This rescued Wall Street banks from near-death experiences, while federal regulators shuttered more than 480 smaller banks. Unable to cope with more cumbersome regulation, many other regional banks sold out to bigger institutions.
Bank consolidation reduces competition for deposits and drives down CD rates. Retired Americans who rely on interest from savings to help pay bills have taken an enormous loss. At resorts around the country, for example, many once prosperous seniors are tending bar and waiting on tables.
Yield hungry investors have scarfed up the junk bonds of troubled companies. Should the Fed permit interest rates to rise, defaults would burn investors in a replay of the financial crisis.
Homebuyers, farmers and speculators, armed with cheap mortgages, have bid up home and agricultural land values, and should the Fed let mortgage rates rise, many would not be able to sell properties as needed and ultimately would default on loans.
Smaller businesses can't get credit from disappearing regional banks. Smaller real estate developers are selling out to big national builders, which can access the bond market to finance projects. Reduced competition pushes up new home prices, but when cheap money goes away, those megabuilders will be unable to sell options-ladened homes and some will default on their bonds.
Like the first crack taken by the dysfunctional personality, easy money made the economy function somewhat better for a brief period. From the beginning of the recovery through September of last year, GDP grew at a modest 2.2 percent.
(Read more: President Obama does little for the middle class)