Henry Hazlitt on the Bailout

If private capital wants to lend directly to the failing banks, it is already capable of doing so. The fact that such private capital is not lending to the banks is a clear indication that the government's current bailout is contrary to free-market principles.

The argument that the government is somehow pumping new capital into the market is absurd. Government is actually borrowing the money from the capital markets that it is in turn injecting into the capital markets. There is no additional source of funding; there is only a diversion of funds from more-productive outlets to less-productive outlets, with government acting as the middleman.

I recently pulled out my copy of Henry Hazlitt's "Economics in One Lesson" to read again and help purge my mind of the poppycock emanating from Washington. Refreshing indeed.