alexander Hamilton wowed the other founders. Take tremendous debt. Establish private bank with the 'inside' shares purchased by the richest men in the new nation. Let the 'little people' in on the 'common' shares. Have the Congress assign the debt to the bank. Have the bank print the debt up as 'money' and 'pay' the people to whom the government 'owes' the debt (now largely a set of speculator friends of Hamilton). Presto!! Debit becomes cash!! Watch the magicians at work!!

            The only problem in all this is that you have to keep the two sides separated, even though they basically mean the same thing. Because, if cash is credit (and not gold or some other idiot commodity), it means that money is always in a suspended state. Its purpose is to hang out there and not get called in - 'called on margin'. Because, in fact, whatever 'cash' is out there as 'real value' is only 'real value' so long as it is out there as 'credit'. Credit, as its name implies, is a promise. It is credit that 'produces' value, within the context of a commercial system. Credit is about commerce, but commerce both as immediate transaction and as investment. It's what allows us to build a factory to produce steel. The credit puts the potential value into immediate 'value' as cash, so the factory can get built and produce the steel. But, even in commercial transaction - buying and selling - cash serves the same purpose. It's not just an alternative to barter. It allows us to 'suspend' or transfer the value, because the cash itself carries the 'promise' of 'production', in its nature as purchasing power.

            This suspension is both the key and the problem. It means that we can, under certain circumstances produce far more credit than is necessary for the actual trade in process. In that case, the economy 'bubbles'. The excess credit looks for a place to 'hide'. But credit is made to 'act' and not to 'hide'. Therefore wherever the credit goes to hide, the economy 'bubbles'. So we had the dot-com bubble, the over-capitalization of crazy ideas, as well as the legitimate 'growth' ideas in the rapidly developing 'digital industry'. Already, clearly, there was too much 'free' credit in the system. But the government couldn't pull it in without criticism. The economy is hot!! Boom. The bubble bursts. But the excess credit is still there. It tries to hide in the stock market. The stock market bubbles. The economy is hot!! Boom! Now we're all burned in the stock market. But still, no contraction of the credit. We can't have contraction of the credit, 'cause that's 'recession'. Well, maybe not. But close enough. So now the excess credit goes to hide in 'property values'. I don't need to recite all the factors that put it there. Or why people sucked the 'value' out by refinance. 'The house was going up, but we weren't getting the raises….' and blah blah blah.
            It's not because housing finance became too easy. It's because finance became too easy. Every time I punch my credit card, I 'create' the equivalent in 'money' for the remainder of the cycle, or however long until I pay the purchase off. I had a friend who bought a second house and mortgaged himself to his eyeballs. Several of his credit card companies immediately extended his credit card caps. Apparently, more debt meant a better risk.
            But it also meant that he was able to create excessive credit, read, excessive money. He was being asked to pyramid on margin.

            I'm not an economist, obviously. But the fed is trying to shoot the gopher on the pretense that there's just one. I'm looking out here and the prairie looks like a sieve. All I can say is, good luck!