When Americans believed in Truth, they used to say that the road to hell is paved with good intentions. That is to say, just because a plan of action has a noble purpose doesn’t necessarily guarantee a noble outcome, kinda like the plan to save homeowners from the horrors of foreclosure. While appearing as a noble goal upon first glance, after a deeper look at the policy is taken, whether due to miscalculation or corruption we find that the only people truly benefiting from his attempts are powerful bankers.
To clarify before making my point, having a banking system is healthy, but investment lending and consumptive lending are two completely different things. While investment lending lends money for the purpose of potentially increasing the income of the borrower either through business or education, consumptive lending does not potentially increase the wealth of the borrower. Borrowing money to go to school should result in a higher income for the borrower, after which he or she should be more financially secure than before. On the other hand, consumptive lending for televisions has no effect upon the borrower’s income, while allowing him to buy something he couldn’t otherwise afford. (more…)