Credit Theory of Money

Credit Theory Of Money

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. Proponents assert 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.

The first formal Credit theory of money arose in the 19th century. Anthropologist David Graeber has argued that for most of human history, money has been widely understood to represent debt, though he concedes that even prior to the modern era, there have been several periods where rival theories like Metallism have held sway.

Read more about Credit Theory Of Money:  Scholarship, Advocacy, Relationship With Other Theories of Money

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Credit Theory Of Money - Relationship With Other Theories of Money
... Debt theories of money fall into a broader category of work which postulates that monetary creation is endogenous ... overlap with Chartalism and are opposed to Metallism and often to the Quantity theory of money ... those with a Libertarian or Conservative perspective, debt theories of money are often compatible with the Quantity theory, and with Metalism at least when the ...

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