Thomas Jefferson was the quintessential American dreamer. He envisioned a nation of self-sufficient farmers, artisans and shopkeepers allowed to go about their lives free from government interference. Even though the modern industrial nation we live in is a far cry from the idealized agrarian republic Jefferson imagined, his vision remains at the core of the American dream. Roughly 70 percent of families nationwide own their own homes and enjoy the independence Jefferson believed was vital in a democracy.

Unfortunately, harsh reality has intruded on the Jeffersonian dream as America comes to grips with the worst economic crisis since the Great Depression. Home ownership expanded greatly during the past decade when both Democratic and Republican administrations brought pressure on lenders to relax their rules and offer sub-prime mortages. Meanwhile, many homeowners borrowed against the seemingly ever rising value of their houses to pay for home improvements, new cars, and college tuition for their kids. Debt-driven consumption fueled a booming economy. Then the bubble burst.

Jefferson had little patience for the complexities of finance and feared that a moneyed aristocracy allied to the government would undermine the democratic accomplishments of the revolution. “I believe that banking institutions are more dangerous to our liberties than standing armies,” he proclaimed. In our cover story, “The Founding Father of Financial Disaster,” page 30, writer John Steele Gordon contends that Jefferson’s antipathy toward money men spawned a chaotic and panic-prone banking and regulatory system. Ironically, the most disastrous impact of the catastrophic failures that periodically plague this system often falls on the ordinary citizens. A great deal of the losses from the current economic crash have fallen on the wealthy, to be sure. But the people hardest hit are those whose life savings and hopes for the future are tied up almost exclusively in their houses and in rapidly dwindling 401(k) plans.

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