Monday, September 14, 2009

Quote of the Day: Friedman on bailouts

Kevin D. Williamson in the September 21 National Review ("Blame Milton Friedman"):
Those who endorsed National Review’s line on TARP may be pleased to know that I have been rethinking my position. There are those conservatives who ask themselves, “What would Jesus do?” There are those who ask, “What would Ronald Reagan do?” There are even a few who ask, “What would Russell Kirk do, other than pour himself a scotch and shake his head sadly before writing another 1,000 pages?” I ask myself, “What would Milton Friedman do?”

Milton Friedman would have supported a bank bailout.

Or it seems he would have, given that a bank bailout is more or less what he prescribed for the last great financial crisis, the one leading up to the Great Depression, which he dwells upon at some length in his Monetary History of the United States, 1867–1960.

I love reading Williamson in NR and on Bloomberg. This has been my positional all along, though I've been wavering lately having seen where it has led.

More on the Fed:
Along with the Federal Deposit Insurance Corp. and other institutions of that kidney, the Fed’s existence is an implicit judgment that bankruptcy law and normal market processes are insufficient in the case of banks. That may be a faulty judgment, but it is a very longstanding one, and it is owed some consideration.
Williamson isn't saying he loves TARP, just that it might have been the lesser evil.

Williamson concludes:
Likewise, those who supported the bailout must surely believe that we ought to live in a country in which the damage it is going to do will be minimized, in which it is temporary, and in which we will act with all deliberate speed to undo those federal incursions into the economy — a world in which the ratchet of statism turns both ways. Good luck with that.

Touché.

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