Economists are dumb, and had no idea that anything bad could happen.

Well, except for these guys. In 2004, they told President Bush that his economic policies were crazy and disastrous. The American people, being who we are (i.e., idiots) ignored them. Because hey, why listen to a bunch of eggheads? The fact that you have an IQ somewhere in the mid-double digits doesn't mean that your completely uninformed opinions aren't every bit as valid as those of a bunch of economists from Harvard, right?

WRONG.

However, they did get SOMETHING wrong. They correctly noted that deficits tend to be inflationary, and that the normal response of the Fed. would be to tighten the money supply. Which would have been the responsible thing to do, although it would have led to a short-term recession. Instead, the Fed. did the opposite; they pushed as much money as they could into the economy.

The way money is actually created is beyond the scope of this blog. I strongly suggest that every single citizen in this country take a course in money and banking at the business school of his or her local college, and re-take it until they actually understand it. Essentially, money is created in this economy by banks lending money to borrowers. The Fed. signals how much money it wants created by setting certain key interest rates, particularly the overnight rate.* By pushing the rates low, the Fed. signals to banks that they want money to be created; i.e., to lend money. Once all the truly credit-worthy borrowers had new financing, the banks followed the signals given by the Fed. and gave new loans to everyone who wanted one, irrespective of the credit-worthiness of the borrower or the value of the assets under mortgage.

We now have the current mess, due to these policies.

The current mess was predictable and was, to some extent, actually predicted. We Americans, by which I mean you people who did and continue to support Bush, considered (y)ourselves too smart to listen to the "nay-sayers", and contented ourselves with the proposition that the people who actually did speak out against Bush's economic policies were motivated purely by dis-like of the man.

Well done, Joe Six-Pack!

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* google it all up.