Last week, our politicians and bureaucrats banned short selling, bailed out an insurance company, allowed two securities firms to magically transform into banks, and announced plans to buy unlimited troubled assets from still solvent financial firms.

By letting loads of bad assets be dumped or written off, the government argues, our financial system might collapse! The safety and security of our entire monetary system will fail!

What's the last bank or corporation that failed—small or large, financial or manufacturing, or any other type—and then actually caused the entire free market to shut down?

If this plan is in our best interests, why not give us a choice? Why don't the feds start a new, large, private fund that would serve the same purpose as this bail-out package? Market it. Raise the capital. Let people invest. They can even collect a management fee and an incentive fee.

Ah, but that won't fly. People are too "jittery." Investors are "irrational." Thank God for government, that beacon of calm rationality.

The free market cannot fail; it is a collection of voluntary exchanges, and each one makes each participant better off. But government intervention cannot succeed; it is a collection of forced transfers to take from the many and give to the few, and just about everybody becomes worse off.

Speculators are a sturdy lot. They can withstand immense government regulation. Markets succeed even in places like Russia and China not because of government, but despite it.

Markets are a lot like passenger pigeons. Now extinct, passenger pigeons were so numerous back when we adopted the Constitution 221 years ago this week, that when they flew, the sky would be black for hours.

By 1900, all the wild ones were dead. They died the same way our government is killing off our free market: by offering seemingly free food with just one small string attached.

Hunters would capture a wild pigeon, sew its eyelids shut, tether it to the ground with a three yard rope, and sprinkle alcohol-laced grain and corn around it. The poor blinded bird could fly up a little when it heard others pass by, just enough to get their attention and leading the other birds into the trap. The hunters would cast wide nets over the whole flock, with only their little pigeon heads sticking out, which the hunters would then pinch or bite to death. The carcasses were sold as meat for servants and slaves at a penny a bird.

Regulations tether otherwise independent companies to the government till. The Securities and Exchange Commission and Federal Reserve sprinkle intoxicating cheap funding at their feet. In 2004, the SEC allowed Lehman, Bear Stearns, Goldman Sachs, Merrill Lynch, and Morgan Stanley (five securities firms that blew up, were bought out, or were redefined by the SEC as "banks" last week) to jack up their debt-to-net-capital ratios. And the poor birds struggled mightily to share with their friends, blind to the fact that they were bringing about their deaths.

The last passenger pigeon bred in captivity was named Martha, after George Washington's wife. In 1913, the Federal Reserve was created. Within a year, Martha was dead.

This market crisis was a result of too much government and too much regulation. Our financial "system" of over-regulation collapsed. And what will rise from its ashes? Less of the failed pre-emptive regulation, replaced instead by a fairer system of ex post justice to punish those who defraud and remunerate those who suffer?

Nah, let's just throw a bunch more regulations their way, bail out the rich, soak the poor, and call it a day.

The government claims their intervention will stabilize the financial markets. I predict it will backfire. Specifically, we should expect more collapses, not just in financial firms, but in automobiles or manufacturing or even global technology conglomerates headquartered in our county.

I also predict this: They'll just print more money, tax more citizens, and claim they are saving us from ourselves. Again.