The Fed defines credit as such: "Credit dollars are a debt generated currency that is denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. However, many forms of credit can readily act as a medium of exchange. As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply."
As an aside; why does the Fed count 'credit', which is primarily BANK DEBT, as if it were money and include it, even though they admit it isn't, as being part of the 'money supply'? Also noteworthy is the Fed's use of the term "credit dollars", which is a fiction, the credit they generate is neither dollars or a currency.
Do you think you would confuse a gold sovereign with a tally stick? They were both used to purchase the same basic things at the same basic price. Because they shared this functional commonality, does that make them the same thing? Money - Credit.
What about the official legal tender money supply which is a product of Law and Government, and credit (digital tally sticks), which can be created by anyone in contract. They are both used to purchase the same basic things at the same basic price. Because they share this functional commonality, does that make them the same thing? Money - Credit.
As with that gold sovereign, you can hold a legal tender note free from any obligatory attachments, not so with credit, it only exist as a debt obligation. In fact, unlike tally sticks, you can't even hold credit, you are totally dependent upon the banking system to hold and manage its existence for you. And when I say existence I mean exactly that, the bank goes insolvent and your credit is gone!...POOF!
Read this carefully:
Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (Fed liabilities). This would meet the requirements of Section 411 (Federal Reserve Act), but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.
Do you comprehend that? (I knew you would)
Now, what does the government NOT get in that transaction?
It does not get the Trillions in credit created by the banks and Wall Street!
Why is that you may ask?
Because all that credit created by the banksters and Wall Street IS NOT PART OF THE MONEY SUPPLY!!!
It is because we conflate money with credit, we are living in a bankster's paradise (debt hell for us).
Do you think the banksters give a rat's ass worth of care that their exuberant over expansion of credit drives inflation up and the value of the legal tender down? NO! They just create more credit by having you go further in debt to compensate!
There is no law anywhere that grants to banks the power to create money, not even the Federal Reserve has that power, which is a right retained exclusively by the government via the U.S. Department of the Treasury.
The whole credit system runs on the belief that somebody will eventually pay what is owed.
'Crediting Your Account' and 'Payment' Are Two Different Things