you definitely could've chosen a better example, like investment or some stuff. loans are pretty often predatory, and universally (at least in the US) place a higher burden on people who already have money problems
You're right in the assertion that irresponsible lending can have incredibly vast ramifications on the economy (see: buying stocks on margin in the 1920s, banks irresponsibly giving mortgages to people that can't afford them in the 2000s, etc)
But the beauty of bank loans is that there is a surplus of accessible capital, which allows for wider market participation in terms of entrepreneurship, home ownership, etc from the average individual. Here's a (very simplified) example of what I mean:
- Person A goes to the bank and deposits $100. The bank has a 15% reserve requirement, leaving the bank free to lend $85 of the $100 it holds.
- Person B comes to the bank to borrow money to buy a fancy new Widget. They borrow the $85, which they use to pay the Widget salesman.
- The salesman deposits his $85 into the bank, meaning the bank has now stored $185 in deposits, with a 15% reserve requirement on the new deposit requiring $12.75 of that cash to be held in reserve.
- The bank can now lend that $72.25 of the new deposit which is not required to be held in reserve, and person B will repay their loan, giving the bank the $85 + interest (let's just assume 5%, so $89.25 is repaid)
To recap, the bank now holds $185 in deposits, will receive $89.25 from the balance owed to them, and is free to lend any other cash not required by regulation to be held in reserve, thus the bank has created wealth, although the bank is unable to literally print currency.
name one system where you, a healthy, fit-for-work human being, don't starve by not working
communism would label you a social parasite
capitalism wouldn't pay you
all forms of anarchy would just directly have you starve
A socialist welfare state would subsidize economic parasitism (until they run out of other people's money to spend due to incentives for workers to not work and for people with money to take it out of the economy and put it somewhere else)