Monday, 30 April 2012

If bank credit is not cash it would have no value

The evidence which establishes that banks print money is nothing to do with the government or the deposit guarantee (although those things may have relevance) it is simply that bank credit trades at parity with cash. There is no other possible explanation for the elevated price of bank credit other than it being cash. If banks do not print money then bank credit would have no value. Bank credit has value because it is cash.

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