Bankers know the difference between money and credit, although they allow customers to remain in the dark between the two. Note the turning point in this history of money and credit, when the government for the first time, got involved in banking, and how poverty and war followed.
The change in law, first introduced in England in 1704, was to make the promises of bankers enforceable. In other words: if a banker issued a note promising to pay a certain sum of money (gold or silver) to whoever presented the note, the law would support the owner of the note when they went to claim the money. At first sight, this law seems to favour the customer; after all, if a bank promises to pay, it should be held to its word. But the real significance of the law – and this was obvious to everyone concerned when the law was introduced – was that it enabled the promises of bankers to become money: to ‘pass from Man to Man in Payment, which will be an Addition to the Cash of the Nation’ (John Cary, 1695.)Feel free to forward this by email to three of your friends.
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