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No more stupid than yours.

You have yet to offer anything other than dogma as a solution.

In a fiat money, fractional reserve currency system, you have to deal with the problem at hand: how to get the banks lending again, How to get the banks’ reserves propped up to a point where other banks will conduct transactions with them.

And free-market dogma ain’t gonna do jack right now. We have all the free market dogma we can handle right now in the credit default swap market. They aren’t even really a swap instrument - they’re REALLY insurance contracts. But because they’re called “swaps,” they’re not regulated by the insurance commissioner of NY State.

So in the CDS market, it is so free-market that there isn’t even complete disclosure of the CDS positions and counterparties, much less the terms of the contracts disclosed. There’s no regulation, there’s no laws, there’s no nothing. Complete free market. Ayn Rand and Alan Greenspan should be having a objectivist orgy, right?

Instead, these instruments are taking down one counterparty after another as it turns out that the lack of regulation allowed very lightly capitalized parties to write CDS far in excess of their ability to pay claims on the contracts.

I point back to the 1873 crash for an example of what had to happen in pre-Fed, pre-JP Morgan days: Banks quit honoring checks from other banks. The US government had to step in with something like $24 million to prop up the reserves in several banks in NY, and several million more in what would be a forerunner of something like today’s TAF, directly from the US Treasury.

The 1873 crisis started around 19 Sep, 1873. It took until the end of October for banks to start clearing checks again. That’s about as close to minimalist intervention as I can find in semi-modern US history, and even then the economic result was known as “The Real Depression” — people who lived through both 1873 and 1929 thought that the 1930’s were relatively easy by comparison.

After 1873, the US didn’t turn into Sweden. It took about four years for the economy to recover and the US went forward.

We can’t wait until the end of the month for short term credit to start flowing again. If it takes that long, you’re going to see large companies with tangible assets and significant book values go down in flames. The Fed’s new program to buy commercial paper isn’t some abstract exercise - it is specifically for the purpose of making sure GE doesn’t go belly-up.

So if you and others want to engage in free market dogma, get ready to use tobacco for currency, as we did in North America in pre-Revolutionary times. (yes, tobacco was used as a currency — go look it up...) Because the US Mint is well behind demand in minting gold coins and many gold dealers are reporting that demand has completely cleaned them out of bullion coins, so gold is going to not be able to keep up with demand merely as a safety net, much less as a currency at the rate we’re going.