Also, who are we taking a loan from? China already owns most of America; now the Federal Reserve is just printing more money to make it look like the government can spend the money - but the reality is, it is just a redistribution of wealth from those who hold cash (middle class, and rich people can invest in other assets) to whoever the government mandates "needs" it. (The way they define needs, is if you are so bad at running your business it is on the verge of bankruptcy, so you need a ton of cash to go have a relaxing vacation costing millions.)
Linking to a Wikipedia article does not in any way answer my question.
You've presented a possible reason why borrowing money to bail out corporations could be harmful, but you haven't demonstrated that it's worse than the alternative. Sure, bailouts are bad. So are depressions.
Quote: Government debt is typically paid back at some point. What makes you think it won't be this time?
Answer: As of November 19, 2008, the total U.S. federal debt was $10.6 trillion.[2], with about $37,316 per capita (that is, per U.S. resident). The October 3rd, 2008 bailout bill (H.R.1424), section 122, raised the U.S. debt ceiling from $10 trillion to $11.3 trillion. Of this amount, debt held by the public was roughly $6.3 trillion.[3] In 2007, the public debt was 36.8 percent of GDP [4], with a total debt of 65.5 percent of GDP.[5] The CIA ranked the total percentage as 27th in the world.[6]
36.8% of our GDP. Okay. How are we paying that off if every year the deficit only grows?
In addition, you said depressions are bad but they happen. And yes they're market failures and natural periods of economic purge.
But bailouts are different - they basically stop that market failure that should have happened to happen. A bailout is a subsidy. Then companies that shouldn't be able to compete continue to do so, and that leaves room for more problems in the future.
How are we paying that off if every year the deficit only grows? You can effectively pay back the loans even with a deficit.
36.8% of GDP payed back at 1% per year would be (Interest - inflation - 1%) = ~.03 * 36.8 = 1.14% of GDP. Which is bad but below the average annual increase in GDP over the last 30 years. The deficit would increase every year, the debt would increase every year, but debut as a percentage of GDP would decrease.
One of the failings of democracy's is it's so easy for people in office to pay for current spending by increasing debt and then pass the buck to the next administration. The real story about the deficit is graphing as a percentage of GDP over time, doing so tells a different story than you might expect. http://zfacts.com/p/318.html
Also, who are we taking a loan from? China already owns most of America; now the Federal Reserve is just printing more money to make it look like the government can spend the money - but the reality is, it is just a redistribution of wealth from those who hold cash (middle class, and rich people can invest in other assets) to whoever the government mandates "needs" it. (The way they define needs, is if you are so bad at running your business it is on the verge of bankruptcy, so you need a ton of cash to go have a relaxing vacation costing millions.)