Reply #136: When limited to the simple supply and demand model price floors and ceilings are inefficient

[Hippo_Tron]

But if you factor in social benefit, it's a different story. For example, minimum wages are a price floor and they are inefficient when you just consider supply and demand. However they have an enormous social benefit and statistically there is very little job loss correlated to the minimum wage increases when they actually occur, despite economic predictions of job loss if the minimum wage goes up.

Also, you have to consider that the efficiencies of a free market that sets optimal prices and quantities only work as they should when the market is perfectly competitive. The banking industry is far more of an oligopoly than a perfectly competitive market. Most of the market share is controlled by a few huge banks. They informally collude to set those 30% interest rates because it's in their best interest to do so. It's not an anti-trust violation unless they formally collude but it's still collusion and it's still bad for the consumer.