However, the Free Market as a whole was responsible for the egregious credit/lending practices during the 1920's, not JUST the Fed.

I won't disagree that the market absolutely played into the issue(s). However, when you have a central bank that's virtually controlling interest rates (or at least overwhelmingly influencing it) and bank reserves, can the resulting actions from economic players really be called a free market?

It's kind of like the 08/09 recession. With incentives like artificially lowered interest rates, the Greenspan put, Community Reinvestment act, Freddie and Fannie purchasing much of the risky assets, etc - there was unarguably significant amount of influence toward low income/high risk mortgage lending. So when that market follows the incentives created and things

One of the key beliefs of Austrians is that it is essential for a market to have both successes AND failures. Whether S&L crisis bailouts, subsidies and stimulus in the wake of the DotCom bust, the bailouts in 08, the entire concept of the Greenspan put - the more govt intervenes to protect companies in the name of "stabilizing" the economy, the more it encourages even more reckless behavior down the road. If these companies end up going bankrupt and closing down, then they (and others) learn that taking high risk actions can backfire. What they learn instead is that they can be massively overleveraged and will still come out ok. This is the cause of (accurate) view "private profits and public losses".

But the problem is that every intervention and bailout in the past directly encourages more egregious risky behavior in the future and larger and more systemic problems - which are used to justify further interventions "We HAVE to bail out the bank or the entire economy will collapse!"

Those who bought the mortgage-backed securities were told those securities were AAA rated, even if they were worse than junk, due to outright fraud from ratings agencies. But, the economic incentive to commit that fraud was much greater than the chance of criminal prosecution.

The major reason they were rated as highly as they were is because they were basically assured they were govt backed! Freddie and Fannie were buying these derivative products like hot cakes.

The US economy, between the end of the Civil War and 1900 saw deflation of nearly 50%, because of the gold standard stagnating the economy.