Why is the “bust” part of the economic cycle something to be avoided at all costs? Isn’t this a natural part of the cycle, like smaller fires that clear out undergrowth in the forest? Isn’t it possible that preventing this by any and all means will lead to much worse outcomes in the long run?
Moral hazard as a concept (as something to be avoided) basically doesn’t exist anymore. Or rather, the whole market now embodies moral hazard. This seems bad.
Because a bunch of people become homeless, commit suicide, and otherwise suffer.
Feel free to run for office on a "periodic culling" platform, though
This is bad, but it seems better than a complete collapse of the economy, mass starvation, and a bloody revolution, which is what often happens when a declining status quo is maintained by force. Reality has a way of exerting itself, eventually.
i'd vote for a candidate that recognizes the existence of moral hazard, yes
Maybe just do something bloodthirsty and populist like bail out the company and execute the leadership.
Because if you let the market fail then people suffer. If people suffer they vote the incumbent out.
Could somewhat help break the cycle by having a safety net for people instead of for overleveraged companies and banks but the US is allergic to that concept.
From a purely explanatory perspective, this is correct. Nobody wants to be the one who didn’t kick the can.