There is several ways systems can break down. One of the largest in recent US history went something like this: You have 100 million. Now you can put it into

There is several ways systems can break down. One of the largest in recent US history went something like this: You have 100 million. Now you can put it into a bank, but there is no FDIC for banks so AAA security's are basicly the safest place to put that money. You now look for someone selling safe debt and don't really care about intrest rates just AAA. Banker notices this demand and sells AAA debt from a pool of AA grade debt and get's to keep the intrest as long as a rating agency is willing to certify his bonds as AAA. But how do you satisfy the new demand for AA debt, well a slightly larger pool of A debt can quickly become AA debt etc. But wait if I can take A to AA then AA to AAA why not save some paper work and make AAA from A. After a while demand for AAA debt is satisfied with large amounts of what amounted to junk bonds and rediculus amounts of leverage. And that huge flow of money went directly to people and institutions that spent it, which stimulated the economy and make it like this where far more stable than they actually where. Meanwhile the people that bought the bonds in the first place now have even more money because the economy is doing great!!!, or atleast it looks that way.