[qnt]

Your example is backwards; the McMansions, oversupply of CRE, TARP and the rest of the 2008 fiasco was the result of private sector speculation. Private sector misallocation of credit, not public sector.

Look at US private home starts [1] for example. All the misallocation was done well before QE started, and no-one was building new homes for years following the Fed MBS purchases.

[1] https://fred.stlouisfed.org/series/HOUST

[pdonis]

> the McMansions, oversupply of CRE, TARP and the rest of the 2008 fiasco was the result of private sector speculation

Enabled by a combination of the Fed printing money and giving it to financial institutions for mortgages and commercial real estate loans, and Federal government policy requiring financial institutions to give loans to people who would not normally qualify for them, in the name of expanding home ownership.

> Private sector misallocation of credit, not public sector.

There certainly was private sector misallocation of credit, but it was enabled by the above policies plus the belief on the part of the private sector financial institutions that, if push came to shove, they would get bailed out and the loss would be put on the taxpayers, not them. Which is exactly what happened.