The business model that relies on governmental largesse functions only as long as the profligacy remains concealed, but now that the charade has been exposed, will this force banks to refine their definition of “creditworthiness”? Yes, the waste and fraud uncovered by the Department of Government Efficiency (DOGE) have been breathtaking, but what now? Federal employees will be fired and entire agencies deleted, but what will happen to banks’ loan portfolios that not only include governments as borrowers but nonprofits as well? As stated roughly a year ago:
Governments produce nothing. The money they have is either lent to them and/or taken from the people they allegedly serve. This is why there’s no such thing as a gift from a government; there are only transfers. Because governments generate no revenue, it’s not the government that repays the loan. Again, with governments, there are only transfers, so yes, a government, on paper, is the primary borrower, but the guarantor is the people. Talk about a perverse incentive, as some of those very same people are also the bank’s clients.
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