money multiplier

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Money multiplier

Under the fractional reserve banking system, a unit of cash injected into the system by a central bank increases as it propagates through the banking system. Thus an increase in the monetary base has a magnified effect on the money supply and the multiplicative effect is represented by the money multiplier.

money multiplier

see BANK DEPOSIT CREATION.
References in periodicals archive ?
Central banks control the supply of currencies through their monopoly on money creation. Often, as at the Alan Greenspan-Ben Bernanke-Donald Kohn Federal Reserve this decade, they get policy wrong, with disastrous consequences.
The same money creation that serves to prop up the prices of goods also puts upward pressure on the prices of labor and other factors of production.
Return the Nation's Money Creation Power to Congress
A system based on inflationary money creation by profit making institutions (banks) requires continuous growth in order to pay off our debts to those institutions.
Treasury securities to the public), or money creation.
These money creation flows are hidden from those who just glance at data on the stock of reserves.
The Nigerian experience shows that money creation is the most popular deficit financing method used and this has the tendency of putting the economy in a permanent state of excess demand if aggregate supply of goods and services does not expand as rapidly as aggregate demand due to the existence of bottlenecks and rigidities.
This practice increases the velocity of money creation, because the bank's reserves are used to back up an increasingly large volume of loans.
As the world hurtles towards climatic disaster and we debate gently dabbing the brakes on CO2 emissions, the accelerator pedal is still flat on the floor until we revise the money creation process, so that new money is only created by governments and not by banks when they make loans.
Even though money supply targeting is no longer a policy consideration, the whole process of money creation and variations in monetary growth rates are still of interest from the standpoint of monetary theory.'
In the world in which we live, inflation is ultimately about the pace of money creation, and the level of the federal funds rate is about how fast money gets created.
In the theory, lending and money creation are conflated (treated as one variable) and high inflation and banking crises are also conflated.