If you go back to the really long-run questions that interested me, the big question was why, over the centuries, the millennia, has growth been speeding up?
Paul RomerRead
Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess
Interpretation
What this quote means
The quote highlights the precarious nature of modern banking, where banks issue loans based on promises rather than actual money.
Irving Fisher's quote raises concerns about the trust placed in banks and the modern banking system, suggesting that banks lend out more money than they actually have, relying on promises rather than tangible assets. This practice can lead to economic instability and puts the financial well-being of the nation at risk, as it intertwines public trust with the unpredictable nature of bank loans and credit.
Themes
BanksLoansMoneyPromisesEconomy
In practice
Example use cases
In a financial seminar discussing the risks of reliance on loans.
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