It’s a terrible idea. It’s undemocratic. It’s bad economic policy, and it’s bad social policy. And it has a very little chance of solving the problem in a meaningful way.
I’ve listened to governments tell me for 40 years that there was a crisis and the world was going to fall apart if we didn’t do this or that. But there have been a few cases where they weren’t able to do that…
Well, that’s what I think we need to do. We need to get the government’s hand out of this, and let’s see whether we can’t get a market solution.
Let the ‘Free Market’ correct itself? What a revolutionary idea!
And if they’re going to do something, then what they ought to do is make loans, which the financial institutions have to repay with interest. And if you think — that’s an idea which the Chileans have used in a bigger crisis than this for them in 1982, and it worked for them.
People paid back the loans. They weren’t allowed to pay dividends until they repaid the loans. They weren’t allowed to take bonuses until they repaid the loans. I think that’s the way — if we’re going to do this, then that’s the way we should do it.
-economist Alan Meltzer, PBS Newshour 9/23/2008
I’m a little disappointed he didn’t mention beheadings, but I think he’s on the right track.