A new video released today by the Center for Freedom and Prosperity Foundation (CF&P) is the first in their “Economics 101” video series, a project designed to educate students, young people, and the general public about basic free market principles. This first video deals with the concept of “Moral Hazard.”

The housing bubble is probably the biggest reason why America now faces a financial crisis. But what caused the bubble, and why are there now so many foreclosures causing so much damage in the rest of the financial sector? In this Center for Freedom and Prosperity, Peter J. Wallison of the American Enterprise Institute explains how government policy mistakes are responsible and he specifically highlights the destructive impact of two government-created entities known as Fannie Mae and Freddie Mac. The video concludes with four key lessons that explain how to avoid similar mistakes in the future.