You’re right, I guess I was a little lazy in my description. When I said bankruptcy, I meant what you said, not the legal protections that allow partners to be shielded from harm.

As for the fiat money question, I don’t think it is as simple as saying we live in a more complicated world, therefore a stable monetary unit is not feasible. We have only been under a truly fiat money system for about 40 years and it can be argued that it has resulted in a unprecedented amount devaluation of the currency and loss of purchasing power of the monetary unit. I am not saying a return to the the classical (19th century) gold standard is the answer, but this purely fiat money system post-1971 cannot be viewed as clean as the wind driven snow.

The Republican Congress in 1999 (and signed by Clinton) passed FSMA which not only allowed commercial banking to combine with i-banking again (ie repealed Glass-Steagal), but also essentially eliminated size constraints.

not some government decree. And exchange rates will always vary with different interest and growth rates globally. While we should strive for conditions that would otherwise make our economy strong (and hence a stronger currency), we should not tie ourselves down to an exchange rate (or policy of such) that would force slow growth just to hit those targets.

But the issue is that Fannie and Freddie required and pushed on mortgages that were very risky. Their guarantee of purchasing mortgages from lenders caused those lenders to not worry about much higher levels of risk than were historically found in mortgages. When these mortgages were bundled and played with the people making the instruments were using historical risk numbers that were no longer applicable because of govt. interference.

These shenanigans should have caused the management of these cos. to be afraid of and research these new instruments, however, the history of govt. rescuing when problems were too big + the cozy relationship these firms had bought with Congress contributed to management not worrying too much. And they were right– how much of the management that was responsible felt the consequences of crashing the cos. they were in?

Keynes himself denounced FDR’s “reform” before “recovery” policies that resemble Obama’s.

Bernanke made his academic mark as an expert on the depression and is obsessed with not having a restrictive money supply be the cause of a 2nd great depression. more later

Ben was in lock-step with Greenspan’s way-too-loose money supply policies after 911 and for way too long thereafter, that helped cause all the real estate investment that could produce a bubble so large that it took on the role of a 1929 equivalent to the stock market crash.

Bernanke is Greenspan only more pure.

Mush as Obama voted for all the TARP and budgets of Bush’s last 2 years!