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>more questionable ventures being funded as savers chase ever more questionable ventures for yields The difference is that for private investment there's a pro
by logicchains 3y ago
>more questionable ventures being funded as savers chase ever more questionable ventures for yields
The difference is that for private investment there's a process of natural selection: bad investors lose money to good investors, and over time the people with a record of better investment end up with more money, and overall better investments are made. Whereas the US government can keep spending money on economically unproductive things like the war in Afghanistan indefinitely without any feedback loop to stop it.
- gruez 3y agoI agree that if government was somehow involved in the lending (ie. choosing which companies to bail out), there would be a risk of picking winners/losers and creating zombie firms, but it's unclear how it's an issue exclusive to fiat currency. After all, governments can still take on debt even while on the gold standard, and can still engage in bailouts.
- logicchains 3y agoYes, the lending during bailouts could still pick winners/losers, but overall during normal times the government would be spending relatively less compared to the private market (as it'd be constrained to what level of taxation voters were willing to tolerate), and there'd also be potentially more oversight over its spending (as it'd have to justify spending increases in order to receive public support for increasing taxes to pay for it).