The US Government
The US Government lowered interest rates for years to record lows which encouraged people to buy large houses and continue to spend more money – which drove up home prices and allowed people to borrow and spend more money with home equity loans. They also continued to print money very fast – creating inflation and devaluing the dollar around the world.
Retail and the Media
The retail industry loves to encourage us to spend money and they use the media to market and advertize to us about how great the economy is and encourage us to spend more money – even if we are actually broke and are spending money on credit cards that we will probably not be able to pay back.
The Security/Investment Institutions
The Stock Market Security Institutions created CDO (Collateralized Debt Obligation) and others to sell trillions of dollars of repackaged mortgages to investors around the world in order to continue and encourage the US housing market. These real-estate back equities (or paper money) were sold to foreign investment banks allowing banks to buy more loans and home prices to continue to rise pushing the housing bubble even higher.
The Financial Institutions (Banks)
The Financial Institutions (large banks) lowered lending standard so that virtually anyone could get a mortgage or auto loan with zero down and no proof of employment. Lower lending standards created more demand for houses, which helped push home prices even higher – inflating the housing bubble even higher.
The nations we fight against on the ‘War on Terror’
Iran, Venezuela and several other nations have helped the dollar drop by refusing to sell oil in dollars. This has helped to create inflation around the world increased oil prices and higher costs of imported goods into America.
We the people
The money problems of America can be traced back to the people of America. We are a people that love to spend money and have elected leaders who – like us – love to spend money.
America needs a new financial education – from top to bottom. The current generation does not understand basic principles of money, because we have lived through the most prosperous time in history, with high paying jobs and the easiest time in history to borrow. Instead of being trained to save money (like the Chinese), we have been trained to borrow and spend.
A new financial education is the beginning of the solution – but it will be a hard lesson to learn as we have followed our natural instincts – like greed, coveting, and dishonesty – to get into this mess. The leadership in America needs to change. We need to start by electing new leadership in the government that stop spending money and change policies to encourage saving a higher percent of household income.
All of the above
It's easier to blame one of these groups, then to blame ourselves, but everyone is likely to blame someone else - depending on how the recession effects your personal finances. The real answer is 'all of the above', but the President and the Federal Reserve are likely to get most of the blame.