The economic experts are almost unanimous. We have to pump up bank balance sheets with bailout money to save the economy. The general public is nearly as unanimous in thinking the best way to help a badly ailing economy is boosting the spending power of businesses and consumers.
So who is right?
The general public, of course. Banks make loans (with interest) to businesses and consumers. That’s what they do. They are merely enablers. If needed money came in some form from the government, there would be less need for the enablers to enable. The economy would start to grow again. Borrowers would also become more credit worthy. The banks would then begin to loan naturally.
This is obvious to almost everyone—except an economist or a Washington policy-maker.