system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: During the 07/08 financial crisis, what would have happened if the US government had not committed to the bailout to save private financial institutions? Doesn't saving inefficient companies have a negative impact on the economy in the long run?

I've been reading up on the financial crisis and the government's decision doesn't seem to line up with the conventional economic logic that in a free market, inefficient companies will dissolve and efficient ones will remain (or new ones will emerge) creating a market equilibrium. So why not let these big private organizations fail when they were clearly no longer able to make profitable decisions on their own? Why feed them tax payer dollars to remain in operation?
gpt
The difference is that other companies rely on large financial institutions for their investments and finances. There is also the issue of investor confidence - you aren't going to invest money or take out a loan if the money starts evaporating. So if a big bank goes down, it takes out lots more with it.

Back in 1929 when Wall Street crashed, the government followed the free market rules and liquidized the failing companies. It resulted in a knock-on effect and more and more companies collapsed. Welcome to the Great Depression.