The world of economics is every moving, ever changing. What was true 65 years ago, or even 38 years ago, is no longer true today. The world has moved on.

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century.
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.

The Bretton Woods system was created during the final days of WWII and we still live with its legacy today. However, it has morphed into something very different since then.

Now that the largest Ponzi Scheme in history has blown up, and the victims are tallied, questions are finally being asked about Bernard Madoff that should have been asked a long time ago. Like "who was minding the store?"

The answers aren't pretty.

For instance, yesterday it was revealed that Madoff's daughter was married to the SEC compliance examiner, Eric Swanson.

Swanson was at the commission in 2003 when the agency was examining the madoff firm. More importantly, he was also part of the SEC team that was conducting the actual inquiry into the firm.

Even worse, the SEC was warned repeatedly as far back as 1999, that Madoff was running a Ponzi scheme.

The financial markets have collapsed. The real estate market has collapsed. The auto industry is collapsing. We are already in the longest and deepest recession in nearly 30 years, and there is no end in sight. The entire world is suffering financial turmoil at least as bad as America, if not worse.

Something this big didn't fall from the sky unexpectedly. There were plenty of people who predicted it.
Hell, even I predicted it three years ago and I have little formal training in economics.

There is plenty of evidence to suggest that the political and financial leaders knew that something like this was coming, and yet no one did anything to prevent it. It's concrete proof of a complete failure of leadership across the globe, but especially in America.
It's also evidence of a more systemic problem in our society.

Every once in a while in the world of economics an economic indicator will suddenly go crazy. One day the charts all look normal and easy to understand. The next day it suddenly launches into an entirely different world.

What a massive swing in the index means is always open to interpretation (a whole industry exists to analyze these movements), and no one is certain if they are correct until years afterward. Sometimes what it means is more obvious than the why, but the 'why' is ultimately more important.

Remember just 17 months ago when Fed Chief Ben Bernanke told us not to worry about housing?

The subprime mess is grave but largely contained, said Federal Reserve Chairman Ben Bernanke Thursday

Just one month before that Treasury Secretary Paulson said:
"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained. All the signs I look at" show "the housing market is at or near the bottom."

The biggest laugher of all, was Bernanke's prediction two months later, when he said:
"Some estimates are in the order of between $50 billion and $100 billion of losses associated with subprime credit problems."

Those guys are such kidders.