zorkfin

'Bailouts' Are Misunderstood

The role of a free market is to alocate a scarce resource, money, to the places where it is most needed and where it is best spent. All government interventions, like bailouts distorts this mechanism and ends up in malinvestments and bubbles, Money which should not be available ends up in investments which should not be funded. That's why you had the internet bubble, the housing bubble, the commodities bubble and the massive interventions now will create the next bubble. Speaking of interventions also the state gets to decide that AIG leaves while Lehman dissapears which should not be their decision. The state can decide to print money but it has no control where the money ends. This is why eventually we will have other bubbles, hyperinflation and a debased currency, even if this does not start tomorrow,