An individual bank can ascertain whether it has overissued
or underissued liabilities, which the public uses as money, because it has access to the same means of economic calculation available to any private firm supplying a good or service: profit and loss accounting.
On the contrary, such a loan-created money stock can, as long as nominal transactions and thus the public's demand for transaction balances remains momentarily unchanged, indeed be redundant, or overissued
. Thus equation (3) says that because at prevailing prices P and real output Q the public's demand for money [M.sub.D] as expressed by the equation [M.sub.D] = kPQ has not yet changed, the new money dM/dt created by loan constitutes an excess supply of money X.
On November 7, 1945, just three months after Japan surrendered, the authorities had adopted a special deposit program to absorb Japanese notes that had been overissued
under the Japanese government.
1877) (offering a brief exposition of overissued
and watered stock and of directors' liability for fraud); FIELD, TREATISE, supra note 2, at 206-09, 246-47 (2d ed.
A Treatise on the Law of Stock and Stockholders, as Applicable to Railroad, Banking, Insurance, Manufacturing, Commercial, Business, Turnpike, Bridge, Canal, and Other Private Corporations