There's a paradox to economic policy. The more it succeeds at prolonging short-term prosperity, the more it inspires long-run destabilizing behavior by businesses, banks, consumers, investors and government. If they think basic stability is assured, they will assume greater risks -- loosen credit standards, borrow more, engage in more speculation, relax wage and price behavior -- that ultimately make the economy less stable. Long booms threaten deep busts...
... The Fed slept mainly because it overlooked the possibility of boom-bust. It didn't recognize that its success at sustaining prosperity -- for which Greenspan was lionized -- might sow the seeds of a larger failure. It bought into an overblown notion of economic "progress."
And there is every chance that politicians and the Fed will fall asleep at the wheel again. Read it all.