Americans are devoted to free market capitalism unsullied by the tyrannical hand of government. At least in theory. In reality once corruption or extreme business cycles expose Malthusian limitations of economic wealth we immediately cry out for government assistance. In American history perhaps only the Great Depression laid this paradox more bare than the financial crisis of 2008.

No matter what you hear to the contrary greed didn't create the housing bubble. People are always greedy and anyone suggesting otherwise is selling you something. What unleashed the worst of our greedy instincts was a series of horrifically ill-conceived regulations crafted by buffoons on both sides of the political aisle. Through the power of misguided regulations elected officials created a system that violated the basic laws of economics. The result was a systemic promotion of our most base greed instincts at the expense of collective common sense.

Related: 3 Myths of the Financial Crisis

What's fascinating is that our collective response to the meltdown has been to cede basic liberties to the same group of elected officials in an effort protect us from letting a similar crisis from happen again. Predictably, the politicians are using the opportunity to wrest even more power from Main Street.

"At the time of the crisis, two-thirds of all the risky loans in the system were either owned by government entities or entities operating under government control," says Jay Richards, author of the book Infiltrated: How to Stop the Insiders and Activists Who Are Exploiting the Financial Crisis to Control Our Lives and Our Fortunes. Richards says this came to be through the efforts of Senator Chris Dodd and Rep. Barney Frank and others now pushed ill-conceived affordable housing laws on the false premise that owing money on a home was a key element of the American Dream. Naturally, the reform bill to fix the problem is being crafted by the very same politicians.

"We create this new and unaccountable bureaucracy in the Consumer Financial Protection Act, which has jurisdiction over mortgages and investment banking but also over pawnshops in Alabama," Richards rages. "I'm pretty sure pawnshops had nothing to do with the crisis."

Related: September 2008: Wall Street's Plunge Into Chaos

So why are pawnshops and other businesses totally unrelated to the meltdown part of the the new regulations? Because the crisis is being used by politicians on both sides to exert more control over parts of people's lives that are unrelated to the meltdown.

The best defense against this overreach is an informed citizenry. It was a misalignment of incentives that created the crisis. Rather than implementing sweeping regulations designed to protect consumers from pawnshops, there should be specific laws making it simply unprofitable to create products such as predatory loans that are backstopped by the government.

Unless voters can tell the difference, we are doomed to a fear-based system that steals our freedoms one at a time under the guise of protecting us from ourselves.