John McCain vs Barack Obama Mega-Politic-Thread of super fun awesomeness.

[Kolar]

If you are talking about the recent bailout of the mortgage industry, then you should know that neither of them was really on the free market, and that both were heavily funded by government already. Now government runs them officially, before government just ran them technically. In the end, the result will be the same.

That's true but not in the Enron case. The GSE model was flawed to begin with but when the US is backing trillions in mortgages and it looked like Freddie and Fannie weren't going to back away from accepting extremely risky credit so they had to step in and stop it and hopefully change how both enterprises operate later on.

[Jerome Scuggs]

Lack of regulation was one factor, but a very important factor. There was no transparency in any of its practices and those at the top trumpeted it as some kind of success.

You do not see any correlation between the level of corruption and economic damage caused and the level of "political insider-ness"? To say Enron's executives were not hand in hand with politicians would neuter any burden of proof you have. The list of contributions and other thinly-coated bribes is a who's-who of the politicians and interest groups of that era. Enron was a highly "politicized" corporation in that it has almost no interest in a free market but from the get-go was an attempt to create money out of thin air by commodifying electricity.

Such destructive behavior is, in fact, the result of behavior that goes unchecked. Sadly, that is precisely what government intervention in marketplaces do: suspend the natural system of checks that prevent such massive damage. If Enron (and even Freddie/Fannie) did not have very firm backing by the government and the capabilities to get subsidies to continue operation, both firms, no matter how insidious or innocent their intents, would not be able to operate long enough to engage in the activities they do. In effect, government intervention often suspends the self-correcting mechanisms of the market by allowing bad businesses to survive, and sometimes even choking good business out.

If what I said wasnt true, then to be frank humanity would not have existed long enough for us to be at this point. Like I said earlier, there is no unique implication as to why yet another set of regulations would somehow prevent that sort of corrupt corporatist behavior, and the inevitable logical result of demanding true transparency will be a fascist wet dream of cameras, microphones, and a police officer standing watch in every boardroom and office. The cause of such high levels of corruption is not the fault of market entrepreneurs but of political entrepreneurs. Though political entrepreneurs might run businesses, their eyes are not aimed on market profits but on government assistance. In such a business, consumer interests become second to government money - just like in the U.S. health care system, where hospitals chase government compensation instead of consumer's money. Such a system can never truly result in the consumers winning out, no matter how many laws you pass - which seems to be the case.

Though used in one case for bad purposes, the act of commodity trading and speculation in and of itself is not an improper market behavior, it's quite vital to the marketplace when used properly. But the laws that guide market behavior tend to weed out improper market behavior, because such behavior is almost never profitable.

edit: btw the fed fucking dropped another 25 billion out of thin air again

http://news.yahoo.com/story//ap/2008..._credit_crisis

i havent been keeping up with this as much as i used to but in the past 3 weeks i think they've dropped another 50 billion - when are they going to stop? at this point real interest rates are literally negative and there's no incentive to save - increasing saving typically reduces consumption which would then neutralize inflation but whatev, ben bernanke knows what he is doing?

[Kolar]

You do not see any correlation between the level of corruption and economic damage caused and the level of "political insider-ness"? To say Enron's executives were not hand in hand with politicians would neuter any burden of proof you have. The list of contributions and other thinly-coated bribes is a who's-who of the politicians and interest groups of that era. Enron was a highly "politicized" corporation in that it has almost no interest in a free market but from the get-go was an attempt to create money out of thin air by commodifying electricity.

Yes but factA (Washington connections) and resultB (extreme corruption of a corporate enterprise) doesn't automatically equal resultC (Enron collapsing). I could easily point to Halliburton which has an enormous amount of political pull and yet it's doing just fine today. I'm not passing judgment on the practice but virtually all large organizations lobby and seek Government help for all kinds of business. Contracts, tax breaks and other opportunities. That is the reality today and I don't see 10 Enrons a year going bankrupt because of it. If all they did was take $600 million in loans over a period of a couple years then I don't see the connection that the Government aided them in any significant way to their fruitless endeavors, or at the very least influenced their decision to. Enron was a multi-billion dollar company, a couple hundred million isn't going to do anything significant. What wasn't there was transparency for those auditing them, no one could look at the business and say exactly where their cash flow came in and out of the business, that was because for the 3rd time Andrew Fastow was moving debt out of the business which inflated the stock price and kept everyone happy. And as long as it stayed that way no one was going to question how they were doing so well even if the numbers didn't add up, they were trying to build up a complex free market approach to energy trading as you said, which isn't a simple commodity in the traditional sense, it's abstract. But I do agree with you that Government agencies shouldn't take on any more risk then a bank and other financial institutions would. That is the issue with Fannie Mae and Freddie Mac because of the GSE model but not with Enron. That model did allow for a lot of abuse because of Government backing. There is also some blame of those running both companies more so Freddie because even under the current business model they took on more risk as the Subprime crisis was unfolding while Congress and everyone else was saying pull the fuck back. So there, I do agree with you on most of this, as for health care ect... I'm not looking to reignite that fire but I personally only ever argued for whatever system was more efficient and cost effective, not from any kind of ideological point of view.

