File talk:Money-creation.gif

This explanation of money creation is not sufficiently clear nor does it explain the most simple way of money creation namely the post-dated cheque. Debit cards also work in this way. The relationships are not soley to do with the banks and can take place between individuals without direct bank intervention.

Both are promises to pay not at once but at some future time. The person receiving the promise (cheque or electronic signature on mrssage) then is confident enough to exchange his goods or services. This activity helps in the creation of more goods by supplying one (or more) of the 3 factors of production, labour, access to land or capital goods and materials etc. So by means of these promissary money creations there is greater economic activity. There is a limit to the degree that this will occur since when too much money is promissed the party who previously accepted the promise for the future payment will no longer do so until some of the actual money changes hands.Macrocompassion (talk) 09:23, 29 May 2012 (UTC)

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 * +1 Deku-shrub (talk) 14:27, 5 May 2014 (UTC)