Abstract away all the money supply stuff. Banking systems have multiple equilibria [1]. That is one way of saying that financial crises are like floods. They

Abstract away all the money supply stuff. Banking systems have multiple equilibria [1]. That is one way of saying that financial crises are like floods. They are a fact of life, and happen from time to time. Who should pay for flood insurance, the public or the people building on flood plains? If the public pays for the flood insurance, there will be too much construction in the flood plain. The fact that TARP provided a small accounting profit to the Treasury is sort of immaterial. It was a free put that was never exercised. People should pay a premium for insurance. An efficient market prices risk... [1] https://en.wikipedia.org/wiki/Diamond%E2%80%93Dybvig_model https://en.wikipedia.org/wiki/Diamond%E2%80%93Dybvig_model