2008 was a warm-up, now they’re full-scale bailers

They were afraid of a depression in 2008. They initiated unprecedented policies under the rubric of ‘ZIRP’ (Zero Interest Rate Policy) and ‘Quantitative Easing’ (what a euphemism for propping up bond prices!).

The ensuing recovery was tepid, but they did avoid a depression. They labeled it a success and now feel justified in going full-tilt. They’re bailing out everything in sight this time.

A supposed basis for capitalist productivity is ‘price discovery.’ Asset allocation decisions can be made efficiently guided by pricing signals. The bailouts fog up price discovery.

A supposed basis for capitalist efficiency is ‘moral hazard.’ Poor investment choices have consequences. They can result in capital losses. The bailouts vitiate moral hazard. The Fed guards against capital losses.

MMT provides the theoretical basis. Progressives have the naive idea that MMT will enable progressive policies. But the money tree will first and foremost augment corporate welfare.

https://www.thestreet.com/mishtalk/economics/ideas-of-the-day-no-company-is-too-small-to-fail