The financial geniuses who caused, yet failed to predict, the world’s financial collapse are not doing much yet to avoid another crash. Given that I didn’t predict it either, I am as qualified as they are to propose “the way out.” Tim Geithner, Larry Summers, and many other bankers brought us to this pass, so they may not be the ones to take us out again. Maybe I’m not either, but at least my finger prints are not all over the corpse of the world’s economy. So, here goes.

Let’s try two economies. We can call one the Wild West and the other The Club. In the Wild West, banks, insurers, hedge funds, and other financial institutions can do what they are doing now, what they were doing that caused the crash, and what they will undoubtedly go on doing to cause another crash. This is the system that both the president of the United States and Britain’s new prime minister already permit. The big money boys who opt to remain in the Wild West can take the risks they always have, but the risk would be theirs alone. The government must make it clear that, in this free-for-all sector, the state will never come to the support of anyone who goes down. Investors, managers, lenders, borrowers, depositors et al. are on their own. Ayn Rand, Rand Paul, and Allan Greenspan would be at home in the Wild West. The poor schmucks who paid the taxes that bailed out the banks, insurance companies, and other flimflam operators who went bust last time will never have to do so again. The cowboys can look after themselves. The Club is for the rest of us.

Like all other legal associations, The Club will be governed by rules, regulations, precedents, and by-laws. Unlike the Wild West, the institutions in The Club would be guaranteed by the state. In return for government protection—remember, in law protection demands reciprocity in the form of loyalty—institutions operating within the confines of The Club would be held to the highest standards of transparency and financial probity—including prohibitions on flogging unlimited credit to students who don’t earn a penny, bundling up bad mortgages and advising investors to buy their own financial products.

Hey, this way out won’t exactly kill free enterprise. If Joe Taxpayer has to cough up, he’s entitled to a little security. Any free market-loving, true believing, Ayn Rand-reading entrepreneur who disavows any and all present and future state aid should be free to take all the risks he likes with his own and his investors’ money. But nobody who refuses to play by the rules set by the taxpayer—the guarantor of last resort—should be awarded a plug nickel from the public purse as a reward for failure. Let’s do it. Let’s try a two-tier system. The Wild West will be the freewheeling, cash-guzzling bazaar the United States has known since Bill Clinton and Larry Summers repealed the Glass-Steagall Banking Act. The Club will be the dull, sober, safe, Rock of Gibraltar, Mom and Pop banks that lend to people who can pay their debts and hold collateral that is worth something. Sector Two will have a firewall between banking and investment. The fly-by-night, Madoff-worshipping, short-selling pirates who don’t want regulation can work, invest and trade in the Wild West. Let them fish on the high seas knowing the Coast Guard won’t risk the lives of its valiant sailors to save them from storms they chose to cruise into. Bankers who want to bank, to make a decent living and to foster the economic well being of the communities in which they work can play by the rules. If they have a bad patch, they can turn to the Treasury for help on the understanding they will repay the Treasury before they hand out bonuses to their managers.

Let investors and depositors decide whether to put their money in the Wild West or The Club. They can take the big gambles that can go belly up without any state deus ex machina to flip them back over. Or they can put their money in banks that are insured by the FDIC and other state institutions. I don’t mind which they choose. Anyone can do what he likes with his money—blow it on a hundred to one shot or leave it in an account at four per cent. If you win at a hundred to one, good for you. If you lose, I should not have to cover you. Let’s face it: the taxpayer makes good your bad bets, it’s not gambling. It’s stealing.

For too many years, the banks lent money to people who could not pay them back. Why did people who couldn’t pay borrow so much? Obvious. They were not earning enough to house, clothe and feed themselves and their families. Falling behind, they added the burden of exorbitant interest payments to the bankers. In the post-Thatcherite-Reagonomic universe of miraculous economic restructuring, real wages for most people fell steadily over the last thirty years while the take home pay of senior managers rose astronomically. It was not wealth creation so much as a Bolshevik-style redistribution of resources in the other direction. The only way for blue and white collar workers to stay afloat was to grab a life preserver, but high-interest life preservers were dead weight pushing them further into poverty. They couldn’t pay the banks back, so they lost their houses. The banks couldn’t pay their debts either, so the taxpayer paid for them.

Did gouging the poor stop when the system failed? Uh, no. I just received in the mail an unsolicited offer of a new credit card with no spending limit and an annual rate of interest of 49%. That used to be called usury. St. Thomas Aquinas wrote that any rate of interest above 4% violated the natural law, but for these people there is no law “€“ natural or unnatural. Mafia loan racketeers used to go to prison for charging poor Sicilian immigrants less than 49%. (It’s not surprising the Mafia lost Las Vegas to the real criminals of modern America, the corporations. Compared to Bear-Sterns, Enron and Goldman Sachs, the Italian honorable gentlemen were financial innocents.) In the future under my two-tier proposal, banks that offer financial temptations to the unsuspecting and are not repaid will go under. Well, let “€˜em. You and I cannot be expected to save them, when no one saves us. Our taxes, paid out of our diminishing incomes, should pay for defence, health, education, roads and the other services governments are elected to provide. They should not subsidise usury, price gouging, short selling and bad judgement.

Dr. Samuel Johnson said that although power was occasionally abused, a nation should submit to a supreme legislative authority for its own good. “And then, Sir, there is this consideration, if the abuse be enormous, Nature will rise up, and claiming her original rights, overturn a corrupt political system.” Well, the abuses have been so enormous that the U.S. Treasury is nearly broke, millions of people have lost their jobs and many who invested for their retirement are gong to have to survive on a social security system whose own future is doubtful. And nature is not rising up. Perhaps we should. If the interests demanding maintenance of the status quo are too strong to be overturned, let them keep their status quo. But let us institute an alternative. We can bank in The Club, they can do what they like in the Wild West without a sheriff. Free market heaven. Or hell.