By Sardar Khan Niazi

In the world of economics, private sector credit is often hailed as the lifeblood of growth. This fuel drives innovation, entrepreneurship, and the expansion of businesses. However, the relationship between private sector credit and economic prosperity is far from straightforward. When done right, it can propel economies to new heights. However, when mismanaged, it can become a ticking time bomb, threatening financial stability and, ultimately, the very growth it was supposed to nurture. Private sector credit refers to the loans and financial products extended by banks and other financial institutions to businesses and individuals. In theory, access to credit should enable businesses to invest in new ventures, expand operations, and hire more employees. It gives entrepreneurs the capital they need to innovate and drive the economy forward. It allows consumers to purchase homes, cars, and other big-ticket items, stimulating demand in the process. But here’s the catch: not all credit is created equal. When credit is easily accessible and too cheap, it can lead to reckless borrowing and lending. Just look at the 2008 financial crisis–an example of how the unchecked expansion of private sector credit, particularly in the housing market, led to disastrous outcomes. The crisis wasn’t caused by a lack of credit, but by an overabundance of it, fueled by overly optimistic expectations and risky lending practices. One might argue that since the 2008 collapse, we’ve learned our lesson. Bank regulations have tightened, and lending standards have become more stringent. However, the reality is that credit is still being handed out like candy at a parade. With interest rates low and financial institutions eager to lend, there’s a temptation to return to the practices that led to the last crisis. The danger here is that credit, rather than being a tool for productive investment, is becoming a game of........

© The Patriot