Available Quote by Joseph A. Schumpeter
“There is another method of obtaining money... It does not presuppose the existence of accumulated results of previous development, and hence may be considered as the only one which is available in strict logic. This method of obtaining money is the creation of purchasing power by banks. The form it takes is immaterial.”
About This Quote
Source Book: Capitalism, Socialism and Democracy, Joseph A. Schumpeter, 1942
Banks can generate purchasing power without needing prior accumulated wealth, making it a uniquely logical source of money.
In simple terms: Banks create money from thin air.
Key Takeaway
Recognize credit creation as a monetary tool.
Themes
economics
finance
innovation
Mood
analytical
critical
Type
theoretical
explanatory
When to use this quote
- banking
- business financing
- government policy
- startup funding
Key Concepts
credit creation
monetary theory
entrepreneurship
Questions to Reflect On
- How does credit creation affect wealth distribution?
- What safeguards prevent abuse of this power?
A Different Perspective
This view ignores regulatory constraints and risk of inflation.
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