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The Down Jones Industrial Average, the most popular and famous benchmark to guage the strength of the American economy, plummeted down almost 700 points today.

The index, which is based on the scaled average of the stock prices on 30 of the largest and most widely held companies here in America, was celebrating the one-year anniversary of closing at it’s all-time record high of 14,164. Today it closed at 8,579.

Just last Friday, October 3rd, the U.S. House of Representatives passed a $700 billion bailout of Wall Street and the banking industry. US News & World Report stated “A failure to pass the bill would have been devastating for markets.”

But you can’t just pick on one publication, because there were many individuals and media outlets, and quite obviously the Congress and President Bush, who believed the same thing.

So despite calls from myself and many like me that they were bastardizing capitalism, they passed the bailout package and signed it into law to keep us from devastating losses and to save our economy.

Oops! Here we are a week later, and the Dow has been devastated by a stock market crash.

Today’s collapse marked the 11th-worst percentage loss in Dow history. The Dow has declined by more than 20% over the past week, something that has traditionally defined a ‘crash’ when it happens close together like this.

None of this is to say that the market would have been fine had Congress never passed the bailout bill. It clearly wouldn’t have been. But neither has the bill been the panacea that it’s proponents, including George Bush who signed it into law and both presidential candidates John McCain and Barack Obama who voted for it, sold us on it being.

What the bailout accomplished was to relieve financial pressures on fat cats at the taxpayers expense. When the government borrows $700 billion dollars, we all borrow that money, because the government is us. We have to pay that money back, with interest, using our tax dollars. That is not simplistic – it’s simply the truth.

So now we not only have our stock market crash, those ‘devastating losses’ that we supposedly needed the bailout to avoid, but we are $700 billion in debt on top of it. And perhaps most importantly, the line to get more bailouts is forming.

The hard lessons of capitalism, allowed to play out in their fullest, will always weed out the bad actors and those who take negligent risk over time. Again, if they are allowed to play out naturally. By bailing out many of these bad actors and fool-hardy risk takers, the government sends the horrible message to “go ahead, do whatever you want, and if you lose, we got your back.”

For U.S. taxpayers, this was not a bailout silver bullet, or even one necessary piece to a financial recovery puzzle. This bailout was just more bullets fired into a wounded economic carcass that each day gets worse in what we can now rightly call the ‘bailout bloodbath.’

God help us all if Obama wins the election and Democrats retain control of both houses of Congress. The tax increases and spending increases that they initiate over the next few years will deal a further blow to American capitalism and greatness. And that is no over-exaggeration.