Where's the flaw in this logic? I have a magic wand and I've used it to compel the Fed to offer loans to LLC's owned by low net worth individuals (less than $500,000)

So your idea is for the fed to create $100,000 of credit for every joe blow that rolls through and says “I want to own a business”? Is there any discrimination on the part of the magically influenced Fed or can homeless people come in and get $100,000? Even though the mission of the fed is not to turn a profit, it can not print money(create credit) at zero cost. This policy would result in a substantial expansion of the money supply which devalues it as a whole. Risk is also very important and cannot just be ignored. The financial crisis of 2008 had many contributing factors, but one cause was that the risk and diversification of certain complex assets like MBSs was not properly understood. If the fed lent indiscriminately to everyone in the United States the consequences would probably be unspeakable.

/r/AskEconomics Thread