Steve Keen

You've got more than a thousand euro headroom inside that credit card.

Okay.

Well, you might have about, say, 10 euro, 10,000 euro.

Okay.

If you wanted to create 10,000 euro, just go and buy something worth 10,000 euro.

And what you do is you create the money by that shopping.

Okay.

Now, you're going to face higher prices for petrol at the petrol pump, given the chaos in Iran, or the chaos in the Middle East.

You just go swipe your credit card.

You've created money.

Okay.

So we have all negotiated contracts with the banks one way or the other where we have the capacity to increase the money supply whether the bank, notionally speaking, wants us to or not.

So your credit card, the headroom on your credit card is your capacity to create money.

Equally, major corporations have lines of credit.

They're not as common as they used to be, but lines of credit which are comparable to personal bank cards with all the banks.

So when the oil prices increased back in the 1970s because of the aftermath of the Omkipa War, the price of oil went from $2.50 a barrel to $10.

So the corporations didn't have to go and borrow the money and pay the price.

They paid the price and then created the money in the process.

So it's not that increasing the money supply leads to inflation.

It's that inflation leads to an increase in the money supply.