[Zeebu]

since the other thread is locked and i dont feel like starting a new one, here:


in other news, gun sales in Alabama hit a record high last month. When questioned why, the most common answer was "The Russians may have taken over Georgia, but there's no why their taking over Alabama."

[Squeezer]

And in less retarded news (or maybe more retarded), John McCain has received a big bump from Sarah Palin and is leading the Gallup Poll.

sigh

[Soul Survivor]

Did anyone else watch Charles Gibson interview Sarah Palin? I think she proved that if something happens to McCain we will be a nation run by a pitbull with lipstick in the literal sense. Hopefully we won't see that Day. I just see their campain as "McBush".

[Squeezer]

Did anyone else watch Charles Gibson interview Sarah Palin? I think she proved that if something happens to McCain we will be a nation run by a pitbull with lipstick in the literal sense. Hopefully we won't see that Day. I just see their campain as "McBush".

I really hope the MSM chooses to have a field day with her comments about war with Russia and her statement that she would immediately overturn Roe v. Wade. Neither would actually happen but the more crazy she spews the more the American people should be turned off.

[Jerome Scuggs]

http://dealbook.blogs.nytimes.com/20...up-report-says

That earlier report, by Michael W. Masters and Alan K. White, blamed high commodity prices on the growing role of institutional investors, specifically index funds. It was cited by several lawmakers as proof that new rules were needed to curb the impact of speculation on commodity prices.

But the new 69-page study, by the Commodity Futures Trading Commission, shows that, rather than rising, the stake of index funds in the oil market actually declined in the first half of this year.

my average level of "i told you so's" per day has skyrocketed dramatically in recent times

[Jerome Scuggs]

and i rly don't want to revive a dead thread but i was hurricane'd

()

It's hard for me to see the case being made when Halliburton is your example :P It is very true that virtually every major corporation and even several smaller businesses have lobbyists representing various special interests in washington - an entire industry based on extracting money from the government. A tendency of humans in general is to prefer the easy route over the hard route, and what is easier than asking a politician for money? Even assuming a business refuses such aid for whatever reason, it becomes harder and harder to resist as taxes and regulations rise while profits shrink. And now, at this point in time, it's basically bad short-term economic sense to not lobby for subsidies when all your competitors are doing it.

My argument against corporations is not one of economics but of ethics. At the core of what I believe is that every individual has rights - and every individual is responsible for his actions. The "corporation" is a legal entity that creates a barrier in which the individuals running the business can shed their direct responsibility. If people sued Walmart's CEO instead of Walmart, the CEO would find it in his best financial interests to be more accountable to the consumers.

The argument against corporate/political ties is similar - such associations muddle the lines of morality. I often say that the difference between a government and a business is that a government can kill you, but what about Blackwater? Our government gave Blackwater the right to commit murder, which is a right I don't believe anyone has in the first place anyways. But to make it even worse, the government is paying Blackwater to commit acts I disagree with - while paying Blackwater with money they seize from me. I can't ever see that being morally justifiable.

Up until this point I haven't familiarized myself with the more specific details of the Enron scandal, but as I read on, a thought keeps occuring to me - what have these guys done to cook their books that our Government hasn't? For instance, you discuss "mark to market". Looking at it, isn't that what governments do? Prepare budgets in advance, assuming a certain level of income? Looking further, Enron created offshore accounts to hide their debt. In practice, how is this different from the government creating the Federal Reserve to manipulate the currency and sustain an ongoing, rising debt? And looking at the results - an economic loss with the only people profiting being those on Wall Street - is that any different from the current situation?

