Cheap credit misallocates resources to undemanded/lesser demanded ventures, increases the present consumption &amp; acquisition of goods, distorts our time preference, creates a dependency on continuous overvaluations, &amp; distorts price signals (because of relative price stickiness, unequal velocity within different sectors, &amp; circular demand within scarce demanded goods [assets]). Speculation increases as lesser educated consumers spend &amp; borrow. They have not went through the thorough process of elimination that normally happens in the free market. <br>When these malinvestments inevitably must end &amp; the spigots of cheap credit are cut, a <i>'deflationary death spiral'</i> must ensue. <br>You <b>have to</b> allow resources to be freed up, consumption to be detered, &amp; then properly allocate them to where they're demanded. If not, attempting to correct malinvestments within the system will crash the economy. <br><br>Market set interest rates &amp; a scarce divisible currency naturally fix this. Banks &amp; borrowers must compete for scarce savings. Through interest rates, these funds are allocated to demanded ventures. In direct proportion to how demanded they are &amp; how much consumption is detered through saving. Since there's no inflationary effects, our time preference of consumption &amp; production is balanced, thereby allowing projects to reach their full potential. Since there's a safe haven people can flock to, this makes inelastic markets significantly more elastic. Buyers can viably opt out of buying. <br><br>Lending inflated funds interferes with needed corrections &amp; exacerbates structural issues. We need to raise rates, default, &amp; let the market properly restructure. <br>Building up our productive capacity is the only way to viably get demanded goods &amp; services. <br>There's no shortcut.