The Credit Expansion Process

In this lesson, I am going to explain, in economic and accounting terms, the process by which means of payment are created, a process which has arisen from the exercise of privileged fractional-reserve banking. Before we begin, you will need at least some basic accounting knowledge. Keep in mind this rule of thumb: in double-entry accounting—write this down—the left side of an account’s entries is called the “debit” side, and the right side is called the “credit” side (Table 5.1).