>The SNB experienced a massive capital loss when abandoned their peg from 2011 in early 2015 First of all, I wouldn't call a 10% loss "massive". The market ge

>The SNB experienced a massive capital loss when abandoned their peg from 2011 in early 2015 First of all, I wouldn't call a 10% loss "massive". The market generally suffers one of those events annually. Second, it was short lived. The USD/CHF went from 1.01 to 0.86 after it was unpegged. It now sits at 0.97, 8 months later (1.2, 0.98, 1.08 for the EUR/CHF, respectively). It was a non-event. I mean, I'm still trying to figure out what point you're making. Are capital market distortions new? Sure, the scale of intervention might be larger. But the scale of everything is larger today. And why do you assume that these distortions are always bad? I don't. They have to be examined on their individual merits. I like the government building roads and subsidizing certain industries. Sometimes it's good business. Maybe buying stock in certain domestic industries is as well. Are shills new? Is an asymetric reward structure new? The basis of the argument against TBTF is moral hazard. Is that unique to the banking system? I've seen it suggested on these very boards to incorporate your company ASAP, in order to prevent personal financial liability. Well, that just might promote higher risk-taking by the entrepreneur. Or what about the house-flippers? Heads I cash in, tails I mail the keys to the bank. Are these people too small to fail? This is our system. I choose to study it as it is rather than compare it to some non-existent ideal.