1/. Groupthink
2/. Believing their own BS.
They have hardly distinguished themselves in the last few years as 'smart', cunning maybe but not very smart. 105% loans, Liar loans, CDOs, CDSs as an example.
Remaining solvent remains to be seen.
Fiat currency is debased every time the Govt prints another $ with nothing but sentiment to back it up. Every time a bank extends credit that is money created from nothing - mostly out of thin air - they leverage up deposits and lend many times more than they hold on deposit. Every $ created means every $ already created is worth a little less. All the major currencies now have < 5% of the original buying power.
An ounce of gold is currently 'worth' nearly $1000 when it was worth <$20 in the early 70s but buys now pretty much what it did then.
The above CPI list doesn't sum up to 20% inflation. For starters only 45% of residential property are mortgaged. But there is NO WAY KNOWN it adds up to 1.4% either.