Many books have been written about the financial crisis. They are, perhaps, getting better with age. Perspective improves as time passes. Economic truisms that were obfuscated in the informational fog that surrounded the financial crisis are coming back into focus as the fog clears.

In the years leading up to the crisis, we somehow lost our way. We confused “free markets” with “free-for-all” markets. We transitioned from a society that valued hard work and entrepreneurship to one that worshipped housing speculation and financial arbitrage.

In the fall of 2008, we got our comeuppance, as an economy based on over-leveraged consumers, inflated real estate prices, and artificial derivatives products finally collapsed.

The Great Recession was not the product of an inevitable business cycle. It was caused by the excessive risk taking of a number of large financial institutions. Investors and creditors supported them, notwithstanding their high flying ways, because of the perception that the government would not let them fail. The “smart money” played the system.