After 10 years of steadily rising home prices, in 2006 home prices began to decline in the U.S. market. The decline in home prices was followed by high rates of mortgage defaults which caused credit crisis throughout the U.S. economy. The purpose of this paper is three-part. First, section II below explains governmental findings on the causes of the credit crisis, and governmental remedy implemented as a response to the credit crisis. The government found that the credit crisis was caused by increased subprime predatory lending in the period between 2001 and 2006. The government responded by encouraging lenders to restructure loans issued to homeowners who are burdened with unfavorable financing terms, and by taking conservatorship of the government-sponsored secondary market entities (“GSE”) under the Housing and Economic Recovery Act of 2008. In addition, the government responded by increasing money supply in the credit market under the Emergency Economic Stabilization Act of 2008, and by influencing historically low borrowing rates. Second, section III attempts to explain fundamentals of the lending market leading up to the credit crisis of 2008. The fundamentals of the lending market suggest that overtrading, spurred by excess inventories, excess money supply, and low interest rate, was the cause of the credit crisis. Third, section IV suggest that the government should take a more moderate spending approach, instead of the one taken as explained in section II. The nature of the home lending market suggests that the market operates as a monopoly, the profits of which are restrained by the ability of borrowers to maintain monthly payments. Excess money supply and low interest rates tend to encourage overtrading beyond the needs for occupied units, and beyond borrowers’ ability to maintain monthly payments. In turn, excess money supply and low interest rates cause defaults and credit crisis in the market. Although borrowing and home building grows the economy, the excess growth restrains it. For that reason, the policy of the government should be one of moderation, and not excess in money supply and low interest rates. The paper concludes that the current governmental policy - in an attempt to maintain equity in the capital markets created by overtrading - induces long term liabilities of the taxpayers, and thus jeopardizes future real growth. Such policy is shortsighted and risky because economic growth will necessarily increase in a few years to meet the leading growth of the capital markets; and, any capital expenditures in excess of natural growth of economy must result in a prolonged or new credit crisis.