Ilya Somin at the Volokh Conspiracy has posted what equates to my simplistic gut reaction to the $700 billion bailout plan.
Obviously this is more significant than a restaurant failure, i.e. it's our entire financial system, but I certainly look forward to seeing some thoughtful responses to his argument.
Tuesday, September 23, 2008
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"Well, let's think about that. Banks don't lend their own money; they lend other people's (their depositors' and their stockholders'). Just because the banks disappear doesn't mean the lenders will."
BUT, if the banks disappear so could some of the money, regardless of what the FDIC guarantees. and more than money, what about confidence?
studying economics you learn (despite the current dollar beatdown) that the only thing that upholds a currency (without a gold standard) is confidence.
shock that and you shock everything, regardless of pairing lenders with borrowers.
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