I would say all of the above. No doubt investment banking and the creation of new instruments increased the stakes, but not borrowing money for fiscal stimulus when it was super cheap was colossally stupid on the part of the U.S. legislature. If our government was partially functional, they would have borrowed money at very low rates for tax breaks and infrastructure spending and gone home to their constituents and play up the one that was part of their respective easy-to-chew platform.
Hmm. So we lost the opportunity to fix our roads and bridges and help single mothers on the cheap, huh? That's a shame. Not that I play the investment game, but I take it there are laws the keep people in America from investing in foreign markets? Say for example, if some company in South America or Asia is looking very healthy, we as Americans wouldn't be able to take advantage of their situation? What about banks and investment companies? Can they do that?
The policy thinking on this was that the banking system had to be preserved at all costs because it wasn't the collapse of the stock market that caused the Great Depression, it was the inability and unwillingness of banks to lend money. Saint Friedman, who the Republicans worship the way the libtards worship Ayn Rand, argued that FDR actually prolonged the great depression by spending money on the New Deal instead of giving it to rich people to hoard. Infrastructure projects take a lot of time and don't inject cash as quickly as other moves. This is why the Obama administration showered America with money via Cash for Clunkers. TARP was theoretically supposed to help single mothers and Americans threatened with loss of their home, but it was so badly documented and enforced that it mostly went to mortgage holders in good stead. Like me. TARP saved my ass about $70k and we haven't missed a payment since the wife bought the house in 2000.
Hmm. But I've read, I think even on here, that part of the reason why we're still in an economic slump is because Americans are burdened by debt, reducing their buying power, and slowing down the economy. If banks handing out loans exacerbates debt, and tax cuts and investing in work programs creates wealth, shouldn't that be the better way to go?
Millenials are burdened by debt. That's very different from "Americans." Lo and behold: consumers, when given a chance, act like corporations. "Debt" is actually "leverage" and economists love it (welcome to bizarro-world). If I owe you and you owe me we have reason to continue to do business together as we both gain from it. The economic slump is probably due to the fact that things would have been downright humungus-eating-dogfood apocalyptic if world governments hadn't dumped preposterous amounts of cash on the investment class, thereby preserving their positions at the top of the heap. It could be argued that our current slump is because we have a socialist financial system propping up our capitalist financial system and the supports are so essential that the capitalist overlay simply doesn't have the strength to stand up on its own two feet. But you won't hear Jim Cramer say that.
No, you can invest overseas. Companies and people do it all the time. With ETFs, you don't even have to buy shares on their exchanges, you can have someone do it for you, although with varying costs and degrees of exposure. For example, I am shorting Brazil. I have a hard time calling any of it investing though, especially derivatives. I guess you can invest in a gambling strategy.