1. The main lesson Government learned from the Great Depression is that bank runs lead to credit contraction, deflation, and ultimately a depressed economy — persisting for perhaps an entire decade!

2. To avoid bank runs, insure deposits. Deposit insurance is like mutually assured destruction where possessing nukes means never having to use them.

3. New financial intermediaries and products? Investment banks too big to fail without unacceptable systemic risk? Expand Federal insurance to cover counterparties to derivative contracts such as credit default swaps, and Fannie's and Freddie's mortgage portfolio.

4. Cut regulation of entities funding themselves from Federally insured sources — all regulation is bad.

5. My God! Look at those Wall Street bonuses! Look at those leverage ratios! Belatedly discover that storied investment banks have been playing dice with other people's money and winning for half a decade or more, as long as real estate appreciated. And why shouldn't others permit it — it's all Federally insured (at least implicitly under the too-big-to-fail principal).

6. Oops. Real estate prices are declining. Financial firms are bankrupt. Federal guarantees must actually be fulfilled.

Open question: where did policy go wrong in the syllogism? It led to catastrophe, but it is based on long-accepted "truths". My suspicion is that either the nature of systemic risk has been misunderstood, or that options other than Federal deposit/counterparty insurance have not been identified or examined. But there are other possibilities. Thoughts welcome.

A stable unit of account, i.e. stable prices, in all economic conditions would remove the need for risky corporate actions as well as naive regulatory solutions.

How do you propose to do that? Fixing the price of gold isn't the answer.