The Topsy-Truvy Bailout.

9 minutes

Bailouts really began in this country back in 1970, when the nearly bankrupt Penn Central Rail Road appealed to the government for financial assistance.

The Rail Road argued that they provided an essential service (to use today's term), and employed a substantial number of workers. So it was in the governments interest to keep Penn Central operational.

The Federal Government, under then President Richard Nixon, bought that argument, and supplied the funds needed to keep the Penn Central running.

And over the last half century, that rationale, has been used over and over again. Often, when a major economic entity has gotten into financial trouble, and loosing that entity would cause some perceived harm to the country, the Federal Government has not been reluctant to step in and provide aid.

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