In 1946, Henry Hazlitt—American journalist and author—wrote a book called Economics in One Lesson. It was aimed at the general public, and his stated aim was to protect them against groups with selfish interests who would try to confuse them into accepting government policies which benefited those groups
Though Henry Hazlitt was a sharp thinker and had a lot of good things to say about real economic problems, don't forget that he believed banks lend money other people deposited with them.
He ambiguously said in his, Economics in One Lesson, "All credit is debt", and see how he struggled with the ambiguous nature of the word: "There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it. He brings it into the bank with him. That is why the banker makes him the loan."
Brilliant as that quote is, it contains a vital error, and I find it much easier to stick with strict accounting terminology. To paraphrase the Bank of England's Monetary Analysis Directorate, Credit is a bank liability and liabilities can't be lent out, like assets.
The inconsistency of terminology causes no end of confusion, especially when one person is speaking technically and the other informally. It's often hard to communicate about these things without agreeing on some definitions first.
Though Henry Hazlitt was a sharp thinker and had a lot of good things to say about real economic problems, don't forget that he believed banks lend money other people deposited with them.
He ambiguously said in his, Economics in One Lesson, "All credit is debt", and see how he struggled with the ambiguous nature of the word: "There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it. He brings it into the bank with him. That is why the banker makes him the loan."
Brilliant as that quote is, it contains a vital error, and I find it much easier to stick with strict accounting terminology. To paraphrase the Bank of England's Monetary Analysis Directorate, Credit is a bank liability and liabilities can't be lent out, like assets.
The inconsistency of terminology causes no end of confusion, especially when one person is speaking technically and the other informally. It's often hard to communicate about these things without agreeing on some definitions first.
I agree. That's why I wrote "#1 - Bank Accounting; Magic?". Sorry about mistakenly misleading you on "Equity".