Lost Decades looks at why the explosion of debt happened through the traditional lens of supply-and-demand. It examines the motivations and situations of people on both side of this debt. Why did demand for debt increase in the United States? The first reason Chinn and Frieden identify is the huge deficits run during the George W. Bush years. These are the trillions spent on the Bush tax cuts, the expansion of Medicare part D and wars in Iraq and Afghanistan that weren’t paid for.

There are a bunch of reasons why people are so silly as to believe they’re going to get rich off of their house–things like the difficulty of adjusting for inflation and the rarity of coverage of markets (like Detroit) that have steadily lost value. But I’d like to raise another question raised by the graph, though: what the hell were we thinking? How did most of our society–including many “serious” experts–believe that spike was real–or sustainable?