I think it's true that the 1 Percent or the elite are living in a world of, maybe, excessive privilege, and they don't fully realize how much pain and suffering, how much anxiety exists out there.

But in the financial markets, without proper institutional rules, there's the law of the jungle - because there's greed! There's nothing wrong with greed, per se. It's not that people are more greedy now than they were 20 years ago. But greed has to be tempered, first, by fear of losses. So if you bail people out, there's less fear. And second, b prudential regulation and supervision to avoid certain excesses.

In an extreme credit crunch, leveraged purchases of gold cause forced sales, because any price correction triggers margin calls. As a result, gold can be very volatile - upward and downward - at the peak of a crisis.

What we need to understand is, one, that there are market failures; and two, that there are things like asset bubbles and irrational exuberance. There are periods of booms, bubbles, and manias. These things, if left to themselves, can lead to crashes, to busts, to panics.

I believe, unlike people that are totally free-market, laissez-faire fundamentalists, that there is an important role that the government can play - one, in providing public goods, whether it's education, health care, or other things, and two, supervising countercyclical policy - stimulus, whether it's monetary, fiscal, or otherwise.

Edward Conard provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.

Having spent 10 years studying emerging markets, I know that you have patterns repeated over and over again. A bubble is like a fire which needs oxygen to continue... when you see there is no oxygen, things change.