How Important Is Credit to the Economy?
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Submitted by Businomics Blog
Fears of the subprime mortgage crisis spreading into other credit markets prompt the question of whether our economy could operate without the volume of credit that we’re used to.
Our economy could be healthy with much less credit than is common now. Businesses could operate with greater equity and retain more earnings. Consumers could defer spending until they had saved enough money for their purchases. It could work. There would be a loss of efficiency, but not a total breakdown of the economy.
