Credit ban

The demand that institutions should limit themselves to the management and control of money and assets, but should not be allowed to grant loans. – Such a demand, put forward by anyone – and especially in Internet forums – fails to take into account essential economic relationships. Thus by the credit above all it is caused that – money comes from the hand of the saver to the order of the entrepreneur, and thereby – by the expert knowledge of a bank in principle the most capable entrepreneur, the best landlord is selected, i.e. that, who achieves the highest return with the loan (unpleasantly called “optimal allocation of resources”), while – the saver is encouraged to forego consumption because he finds the possibility of earning interest without doing his own work, and also – the state, with the loan taken out, provides services for the overall increase in prosperity (e.g. the promotion of knowledge and skills in gainful employment): promotion of knowledge and skills in the working population, construction of transport routes and communication channels). – Whether the above-mentioned and other effects of credit could be achieved at all – and even better – by a committee of whatever composition seems highly questionable. The experience with central credit allocation in the socialist countries shows without doubt that the limited resources did not end up with the most successful enterpriser. On the contrary, the squandering of resources reached a historical maximum in the socialist countries in all fields. – See crowding out, maturity transformation, intermediation, core mission, banking, liquidity management, securitization.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/