Productive Debt versus Unproductive Debt - Doug French - Mises Institute

Productive Debt versus Unproductive Debt - Doug French - Mises Institute: "banks have lent to consumers at the expense of businesses — and that it is only business loans that are 'self-liquidating.' Healthy businesses generate cash flow that can pay off debt, while consumer loans 'have no basis for repayment except the borrower's prospects for employment and, ultimately, collateral sales.'"

"the lending process for businesses 'adds value to the economy,' while consumer loans are counterproductive, adding costs but no value. The banking system, with its focus on consumer loans, has shifted capital from the productive part of the economy"

"Banks increasingly have the incentive to make long-term amortizing loans secured by long-term assets because the threat of bank runs has been taken away by increases in FDIC deposit insurance."

"the federal and state governments constantly enact legislation that makes the employment of workers more costly and in turn makes business expansion riskier. So wealth-producing businesses, like metal fabrication and the like, have every incentive not to borrow money from a bank to expand their operations and not to wander into a wider thicket of onerous employment rules by hiring more workers. Instead, the entrepreneur puts energy into obtaining a low-interest mortgage and buying a big house, or dabbling in real-estate development and speculation. Besides, up until this current meltdown the entrepreneur could obtain a real-estate loan much easier than a business loan."