Josiah Stamp: Manufacture Money
on Wednesday, April 22, 2020Josiah Stamp Money Quote saying banks create money by loaning money that belongs to others. Josiah Stamp said:
“The modern banking system manufactures money out of nothing” — Josiah Stamp
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In this quote, Josiah Stamp seems to be criticizing how the fractional reserve banking system allows banks to lend and create money in excess of the actual cash reserves they hold on deposit. By stating that the “modern banking system manufactures money out of nothing”, Stamp implies that banks can effectively generate new money by issuing loans without having equivalent funds fully deposited by customers first.
The quote conveys Stamp’s perspective that banks introduce new money into circulation through lending activities beyond what they have physically on hand, in a way that resembles money creation. Overall, Stamp appears to be arguing that the nature of fractional reserve banking permits the financial system to expand the overall money supply through lending practices that some view as a form of indirect money printing, since new funds are generated without equivalent hard assets to back them fully.
Birthday: June 21, 1880 – Death: April 16, 1941