Good post. I think your questions is: Is the FDIC to blame for the shadow inventory because they are broke? If “broke” means, insufficient funds to cover potential liabilities, new accounting rules notwithstanding, then the answer would most likely be an unequivocal “Yes!” But I’m not sure that collusion is as evident –given they are on record as having the treasuries backing– so much as expediency. I suppose the logic is that if pretending helps, then why not, but as you suggest it is a gamble, and nobody understands the odds or stakes. It just seems to me, in my limited understanding of these affairs, that willingness to print money has as yet to embrace the concept of finite.
