Posted by
Andrews on Tuesday, November 18, 2008 4:47:29 PM
Both parties seem to be rather blithely agreeing that we "must" bail out he financial institutions, arguing only over how many more industries we "must" bail out again.
Which requires me to ask yet again, don't they realize that any bailout, since it won't be financed by increased taxes or decreased spending, will be nothing but
more of the same inflation which helped cause this problem in the first place? By inflating the money supply, they will once again depress interest rates, inflate housing prices, encourage reckless lending, and generally make even worse the current crisis. Rather than allowing the bad debt to be purged form the economy, they are just setting the stage for still more inflation and the addition of yet more bad debt.
Facing the music would be difficult, it would hurt the economy, but in the long run, it would hurt a lot less than it will should we bail out these financial institutions by adding yet more inflation. And for those who argue it would create a new Great Depression, the only reason the Great Depression was as bad as it was was because the government tried to interfere to "fix" things. In nations where the government meddled less, the depression was much more mild and ended sooner.
Why have we failed to learn the lesson even after seventy five year?