Contrary to conventional wisdom, government policy, not inadequate regulation, caused the 2008 financial crisis, and we're vulnerable to another one if we don't accept that lesson, says Peter Wallison, co-director of the American Enterprise Institute's financial policy studies.
"If we don't understand what caused the financial crisis, we will stumble into another one," he said in a commentary provided to Moneynews.
"The U.S. government's housing policies caused the 2008 financial crisis, but the American public has not heard that from the government or the mainstream media."
The proof is that in 2008, government agencies held 76 percent of the subprime and other risky mortgages, many of which went bust, notes Wallison, author of the new book "Hidden in Plain Sight: What Really Caused the World's Worst Financial Crisis — and Why It Could Happen Again."
So did the government save our financial system from collapse?
"We'll never know," he says. "What we do know is that the government would not have been required to act if it had not caused the problem in the first place. When it did act, it caused more problems than it solved."
Wallison believes another financial crisis could happen.
"As long as the American people and their representatives in Congress believe that the crisis was caused by insufficient regulation of the private sector, they will continue to support the same kind of government policies that produced the financial crisis," he explains.
Peter Schiff, CEO of Euro Pacific Capital, thinks another financial crisis is on the way.
"We're going to have to have a crisis on a much bigger scale than the one that's going on in Russia right now," he told
Newsmax TV's America's Forum" show.
"We're not going to get a repeat of 2008, because the Fed is not going to allow that kind of crisis. If they raised interest rates, that's exactly what would happen. We'd have a worse financial crisis than 2008."
To prevent that, the Fed will refrain from raising interest rates and will instead launch another round of quantitative easing, Schiff predicts.
"But the consequence of that is going to be a currency crisis, a run on the dollar, a run on the U.S. bond market, which is going to be substantially worse, a much bigger disaster, far more painful to endure than any type of financial crisis that would have resulted from an increase in interest rates," he explains.
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