Money And Credit

MONEY AND CREDIT

Credit theories of money, also called debt theories of money are concerned with the relationship between credit and money. Proponents of these theories, such as Alfred Mitchell-Innes, will sometimes emphasize that credit and debt are the same thing, seen from different points of view.[1] Proponents assert that the essential nature of money is credit (debt), at least in eras where money is not backed by a commodity such as gold. Two common strands of thought within these theories are the idea that money originated as a unit of account for debt, and the position that money creation involves the simultaneous creation of money and debt. Some proponents of credit theories of money argue that money is best understood as debt even in systems often understood as using commodity money. Others hold that money equates to credit only in a system based on fiat money, where they argue that all forms of money including cash can be considered as forms of credit money.

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