2002 Nobel Memorial Prize winner Vernon Smith, Professor of Law and Economics at Chapman University School of Law, is at the forefront of research into market bubbles.  He says the more cash in the system, the bigger the bubble--even if all other factors remain the same.  And, he says, past bubbles, like the dot.com bust at the beginning of this century, have not had the power to drag down the economy when they pop.  But the housing bubble was different.  With bubbles in the stock market, investors take a hit when things go wrong.  But with the housing bubble, banks took a massive hit, which then spread throughout the entire economy:

Watch the full interview with Smith here.