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Money Creation, Credit, and Asset Bubbles Explained

Love how Richard Werner explains it.

Money creation = credit creation. But not all credit is equal.

We can divide credit into two types:

  • credit used for GDP transactions (real economy)
  • credit used for asset purchases

Only the first one drives real growth and inflation. The second one drives asset bubbles!

Unless QE leads banks to lend into the real economy, it won’t cause consumer price inflation - it will just inflate housing, stocks, etc.

Originally posted on X

PS: I'm pretty active on 𝕏 if you'd like to follow along

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