Are They Stupid?

When one tree branch falls, should we chop the whole tree down?

Logically, this makes no sense at all, but metaphorically, it’s happening right before our eyes. A few banks go under, so the government concludes that all the banks are going to collapse. So, it takes over the banking industry, effectively destroying its ability to compete and produce wealth.

But before the tree is chopped, a doctor is sent to try to save it. The doctor gives CPR and $20 to the fallen twig, but it is not revived and does not start growing again. The doctor tells the lumberjack that the tree is dead, and the living tree is chopped down.

This is a terrible way to heal the banking industry when we look at it this way, but for some reason, it is the very way that our government feels necessary in rescuing the economy.

The solution to a few failing companies is to let them fail. To prop up a failing company is a waste of money because no matter what you do to it, it will still just be a dead twig. Yes, temporarily a few jobs are lost, but in the long run,the productive banks have a larger market to expand.

Recession is a natural part of the economic roller coaster and government failure will only extend it.

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