The Federal Reserve’s cure for the past decade’s housing market collapse has been to create dangerous asset bubbles that again risk crashing, says financial strategist Jim Quinn on his Burning Platform blog.

“A critical thinking person might wonder how median single family home prices could possibly skyrocket by 37 percent in the last three years,” he writes in a May 28 post. “Household incomes are falling, living expenses rising and the number of houses being sold are at recessionary levels.”

He says the central bank’s easy money policies again are responsible for the jump in house prices, which defy historical norms of keeping pace with the annual inflation rate. Meanwhile, median household income is at 1989 levels and the country’s economy has barely grown by 2 percent a year since 2009, Quinn says.

After the housing market started collapsing in 2006, triggering the deepest recession since the Great Depression, the Fed cut its target interest rate to a record low in an effort to revive the economy. The near-zero rates were intended to punish saving and spur consumers to borrow and spend.

Quinn blames former Fed governors Alan Greenspan and Ben S. Bernanke for negligent monetary policy.

“Greenspan and Bernanke were at least 75 percent responsible for the housing bubble and its eventual implosion, which essentially destroyed our economic system,” Quinn says. “Greenspan and Bernanke were also responsible for regulating the Wall Street banks. They allowed them to leverage themselves 30 to 1. They allowed them to create fraudulent high-risk mortgage products.”

This year, the central bank said it will raise rates if the jobs market strengthens and inflation picks up as a sign of growing consumer demand. Investors see a 24 percent chance of a rate hike in September, according to Fed funds futures contracts. The first hike likely will set the target rate at about 0.25 percent.

“If mortgage rates rise to 4 percent or God forbid 5 percent, the entire housing complex would implode faster than a blowfish out of water,” Quinn says. “If you’ve bought in the last two years you will be underwater sleeping with the fishes like Luca Brasi in the not too distant future.” Brasi was a fictional mob assassin in the “The Godfather” who was strangled to death.

"There is nothing free market about the 37 percent increase in home prices," Quinn says. "It has absolutely nothing to do with supply and demand. It has nothing to do with normal families looking for a home."

Instead, he attributes the latest housing bubble to: 

• The Federal Reserve’s 0 percent interest rate policy (ZIRP)
• The $3.5 trillion of quantitative easing injected into the "economic gambling system"
• Wall Street banks' withholding foreclosures from the market
• Hedge funds' buying up tens of thousands of foreclosed homes and renting them out to the former middle class
• Fannie Mae and Freddie Mac's guaranteeing 70 percent of all home sales
• The Federal Housing Administration's encouragement of 3.5 percent down payments on homes for subprime borrowers
• Chinese and Russian billionaires' parking their ill-gotten wealth in US real estate
• Property flippers reappearing in Las Vegas, Phoenix, Florida and California

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