mother nature does not do bailouts

in our highly contrived economic system we now have the concept of ‘too big to fail’ so the big banks have been saved from collapse on numerous occasions which staves off economic calamity but prevents those organizations from adaptive learning. Small business would never be protected from the blow torch of failure. There is an argument that the banking system, with its capacity to create credit, is a serious weak point in our economic structure. It relies on one single factor and that is TRUST. Banks are in a privileged position in our society and they should come out from behind the veil of secrecy and tell people about the international conventions which allow them to lend out many times every dollar that is deposited with them. Prudential guidelines suggest a conservative ratio might be 7 times but it could easily be 20 times in other parts of the world. What that means is for every $1 deposited with a bank, they could create credit of $7-$20 . How is that done ? I will explain it in a later blog.