Money creation issues approaches
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Date
2017
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
"Victor Slăvescu" Centre for Financial and Monetary Research
Abstract
Money in the current system means debt. Consequently, the way, in the current system, that we have to have money is to borrow it. One of the ways that the economy was kept going was by providing cheap credits to people who couldn‘t really afford things anymore. Banks create new money whenever they extend credits. The amount of money they‘re creating out of nothing is just incredible. Of course, this newly created money is being distributed according to the priorities of the banking sector, not the priorities of society. There are two main issues with allowing banks to create money. Firstly, by creating money when they make loans, banks impose that a healthy growing economy has to exist, which is not always the case. The second big issue with allowing the banks to create money is their incentive to always create more. They create more money if they issue a loan. If you trust bankers to control the money supply, it will just continuously grow, as the level of debt will do, until the point when it crashes.
Description
Bibliogr.: p. 370 (9 titl.). JEL classification: E42, E44.
Keywords
banking, money creation, lending
Citation
GHERBOVEȚ, Sergiu. Money creation issues approaches. In: Journal of Financial and Monetary Economics. 2017, no. 4, pp. 363-370. ISSN 2537-3269; ISSN L 2392-9685.