11/10/2022 0 Comments Notion definition moneyAt the time, the word was used for a leather pouch or wallet and for a leather or skin bottle. English borrowed the word as bowgette in the 15th century and by the early 17th century had settled on the spelling budget. The French diminutive form of the word, bougette, was also being used for a small bag. The Romans formed the Latin noun bulga, denoting a leather bag or knapsack, and this noun became bouge when it was taken into Middle French. In time, capital gained more worth with additional meanings, including "accumulated goods to produce other goods" and "accumulated possessions calculated to bring in income."īudget goes back to 15th-century England, where it was first a word for a pouch or bundle, and then for the contents of such a pouch. This financial word worked its way into English in the 16th century from either French or Italian. Christoffels, Notable Woorke Book Accompties, 1547 And it is at your pleasure whether ye will use this worde Stocke in Englishe, or Capitale. The other worde, the Italians call the Capitall, that is to saie, the Stocke or principall that the Marchant began with all. Their word eventually came to refer to an essential stock of goods used to enter into business. Both the French and Italians adopted capitalis with this sense in the form capitale. Nowadays, the noun capital is commonly used in reference to principal cities. In Latin, capitalis also meant "chief" or "principal." That meaning was adopted into English in the 15th century to describe things of importance, such as a city, district, manor, or monastery. The other familiar "head" sense of capital refers to a letter standing at the head of a page, passage, or line, and it was also in currency about the same time. Such deadly uses of capital have since died away except in describing crimes, like murder, that are punishable by death or the punishment, as the loss of one’s head, inflicted for such crimes. Injuries to the head can be serious and even fatal by extension, capital came to describe people or things threatening the loss of life-for example, a capital enemy. The word was originally used to indicate something affecting the head, as in "a capital bruise" or "a capital wound." The money supply is created as ‘fairy dust’ produced by the banks individually, "out of thin air".The first known use of the word capital is in early Middle English, in which it was used as an adjective meaning "of or relating to the head." It is derived from the Latin adjective capitalis, of the same meaning, which is based on the Latin name for "head," caput. This study establishes for the first time empirically that banks individually create money out of nothing. An empirical test is conducted, whereby money is borrowed from a cooperating bank, while its internal records are being monitored, to establish whether in the process of making the loan available to the borrower, the bank transfers these funds from other accounts within or outside the bank, or whether they are newly created. This is the contribution of the present paper. Surprisingly, despite the longstanding controversy, until now no empirical study has tested the theories. The question which of the theories is correct has far-reaching implications for research and policy. A third theory maintains that each individual bank has the power to create money ‘out of nothing’ and does so when it extends credit (the credit creation theory of banking). According to the fractional reserve theory of banking, individual banks are mere financial intermediaries that cannot create money, but collectively they end up creating money through systemic interaction. According to the financial intermediation theory of banking, banks are merely intermediaries like other non-bank financial institutions, collecting deposits that are then lent out. Three hypotheses are recognised in the literature. The banking crisis has revived interest in this issue, but it had remained unsettled. This paper presents the first empirical evidence in the history of banking on the question of whether banks can create money out of nothing.
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