Sunday, March 27, 2016

How Much Credit is Right?

Pynchon said something about "get them to ask the wrong question and it does not matter what the answer is."

Mish has an article on credit problems in Spain.  We have the terms hydrous and anhydrous, why not have terms like malcredit and benecredit, or more simply credit is beneficial unless it is state credit, then it is termed malcredit.

In any event, in a free market, in which the hegemon has no opinion or power over who extends credit to whom under what circumstances, and certainly does nothing to enforce contracts, then the amount of credit is always perfect.  Two actors will decide if credit is a good idea in their immediate circumstances, and extinguish the credit as rational.

In terms of number of credit extensions, we have this already.  In terms of damage done by state issuance of malcredit, benecredit is dwarfed.  We have what is good, it is just that EZ Hegemon credit overwhelms those who do not know any difference.

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