In a free and Capatilistic world (full disclosure I’m a big fan of) you can’t have a private company with the ability to print money from nothing. It cheats and robs the people who are required by law to use that money. Applies to Gov’t as well but we currently have the Fed. According to the Fed if you had $1,000 in 1974 and saved it until today it will only buy you 25% of what it would then. I think they’re optomistic. Who needs a depression. Thats depressing enough.
In a controlled monetary world if private business creates too much credit and receives bad consequences then it will learn from it so it can profit better in the future. That is capitilism and why it works so well. The market is always the best arbiture of things.
Excess credit creation is the result of excess money creation. It’s looking for someplace to go to work. I saw it happen in my industry in the 90’s. In 10 years the capacity was quadrupled and within 6 months the lending dried up (when the realization hit the loans weren’t going to perform). Within following two years capacity was cut down two thirds. You will witness this in housing I assure you.
