Loans

Essentially, the lender can benefit only if the borrower benefits.

— Peter Schiff; How an Economy Grows and Why It Crashes

Whenever an outside force, such as government, encourages or demands that savers make loans for reasons that may have nothing to do with the actual likelihood of repayment, higher degrees of loss are almost inevitable. Such distortions waste society's savings.

In their zeal to do something good, governments like to influence the way savings are lent out. They pass laws that make some types of loans more appealing than others. But government has no savings; only individuals do! If, as a result of government incentives, the loans go to individuals or businesses that fail to pay off (as they often do), then the loss falls to those individuals who have sacrificially under consumed to create savings!

In fact, Able would be much less inclined to lend in the first place if he were forced to make loans that he felt were excessively risky, such as in the case of fish hypnosis. As a result, he may decide not to work as hard, or not to sacrifice as much to save!

— Peter Schiff; How an Economy Grows and Why It Crashes

In actuality, loans to consumers that do not fundamentally improve productive capacity are a burden to both the lenders and the borrowers.

— Peter Schiff; How an Economy Grows and Why It Crashes

Loans made to individuals or enterprises that do not succeed in creating a needed innovation or expanding productive capacity tend to weaken the overall economy by wasting the supply of savings.

— Peter Schiff; How an Economy Grows and Why It Crashes