The bailout bill aims "to restore liquidity and stability to the financial system of the United States..." It thus establishes an Office of Financial Stability.

The problems presented in these vague goals are an order of magnitude worse than the socialist calculation problem that von Mises brought to our attention. At least the socialists could observe prices in other countries.

In this case, even if Congress knew what liquidity and financial stability actually meant, and the Act provides no definition of them because they do not know, it still would not know how to control them. Even if the Congress knew what these terms meant, it still would not know what the optimum amounts of liquidity and stability are. No one does. Even if Congress knew what these terms meant, which it does not, it still does not know how to connect these items to the General Welfare.But matters are even worse than that. Congress does not know what liquidity means and it does not know what financial stability mean. They or their deputies (the bureaucrats and technicians hired by Treasury) will devise something or other, but to no good end because these concepts are actually both vague and poorly understood.

If, for example, news arrives that should make prices jump or decline, then at that point financial stability in the sense of price volatility is a bad thing. If asset prices are fixed somehow by bureaucrats and look stable, that is bound to be a bad thing. They don't know at what levels to fix them, even if they could fix them. If stability means that institutions shall not be allowed to fail, that too is a bad thing. By what criteria do the bureaucrats know which ones to save and which ones to let go down? What does financial stability actually mean, anyway? Why is it supposed to be a good thing?

The instability they are worried about is probably defined as the failure of financial companies, mainly banks. They don't want them to fail. This is a rescue effort. The sinking boat needs to be bailed out to prevent it from disappearing under the waves. Why? What makes the big banks so special? Why are they more important than the thousands of small businesses that fail every year? Why must tax payers pay for saving them?

If $700 billion can be forced out of tax payers, can't the banks raise $700 billion from investors in the capital market? GE just raised $12 billion from Buffett. If the capital is there, it's only a matter of offering investors attractive terms. And if the bank cannot do that, why should it remain in business?

This bill, if passed, creates a long list of uncertainties.