[AnthonyMouse]

> You can’t make people richer by printing money and just handing it out, tho’ that doesn’t stop governments trying it (quantitative easing being the latest example).

That actually does work pretty well, because it causes people to spend money. If you had none before and the government prints some and gives it to you, now you have some and can spend it. If you had some before and you know the government is going to be printing more, you want to spend it before the inflation reduces its value.

As long as the things people are stimulated to buy are economically productive, it increases real wealth.

The thing you have to be careful with is combining it with policies that cause people to spend the money on unproductive things. See housing bubble.

[UncleEntity]

I used that argument during my counterfeiting trial, didn't go over too well until I started talking about broken windows...

[thaumasiotes]

Counterfeiting is one way of creating money and is generally unpopular.

But making loans is a more mainstream way of accomplishing the same thing, and is in fact often considered to promote growth.

[skookumchuck]

Loans don't make people wealthier. The loans are backed by collateral, and have to be paid back. It is not at all the same thing as counterfeiting.

[opwieurposiu]

We use a fractional reserve banking system. Currently the reserve ratio is 10% for large banks. Therefore when you get a loan, 90% of the money you get from the bank the bank conjured from thin air. Loans are backed by 90% nothing.

[skookumchuck]

Loans are not made to people who do not have collateral. That's what backs them.

[cinquemb]

When I remember applying for student loans from the government, nothing that would be considered collateral by a bank was asked for from the government. Not surprisingly, we see ever increasing NPL rates and larger nominal balances…

Though there was some stuff about having to agree to be enlisted when the draft is made, but you know… metadata drone strikes these days may not always hit the desired target… ;)

With regards to having to pay back a loan, there is always that saying about trying to extract blood from stone…

[thaumasiotes]

Do you by any chance have a credit card?

Furthermore, while there are economic models in which loans are collateralized by goods of value exceeding the amount of the loan, modern American loans are generally not that way.

[thaumasiotes]

Sure, making loans is not the same thing as counterfeiting.

However, viewed in terms of effect on the money supply, it is the same thing as counterfeiting. They both increase the money supply.

[notfromhere]

Loads generate lots of wealth if they're used effectively, and great at creating problems if used irresponsibly.