The problem here is why the expected value of the loan is only 99 cents, if $2.00 of economic activity is being created? And the simple reason is because marke

The problem here is why the expected value of the loan is only 99 cents, if $2.00 of economic activity is being created? And the simple reason is because markets are imperfect, and the downstream positive (or negative) effects of actions do not always flow upstream to the private decision-maker. This is why governments exist in the first place, to coordinate the actions of large groups of individuals for mutual benefit when smaller entities (like corporations) would not be able to do achieve that same coordination. We would never have gone to the moon if the government never got involved. Wisely, the government farmed out much of that work to private contractors, but government still had to be there to set a direction and get the ball rolling.