Stephen Davies has an excellent article at the Foundation for Economic Education about how we arrived at this point. In short, it’s the Federal Reserve’s fault. If you’ve been reading this blog for any time, you’ll know I agree with him. The article is well written and on point, but for most people, all you need to know is what’s in the last paragraph:

A common response to these events is to blame the inherent qualities of financial markets. Certainly the response of people within those markets to adversity does not help their cause. However, the underlying active agency behind recurring crises of this kind is the government’s money monopoly. As long as its policy errors can have large-scale disastrous consequences, three sentences should fill you with fear: “The price of X cannot fall”; “We have managed to get rid of the business cycle”; and “This time it’s different.”

It can. We have not. And it isn’t.

Read the whole thing for the details.