You're absolutely right - Enron tried to "create" a complex rigging of the free market, in an attempt to game the system - and create money out of thin air. This is also the premise behind Keynesian economics and fiscal policy - it's a complex model of the free market and how it works... but it's wrong, and in the end, there will be an implosion. Our government is attempting frantically to create money where there quite simply is none, and attempting to cover up massive losses with a jerry-rigged system of loans and inflation and lord knows what else.

Enron collapsed when people got a glimpse of reality. This is what's happening now, systemically, across the financial sector - people are starting to see the Federal Reserve's monetary policy for what it really is, and the market is reacting as such, which is why it is refusing to respond to traditional government solutions. Before, the government could literally spend their way out, and noone bothered to check their accounting sheets. But now people are scrutinizing those accounting sheets and they see a balance sheet headed for disaster, and that's causing alot of problems.

There seems to be a correlation between our de-coupling from a sound currency and the appearance of sudden and crippling "bubbles" and recessions. The entire rigged system was supposed to prevent "economic cycles" (as if there were some objective indicator of a "good" or "bad" economy), but the result has been to create even more rapid and sudden cycles that do far more market damage. And that's pretty much why I'm an anarchist - the odds are astronomical that our government could ever somehow fix this. In my opinion the very undeniable chaos that immediately follows the collapse of our government would be worth the long-term stability... but in the end, I guess that's what it boils down to: whether or not you believe that a government is required to promote cooperation and stability.

[Cops]

Kolar - John Adams

vs

Jerome - Thomas Jefferson


edit; I stopped fighting people with the idea that the federal government is necessary, if I was in Jerome's situation I'd seek nothing but dissolution from the feds and I'd be in complete agreement that the federal government is almost useless and that as a citizen I cannot trust the federal government to even monitor themselves.

So why on gods green earth would I give them to power to interfere and monitor more so than they do?

Bro, you've got to realize we don't live in America, arguing federalism to someone who has seen the worst side of a federal government is redundant. Americans generally don't want to relinquish any more power to the Federal government. By allowing the government, especially the federal government to be involved more in businesses, health care, as well as security isn't something you'll convince many Americans of.

[Epinephrine]

There seems to be a correlation between our de-coupling from a sound currency and the appearance of sudden and crippling "bubbles" and recessions. The entire rigged system was supposed to prevent "economic cycles" (as if there were some objective indicator of a "good" or "bad" economy), but the result has been to create even more rapid and sudden cycles that do far more market damage. And that's pretty much why I'm an anarchist - the odds are astronomical that our government could ever somehow fix this. In my opinion the very undeniable chaos that immediately follows the collapse of our government would be worth the long-term stability... but in the end, I guess that's what it boils down to: whether or not you believe that a government is required to promote cooperation and stability.

I was going through Vihta's link to Chris Martenson's site the other day, and I sort of get where you are coming from now. I mean you've never really explained your position much aside from just saying the gold standard is good, and Keyes is bad, but Chris does a great job in explaining how the system works and so on.

Still, he does not judge the system, just say how it works. Although I feel he does have a bit of an agenda behind it, it was quite informative in showing how the current system isn't the best.

Still I have to argue with your one paragraph there, because under the current system, we've seen generally the most stable economy in the last 30 years that America has had in the last hundred and so. No great depressions (yes I'm aware that was AFTER the fed was created, but before the gold standard was abandoned), no major boom and bust cycles every other year, and no getting the richest guy in the country to bail out the government. Such things are well documented, and overall I think most people would prefer to live in a country where generally things are pretty much the same economically and it never goes too bad (and conversely never TOO good), versus a state where every few years it goes from crazy growth to everyone's out of a job and living on handouts.

True, there are a lot of things wrong with the current system, but the old system wasn't exactly perfect either. In advocating a return to the older system without really giving a full account of what would actually happen if that were so is pretty pointless.

[Summa]

http://www2.tbo.com/content/2008/sep...news-politics/

side by side comparison on 22 issues, fairly unbiased

[Jerome Scuggs]

Business cycle theory is very complex, but here we go, I guess-

For starters, what is commonly referred to as the "business cycle" really, truly began only about 200 years ago. In a theoretical, perfect free market there is, of course, a constant "fluctuation" - the workings of the dynamic market. Information is not perfect - no human can ever know the needs and desires of other humans, let alone millions of other humans. And so within any system, market or otherwise, there are inherent and inevitable fluctuations - maybe Apple made too many iPods, and didn't correctly foresee that iPods would fall out of high demand, and so for a period Apple lowers production of iPods - so on, so forth. It's a process, never perfect but always approaching as close to ideal as possible, especially as time goes on.

