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With bank lending, the effect is temporary, as the lmoan is paid back, and money destroyed then.

In a steady state (constant amount of loans outstanding as new loans replace repayments), there is no money creation even though there is normal bank lending activity.

It's only growth in aggregate lending that cuases devaluation, so the effect of an individual loan is an order of magnitude less than printing money.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri May 11th, 2007 at 08:18:13 AM EST
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