We can therefore say that all money is credit but not all credit is money. Schumpeter recognised that what is required is a credit theory of money rather than a monetary theory of credit11. And, whilst no definition is perfect, Geoffrey Ingham’s conception of money, which follows Simmel, Keynes and Schumpeter, seems appropriate: money is “a social relation of abstract value defined by a sovereign unit of account”12. Rather than ‘appearing’ or being ‘called forth’ by the natural operations of the market, money is in fact issued into circulation as a social relation of credit and debt between the state, its citizens and its banks13. As such, it can be fairly accurately accounted for when measuring credit creation in the banking system and credit creation by the central bank14.
Andrew Jackson - Where Does Money Come From - Positive Money pdf from epub