Now, sometimes a few industries might experience similar fluctuations at the same time, and this is what is referred to as a "downturn" or "recession". In a theoretical free market, this is absolutely possible - though the odds are pretty out there. This is because a de-centralized currency can not be dramatically changed, and so money and credit tends to flow slower and more carefully.

The Federal Reserve antagonizes the nearly harmless process of market fluctuations and generates intense feedback. By injecting new money into the supply - anywhere from a few to even hundreds of billions of dollars - the Fed essentially creates an artificial demand, because the Fed's logic to injecting money is that it will be spent, and that process of consumption will in of itself stimulate production, bringing industry out of a downturn.

The problem is that the new money will inevitably trickle into ventures and industries where the new money wasn't needed. Before a Fed injection, every dollar of currency is, more or less, exactly where it needs to be. Post-injection, money suddenly appears in places where, ceteris paribus, it isn't actually needed. If it was needed, then capital would have flowed to the industry by the complex of actions that lead to such things (investing, spending, etc).

In doing so, the Fed then guarantees a downturn, because they are sustaining a level of demand that, otherwise, doesn't exist. And so when all the frenzy and capital has settled and cleared, suddenly people realize that the industry that had previously been a hotspot for investment wasn't worth what they thought it was - they were just being fooled by the high amount of capital artificially flowing in that particular industry.

Now here's some trick philosophy to throw in concerning causality. People tend to falsely believe that causation is only endogenous, ie stemming from within. With that framework, the seeming continual sessions of business fluctuations can only be explained by a "cycle". Yet, reality often shows otherwise - that exogenous forces can alter a supposedly closed system.

And so, assuming that this is true, it is then therefore plausible and theoretically sound to consider each recession independently, as phenomenon that could occur because of market dysfunction or outside intervention - but, regardless, independent phenomenon with no "universal" causation. To say that businesses reducing production led to a recession is a causal fallacy - the slowdown of business is the result of whatever actual forces caused them to slow or cease production, the same applying to consumer purchasing habits.

So then we look at the supposed "business cycles" themselves. The first is considered the period roughly between 1814-1835, because this is the first period in which prices began falling drastically and continually.

But this exposes a fallacy - the idea that falling prices signal a depression or any other sort of problem. Falling prices are the key to rises in standards of living - but this is only necessarily true in a stable, de-centralized money system. Because while prices fall, the overall supply of money remains relatively unchanged, which increases each dollar's purchasing power, making every "poor" person that less poor. But business also benefits - because the costs of production fall as well. And so suddenly, with little to no change in the actual supply of money, individuals can increase their wealth and the total amount of goods and services available.

There is only one period where prices actually rise - 1812-1814. This happens to be the exact length of the War of 1812 - when our government began extensive inflationary war spending, which devalued each dollar's value. After the war, the "bubble" of new money and high prices collapsed - perhaps the first government-caused "bubble", though certainly not the last. This led to a period of falling prices and productivity, which people view as a "slowdown" - when in fact, it's actually merely a return to normal, from an economy that was too booming.

This pattern repeats itself following the Civil War and World War I - economic bubbles created by government spending collapse in on themselves as the economy returns to a normal level of production.

Here I can show another common fallacy - the idea that the free market is "endless" and "non-stop", leading to patterns of consumption and excess that will one-day become unsustainable. The truth is that the market self-limits itself from such over-consumption or over-production - and we can see here that it was the Government that tried to stimulate such detrimental excess.

Coming into the 20th century, there is only one period where prices rose with no actual government involvement - the period from 1896 to 1920. This can be explained by the massive Gold Rush taking place in California in Alaska, which increased the monetary supply by 2.5% per year - an unusually high figure, but nothing close to the inflation numbers resulting from government intervention into the money supply. The only time this "inflation" ever radically jumps over 2.5% is the period between 1914-1918 - where, once again, massive government spending created a "bubble" economy that then contracted after the war, when such an economy was unsustainable.

