You don't understand the concept of moral hazard.   The potential for profit is the very nature of all business ventures.  No one opens a bussiness with the intent to lose money.   So greed (with varying degrees, obviously) is what drives the creation of new business, expands business and sustains business.

Now, the element of risk is what holds that greed in check.  From an investors point of view, they buy new property/stock with the intent of profiting from a sale at a higher price than they initially paid.  The check on that greed comes from the risk that they may not be able to sell higher than they bought it for.  When that check is in place, investors know what to buy, what to avoid, when to sell, etc...based on the drive to avoid risk and obtain profit. 

But when the government lowers interst rates on borrowing, makes Fannie Mae and Freddie Mac guruantee all mortgage loans and pressures lending institutions to provide Adjustable Rate Morgages, that risk factor vanishes and it's a free for all for investing.  Even after it was an obvious problem, the government was infusing money where it didn't need to be to artifically keep prices high...thus continuing the false security.

When government acts like a  fail safe, it's safe to say it will fail.

Bubbles regularly occur without significant government involvement but they are usually small, short lived and localized. You really need the government to create a bubble that has the potential to collapse the entire financial system and the economy.

As Viper1 pointed out, the natural check and balance against over investment due to greed is fear of losses. When the government creates an environment where they "socialize the losses" through institutions like Fannie Mae and Freddy Mac and directly bails out companies that fail, while creating disincentives through litigation and legislation for banks acting responsibly, and even incentivizes individuals to act irresponsibly with things like tax deductions on mortgage payments, the net effect is that the government encourages people to act irresponsibly; and creates a perfect environment for a bubble to grow that can threaten the entire economy.

An example of a non-government created bubble would be the .com bubble that burst in 2000. It was due to many, many over-valuations of internet based IPOs. Wasn't created by the government.

The Austrian school argues that every bubble is actually created by government interference with markets, in the sense that the central bank ends up making interest rates too low, and causes malinvestment to happen, which then drives a bubble.

I would argue that would play a roll with it.  Also have to ask here if it is considered that the dotcom bubble gave way to the housing bubble.  People end up looking for the next thing.   A perfect storm of deregulation, government cheerleading on lending, combine with mechanism that HAD worked for loans, ended up with an overvaluing of the housing market, and combined with leveraging, resulted in the mess we had.  Throw in also that the mathematical formulas used for evaluating the credit worthiness, used by the markets, had a mess.  The markets were looking for the next thing, so everyone piled in on it, and the things crashed.  

Is the only basis of growth we have now is short-run bubbles?  We had 2 over a 10-15 year period.  And apparently it took an dotcom bubble to only be able to balance the U.S federal budget.  It seems now that everyone ends up rushing into anything that shows the most growth, and overinflates it.  I would say if the trendy thing is to do, mark-to-market accounting, one is asking for trouble also:

http://en.wikipedia.org/wiki/Mark-to-market_accounting

Mark-to-market or fair value accounting refers to accounting for the fair value of an asset or liability based on the current market price of the asset or liability, or for similar assets and liabilities, or based on another objectively assessed "fair" value. Fair value accounting has been a part of Generally Accepted Accounting Principles (GAAP) in the United States since the early 1990s, and has been used increasingly since then.

Since the 1990s?  If that is the case, wouldn't that lend to the creation of bubbles?  If people are pricing things based upon what the current market price is, all it takes is for there to be an abnormal rise in prices, for everyone then to overvalue assets, and then if they leverage on top of that?  Isn't there an asking for bubbles to happen?

They don't suggest EVERY bubble is created by that... just the really bad ones that have happened so far.

Afterall, bubbles existed before there was government interfernece within markets.

The difference was they were more frequent but smaller.

Aside from which, the main point of Austrian economics is that it's stupid to attribute any one thing to another thing, because economics is inherently untestable.

It's treated more as a hard science like chemistry or phsycis when the reality is, that the basis of economics is in fact people who are individual agents who all act differently to change.

To study why the economy is acting how it is, one must study the individual.

And that main point of Austrian economics you bring up, puts it on very shaky grounds.  It puts economics in the realm of personal preference and opinion, with everyone reaching their own conclusions that placate them, rather than being able to at least have a degree of probabilistic causality, which can say this or that can cause things to happen or not happen.  

I also have to wonder, if economics is inherently untestable, then how can one even speak of "The Laws of Economics"?

You're not a fan of the social sciences are you.

There is far more then just quantitative means to science and to put things into perspective rather then "personal preference."

Heck, Consumer Psychology has a number of qualitative methods used all the time very effectivly to stimulate economic demand on a company by company basis.

How about levying taxes whether they are headquartered there or not, if they wish to even trade in that US? Based on the percentage of revenue or profit earned within the US?

That would be a coprorate Vat.  It's the way i'd go, heck we'd only need a corporate VAT of like 3% to replace our current 35% number.  Bump that up to 5 and you've still got a huge discount for all the job creators.

That's what I would do to replace the entire corporate tax system. Just levy a 2.5% or 3% VAT on anything brought/sold in the US. That way, there are no ways around it, and/or it doesn't discourage manufacturing in the US.