it seems natural and appropriate to let poorly run businesses fail. unfortunately, our central bank doesn't prioritize based on inflation rates: http://www.hous

it seems natural and appropriate to let poorly run businesses fail. unfortunately, our central bank doesn't prioritize based on inflation rates: http://www.house.gov/jec/press/2005/10-18-05.pdf http://www.house.gov/jec/press/2005/10-18-05.pdf instead they do the following: instead of managing inflation, they generally do everything possible to prevent periods of deflation (which requires propping up the money supply) which is what happens when you let industry leaders fail. if we let all of the businesses fail instead of bailing them out the fallout would likely be unprecedented. see jason calcanis's explanation of the belt tightening effect and the resulting death spiral. imagine if every industry was experiencing this. http://calacanis.com/2008/11/06/the-future-of-startups/ http://calacanis.com/2008/11/06/the-future-of-startups/ people need to realize that this is not an adam smith capitalistic system, this is a system heavily influenced by the government. this leaves room for regulation loopholes and mistakes which create bubbles which ultimately pop. this bubble has been patched for years, its getting too big to pop. popping it would remove our status as world police and likely be a large security threat. george bush wanted to let these companies fail, but he was told, albeit mostly by market and industry leaders that letting them fail would create a chain reaction of failures and deflation. the answer is probably to let some companies fail so as to punish poor businesses, but we have to be wary of purging the entire system.