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example of (private) money creation under gold standard
#economics #money
The money lender himself accepts "deposits" which is a polite way of saying "borrows gold coins from people". The gold coins he accepts from depositors are of course the gold coins from the previous transaction of lending gold coins out by the same lender. Each time they are lent out to borrowers and taken back in from lenders, the money lender's balance sheet grows. He splits the zero into assets and liabilties.
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Mark Wadsworth: Glad to have cleared that up.
l repay x gold coins at a future date (an asset). The borrower now has whatever he spent the coins on and a liability. The money lender's new asset and the borrower's liability are equal and opposite and have been created out of thin air. c) <span>The money lender himself accepts "deposits" which is a polite way of saying "borrows gold coins from people". The gold coins he accepts from depositors are of course the gold coins from transaction (b). Each time they are lent out to borrowers and taken back in from lenders, the money lender's balance sheet grows. He splits the zero into assets and liabilties. "Debt of course CAN BE USED as money, but it’s not the only form of money. Also the extent to which base money is form of debt is very debatable. E.g. £10 notes claim that the Bank


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