From 1920 onward, the cycles become a bit more complicated, because there's a new player - the Federal Reserve. The Federal Reserve can be almost singularly credited with manufacturing the "boom" of the 1920's. The Fed was the solution to the post-wartime "recessions" - because the Fed could always inject more money and lower more interest rates, therefore theoretically being capable of permanently "stimulating" the economy. But like I said before, the Fed is not "improving" the economy, but driving it upwards unsustainably, outside of the actual, real market supply and demand.

A metaphor - it's as if I was observing another individual and measuring his progress on his college dissertation. I then decide to "stimulate" the student by giving him an Adderall. Noting his significant progress in one single day, I then come back the next day to see the student being overly sluggish and slow. Not wanting to continue this "boom" and "bust" cycle (for lack of better terms), I then decide to give him amphetamines daily - but his tolerance (metaphorically, "inflation") grows, and so I am forced to give him increasingly large and hazardous doses to keep him at "peak" productivity.

I think you see the result. Over time the student will respond less to the amphetamines, and his productivity will inevitably drop. Now, normally I might think "alright, I'll take this student off of the meds - he might be really slow and sluggish for awhile, maybe as long as a week, before he returns to normal". But, metaphorically speaking, I decide that a week of sluggish behavior would be "disastrous" or "undesirable", and I continue the amphetamine onslaught. Suddenly, the student has a heart attack. Maybe he lives - but he spends weeks in intensive care, unable to perform ANY "productive" work other than to heal. But, even worse - maybe he dies, and with him goes the dissertation - and I've failed in my initial goal of seeing a dissertation be completed.

Since WW2, the Fed has taken an increasingly active role in the marketplace - meaning, the marketplace has been subjected to increasing waves of manipulation and distortion. Every time the economy began slowing down (in response to previous bouts of credit expansion and rate-cutting), the Fed quickly released more money and cut rates lower in an effort to re-stimulate production.

I can't tell you why this keeps happening - but I can reasonably assert that politics has played a major role - new guy gets voted into office, the economy begins contracting because the Fed had made it unsustainably large, but the new guy, concerned with his "public image", wants to stimulate production - because when he came into office, the economy was at level X, and so to him level X is the "normal" economy, not a "bubble" economy. So when the economy contracts to level Y, that politician only thinks in terms of his tenure - since Y is lower than X, the economy must be going bad. He might be completely unaware that it was X itself that was unnatural, and Y was normal.

And so for the past half-century, the market quite simply hasn't been allowed to return to "equilibrium". Layered over-corrections lead to market crashes which in turn stimulate further over-corrections. Bubbles feed off of bubbles and implosions feed off of implosions - and so the market is rendered nothing short of "chaotic" in the most accurate sense possible.

Economically speaking, then, it could be said that what is referred to as the "business cycle" is, in essence, a justification for the Fed to pursue their policies while escaping blame for the consequences and increasing the perceived "necessity" of the Fed.

[Epinephrine]

I can't argue with some of the points you make because they are absolutely true.

First of all, central banks do exist to increase the money supply to 'stimulate' the economy and thus artificially raising the market with funds which otherwise would never have been spent and thus distorting the supply and demand curves.

Secondly you are correct in that a lot of economic policies are considered purely due to political considerations and not real economic considerations.

But there is a problem to the inverse and I will get back to the (federal reserve in a bit), which is what you generally want which is 'anarchy' and 'completely unwatched free markets'.


First of all, no matter what, anarchy cannot exist for long within human society. Humans are by nature extremely social animals, it is how we have evolved to be. Whether as family units, extended family units, clans, towns or nations humans are very social by nature. As a side effect of this, in our societal structure as that of all higher mammals, there is a definite hierarchy towards how we organize ourselves. This naturally leads to those who are leaders, and those who are led. Further more, the larger the population, the more complex this structure becomes. By evolution (and probably because this is the most advantageous way for a species to prosper) we are thus designed to have complex social systems, and thus in the extreme to have governments.

Secondly I think we can both agree that individual freedoms are important, and I think both of us would feel that some level of oversight is necessary for a 'free' market to function. While an absolute free market really just has anyone doing anything they want, a democratic system would at least have the option for those who are wronged (i.e. whose rights are infringed upon) to sue a company that harmed them, a fact that you have brought up before in your posts. To guarantee individual freedoms and to guarantee at least legal rights, we also need a government.

