Understanding banking system (and by extension the overall finance system) requires some study to say the least. You might start with http://en.wikipedia.org/wiki/Money_creation.

But considering we live in a complex, interdependent society, I'm skeptical that risk is going to be decoupled any time soon. I actually think regulating the most risky behavior is more practical than arranging for each person's risky behavior to only affects them.

Maybe its more practical in the next five minutes but I think less practical in the long run. Every time someone fails and the government assumes all the consequences, more people find it profitable to engage in the stupidity. And those who are prudent get taxed more to pay for it.

Long term its a game we can't win and it will collapse. And that collapse may ruin the US's ability to compete in the world, letting others win the next technology battle and leave us subject to their whims.

The whole mess can keep going, but ultimately it must compete with less stupid societies.