CEO Michael Hyatt’s blog post about “the wealth Wall Street can’t touch” is a great reminder of what really matters.

His title, however, reminded me of an editorial I ran across today. I wonder if we could take it further. Maybe Wall Street simply does not have the earth-shattering impact it wants us to think it has. Casey B. Mulligan, a professor of economics at the University of Chicago, says exactly this: “The non-financial sectors of our economy will not suffer much from even a prolonged banking crisis, because the general economic importance of banks has been highly exaggerated.” This certainly jives with what we are all experiencing, doesn’t it? We’ve seen the economy slowing for months and maybe years but no one has seen a sudden cataclysm that matches the stock market nose dive. In fact, today I heard a radio commercial for cadillacs assuring listeners that they had plenty of cash to loan. (I’m not sure I think that is a great thing, but there you go.)

This claim also reminds me of the fact that the Great Depression did not begin immediately with the stock market crash of 1929, but occurred later (after the government took steps to fix the economy. And the 1987 crash, Mulligan writes, didn’t cause a Depression despite being of similar proportions.

(I just saw this post by Robert Higgs telling of receiving another offer of credit and also finding it hard to find evidence that “no one is loaning.”)

I’m no independent expert on these matters, but this scenario does work with the hypothesis that the government lies.  The first lie was that the economy is great when it was in fact in a recession with the financial sector especially ready to self-destruct.  Then the second lie was that unless $700 billion was put at Paulson’s disposal we would have martial law on Monday.

Still I wonder if Mulligan’s scenario is too rosy.  If America has been borrowing money to buy iPods, then that has to  cost something.

Whatever it would cost, we can be pretty sure that the government is going to try to make sure that those most responsible don’t pay it.  Better Main Street go to Hell rather than Wall Street lose its place in Mammon Heaven.