I'd just note the money effect doesn't have to be fraudulent (though I'm sure it helps).
Just the simple effect of banks being able to loan the funds under their care creates an effect where people have access to more money, even if it isn't there and they act accordingly (and certainly adds to the pure embezzlement as well).
Also, this highlights to me the contrast between '29 and 2008. In 2008, the problems up past a certain were covered up, effectively insolvent banks were supported and whole industries were bailed out. So one presumes the position of the embezzlers has been different, though some certainly were caught. Indeed, I would imagine that today's embezzler is trying to steal as much as possible as quickly as possible so as to get into and remain in the too-big-to-fail mafia.
I'd just note the money effect doesn't have to be fraudulent
You're pretty much precisely inverting Galbraith's insight.
First: the whole point of the bezzle is that it is fraudulent. It's that during the period before you realize this, everything looks hunky-dory. It's Wile E. Coyote running off the edge of the cliff, before looking down and realizing he's suspended in the air.
The other is that an expansion in the money supply, in the short run, leads to consequences generally seen as favorable: those whose apparent financial wealth is increased suddenly have the ability to make claims on (purchase) resources they wouldn't have been able to previously. There's a model of money as exchange particles, and the concept of virtual particles which can be created under certain circumstances, which I'm finding increasingly compelling. The problem is when the wavefront collapses -- that's when misery sets in.
As for '29 and '07: yes, individual institutions were allowed to fail (mostly) during the Great Crash. Again, Galbraith goes into detail on this, I recommend his book. Where addressing the situation failed was in not creating liquidity elsewhere in the system to make up for this resulting in tremendous deadweight losses as the economy simply tanked.
In 2007, an institution was allowed to fail (Lehmann Brothers), but the consequences were so severe that politicians stepped in to staunch the collapse. The manner in which they did this was both useful (the liquidity was absolutely needed) and utterly flawed (the very individuals and institutions which had, in large part, assisted in creating the problem were greatly enriched by the intervention). And yes, getting into a business in which profits are privatized and losses socialized is very much the modern mantra.
I'd just note the money effect doesn't have to be fraudulent (though I'm sure it helps).
Just the simple effect of banks being able to loan the funds under their care creates an effect where people have access to more money, even if it isn't there and they act accordingly (and certainly adds to the pure embezzlement as well).
Also, this highlights to me the contrast between '29 and 2008. In 2008, the problems up past a certain were covered up, effectively insolvent banks were supported and whole industries were bailed out. So one presumes the position of the embezzlers has been different, though some certainly were caught. Indeed, I would imagine that today's embezzler is trying to steal as much as possible as quickly as possible so as to get into and remain in the too-big-to-fail mafia.