Thirdly, we have to look back at the fact that humans are naturally very competitive creatures. Whether it is by building things or by destroying things or by conquering eachother, humans naturally compete. Indeed, the entire 'free market' system is based on a healthy level of competition.

In a 'free' market system, the leaders of individual players within the market (i.e. CEOs, owners of the largest businesses) will also have the most power to and the most incentive to abuse their authority, whether by influencing the government (or in a government-less system to abuse the people directly).

Therefore, the issue of the 'rich' changing the 'rules' to suit themselves is seen in any political system possible, even that of anarchy, and thus the issue of the government taking advantage of the federal reserve to suit political purposes would happen no matter WHAT the system.

The point I'm trying to make is that, because of human societal structure, and because of the nature of complex systems, there will be people who will control the system no matter what, and in the end it will always be the rich and powerful that do the controlling. In a free market system, there is no official regulator for this, no one to guarantee that the system will even STAY as a 'free' market (i.e. no one to guarantee say that Microsoft isn't going to carbomb every other competitor or whatever) and thus the system over time will tend towards an unfree market no matter what.

Finally I take issue with your point that people when left to their own devices won't use up all available resources until the end. Looking at history, this is basically how humans work. Actually this is how any living creature works, which is to use as many resources as possible to grow their numbers as much as possible, with the only constraints being predators and resources running out which usually results in many small population die outs or at the extreme you have extinctions. Unfortunately for an economic system, this means that naturally the market will tend towards extremes due to human nature. When it DOES reach an extreme, the free market will of course 'correct' itself, but the issue of how long and how hard the correction is becomes the central problem. Many times, the correction will be VERY hard and VERY long, in which case a lot of people's lives are messed up. You only need to look at ANY example of markets or even parts of the markets to figure this out. No matter how much regulation, there are still bubbles that make no sense, and over investment does happen quite often no matter what.

Look I have no doubt that the free market is probably one of the best ways we have at figuring out the balance between supply and demand, but in reality, there are many real-world constraints to a real free market. For instance, in many modern production processes it can take years and years for new production to come online, especially for complicated things (i.e. microchips), and overinvestment can wreak huge effects on the economy as well. As well, workers can not be so quickly retrained. Finally you cannot ignore human nature in over-investment in entire sectors by people being sheep and gravitating towards 'winners' and away from 'losers' which are really psychological problems at the macro level, whether it be real estate, commodities or 'hot' stocks.

We've already said that we are a society that respects individual rights (i.e. individual > collective), and so we must realize that any system where there are meant to be large corrections and where massive amounts of people are liable to be effected by massive corrections, we should do our best to minimize these effects if we really do respect every individual person. If we were a collective society like China, we really could care less if millions suffered as long as most people did pretty well for themselves, but I don't think our societal values are like that.

So what does this lead us?

Basically how do create a system where the constraints of the concentration of power are acknowledged, individuals are acknowledged, and the very fact that because of human nature and real world constraints even the 'free market' may not be perfect in addressing these concerns because we recognize that the theoretical 'free market' cannot possibly exist in reality?


The creation of the central bank has been one way this has been addressed. Generally I'd say that it was a good idea, because basically any country worth their salt in the world has adopted this idea willingly. Maybe there are better ways, but to just deny the system because some things can go wrong may be too extreme. It's like saying 'democracy doesn't work, let's go to anarchy because sometimes people can rig votes' is not very constructive. So I ask, what is a better system than the federal reserve if we understand all of these constraints? Or at least can you argue that these constraints do not even exist in the first place?

[Epinephrine]

The chart in this article about recessions is what I have been referring to.

http://www.nytimes.com/2008/03/23/we...%20bust&st=cse

"Between 1857 and 1929, while regulators largely stood idle, the American economy swung through 19 national boom-and-bust gyrations that sometimes threatened to wipe out whole industries within months.

But in the wake of the Great Depression, American policy makers began actively managing the economy with a handful of tools, including adjusting interest rates and using massive government spending to spur growth. Since 1945, there have only been 10 boom-and-bust cycles, most of them much shallower than earlier ones, and the unemployment rate has never topped 9.7 percent.

Much of that stability, economic historians say, stems from reforms designed to calm consumers during downturns, like the Federal Deposit Insurance Corporation, which guarantees most checking and savings accounts up to $100,000 if a bank fails."