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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…” quote by Irving Fisher
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“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.”

Irving Fisher

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.

Key Takeaway

Understand money creation limits.

Themes

economics finance money supply

Mood

analytical neutral

Type

explanatory educational

When to use this quote

  • banking regulation
  • personal lending
  • financial education

Key Concepts

fractional reserve banking monetary policy

Questions to Reflect On

  • How does banking affect inflation?
  • Can individuals influence money supply?
A Different Perspective

Individual lending cannot expand money supply.

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