Educate me ? why can't the Gov provide Credit on its own to any entity that needs it

[UndertheOcean]

without having private banks as intermediary. And to curb inflation stamp a reasonable interest rate on said credit.

I am not talking about running the printing presses amok , just lend money to people and businesses that actually benefit society without talking an arm and leg in return. And without for profit entities like private banks living like parasites within the system without actually producing anything .

It shows I have no understanding of economics .... but this solution makes sense to me.

[Hannah Bell]

1. It can - & has, historically.

[UndertheOcean]

2. So , was it a good thing when it was done ?

[scarletwoman]

3. Because the Owner Class doesn't swing that way.

What? You think the government is supposed to work for YOU?

Our government works for the Owners. The function of the State is to protect the Owner Class and prevent any challenges to their power from the herd animals below.

[endarkenment]

4. It could and that is what it should have done.

Instead of giving billionaires trillions in 'bailout loot' so they can maintain their death grip on our democracy.

[TheKentuckian]

5. It can and does when it chooses

but then the people would in effect control the economic system and there would be little to be profitted from on the margins.

edited for erased content and to make some sense.

[customerserviceguy]

6. It's done so through the tax code

The first time homebuyers credit that was in last fall's package did just that. The $7,500 credit was to be paid back at $500 a year for fifteen years, no interest.

It occurs to me that the same mechanism could be employed to stimulate automobile sales.

[Jim Lane]

7. Right now, the government isn't equipped to handle all the small-business lending

Suppose the new Federal Credit Agency gets in a bunch of applications from businesses. They all say, "I'll have to close my small business and fire my ten employees if I don't get a loan." Does the government make all the requested loans? Some will have no hope of being repaid. Therefore, each application would have to be reviewed.

The government doesn't currently have the staff to review all the applications that would come in. That work has been done by thousands (maybe scores of thousands) of loan officers at banks all across the country. Of course, the government could decide to take over that function, but there'd be a significant time lag before such a program could take effect.

We've generally done OK with the system in which private, for-profit enterprises get most of their credit from other private, for-profit enterprises. The federal Small Business Administration does do some lending but doesn't attempt to satisfy the entire need. The current crisis isn't because the system is conceptually flawed; it's because the private lenders were allowed to consolidate, to the point where problems affecting only a few would effectively shut down the system, and then those few were allowed to speculate without proper regulation.

By the way, if government officials are in charge of deciding who gets loans, expect to see the likes of Halliburton doing very well. That would NOT be an improvement.