Can do Quote by Irving Fisher
“If two parties, instead of being a bank and an individual, were an individual and an individual, they could not inflate the circulating medium by a loan transaction, for the simple reason that the lender could not lend what he didn't have, as banks can do. Only commercial banks and trust companies can lend money that they manufacture by lending it.”
About This Quote
Source Book: The Theory of Interest by Irving Fisher, 1930
Banks can create money by lending beyond their reserves, unlike individuals who can only lend what they own.
In simple terms: Banks can make new money; people cannot.
Understand money creation limits.
Themes
Mood
Type
When to use this quote
- banking regulation
- personal lending
- financial education
Key Concepts
Questions to Reflect On
- How does banking affect inflation?
- Can individuals influence money supply?
Individual lending cannot expand money supply.