We humans are easily seduced by abstract, feel good ideas. The free market is an abstract idea, like the social contract or a personal God. Nobody has ever seen one. We've known for centuries that debt and lending are a two-edged sword, creative but prone to excesses. That goes back to John Law and his 1718 Banque Royale, or even earlier. Paper currency adds flexibility, but is often abused by governments. We need regulation because those who create debt plan only for boom times. However, the regulators are easily distracted and corrupted. Think of the automatic Gramm-Rudman-Hollings budget cuts that were supposed to keep our federal budget out of deficit: would a college freshman defend such a scheme as credible? Did those fictitious budget cuts stop Greenspan?
Modern governments control interest rates and manipulate the economy in many ways (such as tax policies). Our government now prohibits shorting financial stocks- that's market manipulation. We have the plunge protection team (the real name is more mundane- Google it if you don't know about it), which Reagan created to slow stock market declines. Nobody is serious about restraining upward excesses.
Bubbles are investment opportunities for those with means. Those of us who own stocks are to some extent favored by these government measures that bolster stock prices; those at the bottom end have no stocks and can’t take advantage of money creation. Periodic market crashes inevitably follow Greenspan type bubbles and wipe out many working class people. It's like playing blackjack against the house- she with the small stake generally is wiped out, the house survives. The plunge protection team, operating secretly, plays favorites.
All governments manipulate markets; this has been true for centuries. Russia and Zimbabwe have regulators; some governments are more corrupt than others, none are free of corruption. Success and militarism increase corruption.
The idea that hundreds of millions of people can be governed fairly without the regulators shoving money to their pals and supporters is a fairy tale, like the Gramm-Rudman-Hollings Act of 1985. Who regulates the regulators? Power corrupts and concealed power is the worst of all. Republicans have been in power and abused the system, but with the assistance of Congressional Democrats. Do you think that Bill Clinton shut down the plunge protection team? Why don't our schools and our press teach us about the PPT? Why must a Wall Street predator be secretary of the treasury? Who benefits from cutting capital gains taxes? Can we live without fantasies?