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"Issuing a loan" and "buying debt" are the same thing in different words. Issuing a loan is still, in effect, buying an asset.
by klipt 4y ago
"Issuing a loan" and "buying debt" are the same thing in different words. Issuing a loan is still, in effect, buying an asset.
- scotty79 4y agoThe difference is, who created the risk. When you buy asset from someone else you are buying the risk someone else has created. So you have more risk. Banks are very unique institutions that are allowed to do things no other business is allowed to do. They also should be equally severely restricted so they can't acquire any additional risk they themselves didn't create. Banks are risk sources in the economy, the risk of "what if borrower doesn't pay in full or at all", the law should do everything to prevent banks from being risk sinks in the economy. Because in current setup banks just buy more an more risk and they eventually collapse one way or the other when risk is en masse converted to cost to the people and the economy.