ic, the important thing to know is that it is a reg, and it is artificially discounting bank asset values, meaning banks in order to maintain reserve requirements have to hoard cash, rather than lend it. this frozen money stops spending and raises unemployment (inventory backs up and workers are let go) and the circle spirals another round down. what’s weird about that ordinary economic recession is the violence and velocity it hit –there was too much debt in the sysytem so insufficient flexibility. M to M is fun in a bull mkt, banks ‘make’ money with it –but it kills in a downturn. FDR suspended it in 1938 and it stayed suspended until mid-2007. a different model was used all that time, a cash model of the asset value, and there’s no reason we can’t go back, it would take a word. instantly the sysem would start limbering up. it is becoming PAINFULLY clear to some that the gov’t wants to control the banking system and is leaving M-to-M in place until it can get a monster discount on an expropriation of all those assets –in the name of the “taxpayer” –an entity with which these socialists are cementing themselves and their friends and families into permanent power and control. that the country’s workers and savers are getting their savings murdered doesn’t seem to bother them. this is getting people very very very very upset.