Not only did the Fed's owners explode the market for CDO's and MBS and derivatives as soon as they purchased the repeal of Glass Steagall from the government, but then they immediately used the government to distort the risk equations of their new financial products, by using Fannie and Freddie to backstop the crap mortgages they were bundling. Then the ratings agencies rolled over and slapped AAA on them and then the credit default swaps exploded because after all, who wouldn't write insurance on a government-backed debt?
The rest is history. Organized manipulation of the markets by a financial sector/government partnership. The markets were not free. Just like when termites invade your foundation, they are collaborating with a single goal: to eat the pilings out, harvest the profits, and leave the carcass for the taxpayers to clean up.
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