TruthSavvy.

Investment markets have been unsettled of late, resulting in the worst quarter for major American stock indices since 2008. Are European G20 leaders correct in declaring there is too much debt in the world? Or is President Obama’s team right in pushing for more stimulus? Who holds the real economic insights? Those who say we must borrow our way forward to recovery?

The emerging bank reform legislation might be viewed in a singularly positive light if the reforms were not the byproduct of a skewed capital system that made several million Americans undeservedly powerful and rich while Congress slept. One could feel downright hopeful about the future of American banking if moral hazard had not contaminated the land. But too much polluted water has gone under the bridge. The good in the reforms is counteracted by the poisons that produced the need for remedial interventions.

As long as the value of the yuan in international trade is not an issue addressable by the international community, China’s policy of growing its money supply (M1 & M2 equivalents) at over 20% annually is the same thing as China declaring war on the world. As thinking people have come to understand, a large country’s monetary policies can impact the long-term economic sovereignty of other countries in the global trade era as effectively as military policies.

If the truth sets people free, why is America becoming less free on the heels of twenty-five years of “free market capitalism”? Granted, banks could not do every last thing they pleased (although hedge funds pretty much could). But banks did receive enormous breadth of latitude for self-regulation. The theory was that the free market profit motive would facilitate naturally functioning checks and balances. Instead, the whole world got a taste of what happens when virtue sits on the sidelines while greed is empowered as the referee.

Free markets and their attentive politicians are always serving up something new. May’s service — an 872 point Dow Jones blowout — clearly dampens recovery hopes. Is it right that financial markets impact the underlying economy so remarkably? Could a different financial architecture help mitigate this problem — an architecture that does not shortchange honorable merit when it comes to financial rewards?

The market’s recent plunge to new closing lows complicates the recovery picture for many market bulls, including people who believe the regulatory reforms underway will eventually cure whatever ails us. Recent market action — including the May 6 ‘Flash-Crash’ — should be unsettling to individuals who think free market mechanisms are all we need.

A contradictory investment climate exists because the Fed bombed Wall Street with money. Hedge funds and investment banks don’t care that short-term Treasuries pay next to nothing. They buy Treasuries as collateral in up-leveraging speculative plays, especially in commodities. Wall Street elites expect to recoup the losses of 2008 as well as to grasp massive new profits, even if major indexes top out well short of their former highs later this year or next year.

Is there a global debt bomb waiting to be detonated? If so, will it create rampant anarchy in America? Maybe in Great Britain, too? Does an apocalyptic world await? Is the coming world worth fighting for? Increasingly, people believe these questions are worth exploring, evidenced by the size and nature of audiences generated by writers like Marketwatch’s Paul Farrell.

Wall Street could learn a few things from the Tiger Woods apology on February 19. Wood’s detailed apology is an important step toward a gradual rehabilitation of his image. Nevertheless, the healing will not be easy. Nor should it be. People who commit grand larceny often receive heavy fines and spend considerable time in prison. Woods faces the prison of public opinion as well as the loss of endorsement revenue. He stole a lot from his wife, kids and supporters. He is deserving of his reward.

A nation borrowing its way toward financial insolvency is not staging an economic recovery even when GDP picks up and the stock market rises. Some people talk about the “recovery of growth” like it is the ultimate goal of American life. What is this recovery that we supposedly need? It is nothing but debt facilitated GDP growth and asset inflation to create a built-in reward for leveraged mega-investors. That’s how Wall Street banks “create” the money to pay big bonuses.