A lot of people are invoking the Great Depression these days but few make clear links between what is happening now in the U.S. financial markets and the dismantlement of the regulatory safeguard enacted after the Great Depression. Leave it to some Fools do outline the connections. Taking a historical walk-through, they outline how the Glass-Steagall Act of 1933 was step by step dismantled to create a similar financial environment as before the Great Depression.

Fools know precisely how this brief experiment with a deregulated financial sector has turned out. Staring into the face of financial ruin, the Federal Reserve and the Treasury have responded with all manner of liquidity injections, loans, bailouts, and rule changes. For the second time in history, the brokerage industry has proved a potentially destabilizing speculative force in the financial sector.

With this week’s move to treat Goldman Sachs and Morgan Stanley as banks, it seems we’re headed back toward the troubles that brought us here in the first place. Perhaps the wiser move would be to reinstall some boundaries between lending institutions and underwriting businesses, and maybe even bring back that discarded post-Depression relic called Glass-Steagall. Perhaps then we’d have fewer companies that are “too big to fail.”

Here’s the recipe for disaster: First, allow companies to buy up anybody and everything they want to form super-conglomerates. Second, do business to maximize short-term return without worrying about the long-term health of your company. Third, when you’re in trouble, convince politicians that you’re simply to big to fail.

In addition to reinstating the post-Depression regulations, Congress should also hold people accountable, which they are apparently not planning on doing. There are better options but they wouldn’t allow people to get away with ruining the economy.

Addition on Monday: Here’s another perspective on the “Great Depression” analogy…

There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.