Fascism is a lot more than central economic decision making; it involves a heavy militarization of society and an aggressive imperialist foreign policy. Neither of these is present in the US. While there were invasions of other countries, the last 'conquest' (military occupation and later annexation) in US history was that of the interior of the West. Society has seen increased security, but it's hardly comparable to the shocking images of Hitler Youth marching with shovels or other such events. While there has been central planning in response to lobbying, consider the idea that if you or I were to advocate Austrian economics to the government then we too would be part of the system that you describe as malignant. There's no way to get rid of lobbying, be the government despotic or democratic, those with resources, guile, and determination will make their voices heard.
The moral hazard that you argue caused the crash was not present until September 2008. The crash had already happened, and the government was trying to pick up the pieces by injecting money into the economy. The Community Reinvestment Act was far less likely than other lenders to engage in subprime lending, for further information on the subject, see
http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf What's more, when they did make one of these loans, they were half as likely to sell them as the market (same source as before). That's not crony capitalism, that's playing it safe.
On the pressure of Fannie Mae and Freddie Mac to take risks, when I looked at Wikipedia, their description of insuring almost half the loans in the US was not a number, but rather shown as "dubious-discuss". They also decreased the number of subprime loans that they insured as the bubble got bigger (see
http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html#ixzz12xTyWY91A), which means that if there was any conspiracy, then the conspirators were either cowardly or incompetent in their pursuit of a mortgage bubble. The more likely reason is that Fannie Mae and Freddie Mac were trying to avoid an explosion.
Now that's not to say that there wasn't corruption, of course there was. Money was flowing from investors to politicians and back again through donations and legislation, respectively; however, it can hardly be expected that such corruption would have had the time to so influence the government that it could be blamed entirely for the crisis. However, I would like to know what exactly you wanted the government to do. Clearly the bubble had its own origins in the financial system (MBS was nothing new, and the Credit-Default Swap was entirely a private invention) so there had to be a change in order to prevent a crash.
With regard to gold-standard vs. fiat money, though fiat money is inherently unstable and gives power to the government (not always a bad thing, especially with environmental and health regulation), so does the gold-standard, especially as the population increases. The removal of even a few pounds of gold from the system could easily drive up its price in a country of 300 million. Furthermore, if gold were used as a standard, inflation would still exist, but on the other side of the decimal point. There would be a need for ever smaller units of money in order to keep consumer purchasing power from overcoming the means of production, much like there is a need for ever higher wages and salaries in order to keep up with inflation in a fiat money system. Money becomes ridiculously weird as the economy grows because it has to represent an ever growing value with a number.
An interesting point that I thought was interesting was the difference between GDP with the bubble included and with the bubble removed. The bubble accounted for all but 1% of GDP growth, which can mean one of two things; either the US has reached a steady-state economy or we were so distracted with home equity extraction that we forgot to build new factories. It's probably a bit of both, which interestingly vindicates Endogenous growth and handily explains the need for improved education in order to continue growing without a rapidly expanding economy. Until we can colonize other planets, the world may become an information and innovation economy, as opposed to a factory-oriented one for a long time.
@pembquist
Certainly, the derivatives market was exempt from regulation. Again, laissez faire fails to recognize the limits to human reason and we get a crash, thus highlighting the need for regulation that keeps people acting rationally. Behavioral economics really hits this point home with books like "Nudge" that show how we often make decisions based on no information at all. For instance, if you show up at work, and your boss gives you a card to write down your contribution for your 401k, and the number 3 is on the card, then you will likely not go lower than a 3% contribution. It also works in cafeterias, where food closer to the cash register is bought more often, regardless of stated preferences.
back to mthrockmor:
Again, the idea of economics being an exact science is not true, yet. It's like learning to ride a bicycle. Sure, you should rightfully fear the quickly spinning spokes and chain, but not turning the handlebars for fear that you'll crash is no way to learn. You'll crash anyway and still not know how to ride. The science of economics works the same way. We try something, it works or doesn't work, and then we see what we can do better next time. It takes a while and isn't very efficient, but unless the knowledge just falls down out of the sky, there's no other way but to try.
-Penguin
