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 shorthand for "credit denominated in dollars" and a fiction. The credit they generate is neither dollars or a currency.
Do you think you would confuse a gold sovereign with a paper demand note? 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 deposit credit, 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 exists as a debt obligation. In fact, unlike demand notes, 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!
And think about this; they're counting $19+Trillion in bank debt obligations to deposit account holders as being the "money supply". How insane is that?
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 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
Addendum:
The only ones who benefit from the conflation of money and credit are the issuers of credit with no money.
Has the term 'Fractional Reserve Banking' lost all meaning? If the banks are holding US money as reserves then what are the banks creating for your use in its place? It's not US money so, what is it?
This is how safe your 'money' is when it is deposited in a U.S. bank; it is stolen by the bank at the moment of deposit (assuming the 'money' existed in the first place) and your account is credited with the amount stolen. This means that the richest amongst us have exactly the same amount of 'money' in their credited accounts as the poorest amongst us have in theirs, $0.00.
That a bank maintains some 'money' on hand to placate a few requests for the medium, does not negate the fact that all credited accounts maintain a zero monetary balance. A ledger book entry denoting the amount of 'money' the bank owes to (stole from) the depositor, is not 'money', regardless of anyone's ability to 'simulate spending' that ledger book entry with a debit card. Passing around bank debt from one recipient to another, is not payment for anything. Crediting an account with the amount and actual payment are two different things.
That a bank maintains some 'money' on hand to placate a few requests for the medium, does not negate the fact that all credited accounts maintain a zero monetary balance. A ledger book entry denoting the amount of 'money' the bank owes to (stole from) the depositor, is not 'money', regardless of anyone's ability to 'simulate spending' that ledger book entry with a debit card. Passing around bank debt from one recipient to another, is not payment for anything. Crediting an account with the amount and actual payment are two different things.
Some people bitch, howl, whine and complain all the time about 'gold' and 'silver' being 'real money' and denounce the 'fiat paper', and they're not even getting or using the 'fiat paper', which is the money as defined by law. Do you know what is not listed in that legal definition of money? Ledger book entries made by the Fed and the banks denoting the amount of money they owe.
**By the way, I just gave you a description of real 'fractional reserve banking', did you spot it?
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Working Paper No. 529: Banks are not intermediaries of loanable funds
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Does the Money Multiplier Exist?
Federal Reserve Board
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Does the Money Multiplier Exist?
Federal Reserve Board
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