The last bubble and subsequent recession were caused when Wall Street took on huge amounts of cheap debt. This debt, as it was repaid, was meant to pay off many times over. But the reality of the situation was much different. In many cases, the debt was put on the back of private individuals who couldn't handle it, who shouldn't have been offered a loan in the first place. They defaulted en masse and -- among many other factors -- it caused the bubble to pop. Debt is only worth something if it gets paid back, plus interest. In 2008 the whole house of cards collapsed. Massive firms like Lehman Brothers went under and a lot of money just disappeared.
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