Too Big Too Fail: Too Foolish to Fall For

The economic doctrine Too Big Too Fail has justified increasing overlays into the private sector from the public coffers.

In theory, by infusing liquidity in banks and other financial institutions struggling with toxic debt, they can bolster these institutions, preventing them from failing, which would drag down with them the responsible deposits of unwitting clients.

In reality, economists and investors are listening to fearful abstractions. Nations that default, or that cannot pay their bills on time, must do without credit. Nations brimming with natural resources must make do with letting the land lie fallow, and with suffering a do-nothing government, while local stakeholders make every effort to get by on free markets, some free of official currency.

The fallout of corporate failure is looming, yet the ongoing attempts to prop up failed institutions over and over throws good money after bad until there is no money left to throw, and no resources left to print money ad infinitum.

There is no such things as "Too Big Too Fail", and that includes the federal government. If an entity cannot pay its bills, that is should no longer be able to open house and carry on business.

Let us return to the simple adage of President Calvin Coolidge, "The business of the American People is business." Let the business fail if it cannot keep up, but let us cease deluding ourselves with the extended notion that propping up bad businesses and bad debt will assist this country and the world for the long term.