Trying to solve our economic problems with more stimulus is like the captain of the Titanic trying to solve his iceberg problems with more acceleration.

I can hear it now: “but QE2 is not stimulus! It’s different!” Okay, then: how different is QE2 from QE1, which also didn’t work? One thing we know for sure: all of this pump-priming and stimulus and bailing out of bad companies is far, far different than capitalism.

Some say “American-style capitalism” was to blame for the Global Financial Crisis. That narrative has proven to be such a populist winner that an April 2009 Rasmussen poll found “only 53% of American adults believe capitalism is better than socialism.” A BBC poll found “only 11% of those questioned across 27 countries said that it [capitalism] was working well,” and the U.S. Chamber of Commerce was forced to take the unusual step of buying television ads “to defend America’s free enterprise values” in a country that was built on free enterprise.

The problem with this “blame capitalism” narrative is that it bears little relation to reality.

Here is what the complete arc of the Global Financial Crisis would have looked like if free market capitalism was in effect, in a parable I like to call “Why Johnny Can’t Borrow.”

One day, Johnny woke up and decided to buy a house. But Johnny did not have enough money to buy a house. So he went to someone who did have enough money: Mr. Capitalist.

“Mr. Capitalist,” asked Johnny, “could you please loan me the money to buy a house?”

“Do you have good credit, a down payment, or proof of income?” asked Mr. Capitalist.

“No,” replied Johnny.

The End

If free market capitalism had been in effect, lenders would not have lent money to people who could not pay it back. End of story. And end of the Global Financial Crisis.

But free market capitalism was not in effect. At the heart of capitalism is risk. Risk of failure is what spurs capitalists to make better products, to streamline operations, to work harder, to do well, to satisfy their customers — and to not make stupid loans. Without risk of failure, there is no motive to do well because, without risk of failure, there are no consequences for bad behavior.

As CNBC host Larry Kudlow said in his interview for my book Underdogma: “If you knew you could fail and go out of business, I think you have a much better discipline. When you take the failure out, what you’re left with is private profit and taxpayer risk. That is the essence of what is not free market capitalism.”

When “champion-of-the-underdog” legislators mandated that banks make risky loans to “little guy” borrowers, and when they artificially removed the consequences of bad behavior by backstopping these loans on behalf of little guy borrowers, people behaved badly: borrowers, lenders, investors — all of them. When the “checks and balances” of risk and consequences were removed from the system, the system stopped being free market capitalism and became a playground for those who were experts at gaming the government-run, government-regulated, non-capitalist system.

As John Tamny said on The John Batchelor Show, “this crisis was caused by a lack of capitalism, and the government just piled on by bailing out banks that should have been allowed to die.” These problems “came not from a lack of government regulation and oversight,” wrote Thomas Sowell, “but precisely as a result of government regulation and oversight, directed toward the politically popular goal of more ‘home ownership’ through ‘affordable housing,’ especially for low-income home buyers. These lax lending standards were the foundation for a house of cards that was ready to collapse with a relatively small nudge.”

As psychologist Abraham Maslow observed, “it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” Rather than learn the lessons of QE1 and all the other stimuli that didn’t work, the very same government regulators who triggered this crisis are now using their hammers to build yet another doomed ship called QE2. That iceberg up ahead? It’s called reality.

Michael Prell is a strategist for Tea Party Patriots and author of the forthcoming book, Underdogma: How America’s Enemies Use Our Love for the Underdog to Trash American Power (January 2011).