Americans are still deciding how to respond to the financial crisis, an economics professor said Thursday night.

"I've been studying political economics for a long time, and now everyone wants to talk about it," said Dlynn Armstrong-Williams, director of the Center for Global Engagement at North Georgia College & State University.

"I'm hearing a lot of questions about why it happened and why it happened to us," she said. "The good thing is that it didn't just happen to us and is happening all over the world. But the scary thing is that it is happening all over the world and didn't just happen to us."

Armstrong-Williams addressed a crowd of more than 50 people who gathered at the Gainesville Civic Center for the university's fourth installment of its Great Decisions Lecture Series.

She explained the economic indicators that led to the downturn, including cyclical contractions in the economy, deregulation of banks and the housing crash.

"How did we get here? It's very predictable," she said. "It's the concept of moral hazard, which asks about your incentive to cheat. When no one is watching, it goes up significantly."

During booming economic times, both Republicans and Democrats turned their eyes from increasingly deregulated policies, and financial firms invested in risks.

"Banks cannot fail because they hold government debt, so they know the taxpayers will pick it up," she explained. "To prevent currency crashes, governments must use bailouts."

To escape the tough times, governments tend to cut spending, print more money or default on loans.

Historically, the U.S. does not cut entitlement programs, which would lead to instability, and doesn't increase taxes, Armstrong-Williams said.

"We really struggle with using taxation for social policies," she said. "One of the biggest struggles is the fact that we are culturally very linked to limited government and limited taxation."

This in turn leads to stimulus spending and depreciation of the dollar.

"When it comes to the stimulus, we had very few choices," she said. "If we would have let the banking crisis go, the reality is that there would have been a faster currency drop, and how much shock can a system take? That's where the politics comes in."

Though the federal government can run a deficit, the states cannot, which will lead to austere budgets this year, she noted.

"The states will be the first on the line to really pressure their populations, and then we'll see how much people can adjust to the pain," she said.

"Passing the budgets on top of the federal budget this year will put us in a lot of pain."

As the U.S. pushes forward during a slow recovery, politicians will make tough choices about increasing military spending and the country's place as a world power, Armstrong-Williams said.

"If we decide to step back, we have to take everything that goes with it and really let go, and when you let go, you don't control it," she said.

"If you don't control it, the world can be hostile, and the U.S. isn't ready to lose the car keys just yet."

Other countries are deciding their fates as well, she said.

"Everyone is scared, not just America," she said. "I think many people agree that we're on the decline, but we're not there yet, so do we continue to prop up the idea of an empire, or do you let it go? There's a price to pay by getting out of the game, and there's a price to pay by staying in."