You make no mention of the Federal Reserve, and seem not to understand that by lowering interest rates, the Federal Reserve increases the supply of money, causes inflation, and causes systemic malinvestment on a vast scale. This ensures both the boom and the following bust.

The idea that the problem could be avoided by 'wise' regulation ignores the fact that it was government policy that caused the problem in the first place. Who shall guard the guards?

Ultimately, the 'blame the market' schools of thought are assuming that we can make real wealth out of thin air, without negative consequences, by having government inflate the money supply. That is what is really in issue here.

But of course we can't, because reality eventually kicks in. All government can really do is re-distribute: taking money from A and giving it to B. When the whole charade collapses under the weight of its own folly, people, not understanding how they were ripped off, blame "capitalism". But no advocate of capitalism ever claimed it can make bread from stones (apart from Keynes that is).

But there is also a deeper flaw in the idea of wise regulation. The whole point of economic activity is to try to bring about an improvement. The problem facing everyone is, the original economic problem is, how?

If government already presumptively knew the answer, there would be no need for private action of any kind, for private property, or for human freedom. We could just vest total power and all resources in government, and enjoy the optimal society. But the presumption of a well of superior wisdom in government is simply not reality-based.

Total government control over the economy leads to immediate collapse and mass starvation; but governments don't become magically more capable when it comes to partial control. The more and more we approach the state of governmental control of the economy, the more unsustainable, destructive and anti-social are the necessary consequences, however well-intended.

FORGETTING THE VERTICAL DIMENSION - AND EVEN SOME OF THE HORIZONTAL

Why does the pro-sprawl brigade always demand an automatic right to build low-density housing on the urban fringe, but never an automatic right to replace low-density housing with medium density in developed suburbs?

Is it because medium density isn't suitable for all households? Hardly. If SOME households move from low-density to medium-density, the demand on the low-density stock will be eased. In particular, if only 3% of households moved onto the lots currently occupied by 1%, the released housing stock would be enough to restore rental vacancy rates to something like normality.

Is it because of the infrastructure demands of higher density? Hardly. Higher density means shorter commutes, hence fewer vehicle-kilometres per day, hence fewer vehicles on the roads at any particular time. And of course new suburbs require new infrastructure. If the automatic right to build new suburbs can be made contingent on a reasonable contribution for infrastructure, so can the automatic right to rebuild at higher density. Moreover, in the latter case the contribution is not needed if the infrastructure footprint of the new development does not exceed that of the old. I would be greatly surprised if it were not possible, using appropriate technology, to replace an old single dwelling by (at least) a duplex without adding to the load on electricity, gas, water, and sewerage networks; and of course there is automatically no extra load on drainage.