The Fed is.

Capitalism is in essence driven by what you can sell, not what should. The too big to fail phenomenon presents moral hazards but these are different from those of public borrowing entities. Remember, the institutions that accepted TARP funds were commercial banks, not investment banks, and they all paid back the funds very quickly.

Public entities are not intended on profit and are dependent on a tax base for basic function. Credit is derived from the same source. On the open market, defunct municipalities are in the unfortunate situation where their costs of capital is extremely high, and their need is greatest. A private company in that situation could not function, especially considering the astronomical liabilities of cities like Chicago. Given the natural monopoly of Governments, that is not really an option….hence bailouts.

Government liabilities and the court enforced system of contact between public institutions need major reform. The offloading of costs to public debt is criminal and could not exist in a sane society.

There is no easy solution, and politicians are in the business of kicking this can full of dogshit downthe road. The most likely outcome will be continued stagnation. The 20th century and the American middle class were economic outliers.

I concluded that our money – the dollar – is Risk Formula based Fiat. Our accounting is known as Fraud, the dollar has not run out it’s string.

http://www.realclearmarkets.com/articles/2015/06/26/the_road_to_economic_tyranny_is_littered_with_high_iqs_101723.html

Happy 4th.