Credit mechanics: a precursor to the current money supply debate

Credit mechanics and related approaches were developed by a group of German monetary economists during the 1920s-1960s. This column assesses the analysis of credit mechanics within the context of the current money supply debate, arguing that the theory qualified a one-sided, bank-centric view of money creation which is now often encountered in monetary theory. With the old standard textbook models of money creation now discredited, the authors advocate a more general approach to money supply theory involving credit mechanics