> it will not be worth what the loan assumed

I'm begging people to take the time to write things themselves rather than getting Claude to write for them.

If you want human effort from readers, please put in human effort while writing.

> A producer making thousands of wheels annually is therefore sitting on an enormous and steadily growing asset that generates no cash whatsoever, while facing continuous bills.

Once a company enters a steady flow, usually after the first 2-3 years, this is not a problem because it has the income of previous years. The only thing that changes is the difference in the company's turnover.

This type of loan is not new, it has existed for more than 70 years. There’s something similar for wine, prosciutto, oil and other types of cheese.

Googling "agricultural products as collateral cheese" turns up some very interesting results.

https://www.google.com/search?q=agricultural+products+as+col...

The blog post is written by someone who has never heard of a Lombard loans.

TL;DR: No surprise to anybody .... loans involve two parties, and shockingly (/s) its up to the bank what they take as collateral !

Lombard loans have been a thing ever since banks have existed and – ironically in the case of this blog post – the term originates from the Lombards who conquered the northern region of Italy now known as Lombardy.

In the case of this blog its cheese. But it is incredibly common - for example - for the loan collateral to be an investment portfolio.

As long as there is an accepted way to value it, correctly manage it and it has a good chance of holding or increasing its value, banks can consider it as collateral. Doesn't mean they will (that is a decision for the risk committee), but they can.

Not really that strange if you think about it. The cheese is playing the same role that gold once played. It’s a relatively static asset of relatively assured value, which is exactly what makes a commodity a potentially good currency. Unlike gold, however, the cheese is not absolutely unchanging, its value is specific to one industry, and its value also relies on its environmental condition. So a very situation-specific currency. Very apt that this return to a mercantilist form of exchange is happening in Italy.