The Global Financial Crisis of 2007-08 might still produce a Great Depression. Massive monetary and fiscal stimulus has been thrown at the problem. Major financial institutions, with one exception, have been bailed out by taxpayers. The problems created by excessive debt and over-easy monetary policy have been ‘solved’ by more of the same. The bailout of Wall Street by Main Street entrenches, indeed reinforces, what economists call ‘moral hazard’. The previous Chairman of the US Federal Reserve Board, Alan Greenspan, did not believe in opposing asset bubbles but cut interest rates under his control almost to zero when his asset bubble burst. This was a mistake repeated by his successor, Ben Bernanke, in the crash of 2007-08.
