How unbacked lending weakens the wealth generation process

Source: Cobden Centre
by Dr. Frank Shostak

“For most commentators lending is associated with money. However, is this the case? We suggest that a lender lends savings to a borrower and not money as such. When a saver lends money, what he/she in fact lends to a borrower is final consumer goods that he/she did not consume. … Lending unbacked by savings results in economic impoverishment.” (09/15/21)