If you want to boil national economics down to one issue, it would be this: When debtors get underwater, it messes up the economy.
The reason for this is simple. Modern capitalism runs on credit (means faith). The faith that runs the credit system is that the other guy can make his responsibilities.
A bubble is a situation where a lot of people borrow money to buy assets which subsequently plunge in value. So these plungers end up underwater. If they were to sell their now-depreciated asset they would still have to find extra money to pay off their debt. It doesn't take a genius to figure out that the economy is going to be in real trouble when millions of people are in this position, and are frozen in place hoping that, if they keep servicing their debt, things will turn out OK. The capitalist economy needs to have people freely trading and producing, not cowering in fright.
In other words, for capitalism to work, people must be able to cover their losses.
So now you can see what Ben Bernanke, Chairman of the Federal Reserve Board, is doing with his "QE2" money printing. He is trying to float the boats of the millions of people with upside-down mortgages. Once those boats are floating again then the millions of folks can sell their houses, they can move to new jobs. They can start to live again.
The cost of all this of course is enormous losses for the widows and orphans that own dollar-denominated assets. Because the whole idea is to devalue the dollar. You devalue the dollar and home prices rise. Home prices rise and underwater homeowners get to breathe again. Homeowners get to breathe and the economy recovers.
We've done this several times since the government asserted complete control of the credit system in 1913 with the establishment of the Federal Reserve. We did it in the 1930s. We did it during and after World War II. We did it in the 1970s when the US went off the Bretton Woods system. We did it after the Plaza Accord in 1985. We did it after the Mexican meltdown in 1994, the Long-Term Capital Management failure in 1998, the tech bubble in 2000, and the real-estate bubble in 2007-08.
Some day soon, it's going to be time for sensible, practical Americans to admit that the government has made a right mess of its constitutional right and duty to "coin money, [and] regulate the value thereof".
Once we've admitted that, then it will be time to do something about it.