Fungible: (esp. of goods) being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind.

Congress is a manufacturer of stupidities, the latest being to raise limits on FDIC insurance.

If it were not so commonplace, we would realize that it is totally absurd (and no doubt unconstitutional) for Congress constantly to be changing the rules of the game! In finance, we have the concept of “noise”, which is random variation induced for no good reason. Congress manufactures noise by the barrelful, but there is usually a reason relating to their own sinecures.

Large bank CDs now become more attractive, to the extent that the guarantee is credible. The weaker and weakest banks now can possibly attract more funds at the expense of the stronger and strongest banks (are there any?). Money is fungible. It flows from one place to another. The companies who issue commercial paper (a market already under pressure and declining) may now find that their market has worsened. Municipalities will find their market made worse, if money flows out.

Nothing is accomplished but to shore up already weak banks. Any deposit insurance is a direct subsidy to stockholders of the banks being insured and raises the moral hazard of their investment operations. This is already a problem, and Congress is making it worse. There are of course costs to the guarantee.

The depression is and will be worldwide, no matter what inane measures Congress adopts that worsen it. Europe is going down. China is going down, as its central bank is over-levered and as its mercantilistic policies flame out. Russia is going down. New spots of weakness will be appearing right along as time passes. Advertising will fall, the boom in the metals and metals fabrication industries is over. Oil and gas companies are dropping. Retailers are dropping like flies. Very few companies will not be affected.

This is going to be one for the history books.