Thursday, July 08, 2010

The Destruction of Government Credit

“The schemes by which people get economic benefit at the expense of others are almost endless in variety. There are many kinds of credit assistance, for example, and it is widely considered that they are conferred at no cost. But that is not true. Credit is a valuable and scarce commodity, and when it is subsidized by loan guarantees, such as those given to veterans to help them purchase houses, or to Lockheed to bail it out of the consequences of gross mismanagement, that credit is taken away from individuals and companies who are better risks and would receive preference from lenders. Further, it stimulates demands from those deprived sectors for similar subsidies.” (Herbert Schlossberg, Idols for Destruction, p. 110.)

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