by Reisch
[Bibliographic Information and Introduction]: Bibliographic details for the 1931 publication in Weltwirtschaftliches Archiv and the beginning of Richard Reisch's critical review of L. Albert Hahn's third edition of 'Volkswirtschaftliche Theorie des Bankkredits'. Reisch notes Hahn's significant revisions and his tendency toward provocative, paradoxical formulations regarding the power of credit. [Methodological Critique: Cashless Economy and the Concept of the Creditor]: Reisch critiques Hahn's methodological approach, specifically his use of a hypothetical 'cashless economy' to explain modern banking. He argues that Hahn's definition of money holders as 'economic creditors' of future suppliers is a confusing metaphor that fails to distinguish between private and national economic realities, leading to theoretical inconsistencies. [The Mechanics of Credit Creation and the 'Deposit Legend']: Reisch disputes Hahn's claim that banks create credit 'out of nothing' (ex nihilo). He contrasts Anglo-Saxon and Continental accounting methods, arguing that Hahn's theory ignores the necessity of available means and the obligation of banks to maintain liquidity and fulfill payment promises, which prevents credit from being an infinite resource. [Liquidity, Central Banking, and the Limits of Expansion]: Reisch examines Hahn's views on bank liquidity and the role of the central bank. He critiques Hahn's assertion that liquidity considerations do not limit credit expansion, pointing out that central banks are constrained by currency stability and that commercial banks must adhere to strict ratios between deposits and cash to avoid collapse. [Credit's Impact on Production, Capital, and Distribution]: The author analyzes Hahn's second section regarding the effects of credit on the production of goods. Reisch critiques Hahn's redefinition of 'capital' as mere purchasing power and his claim that credit can pull goods 'out of nothing.' Reisch maintains that real production depends on existing goods and savings (Böhm-Bawerk's theory), not just credit-driven distribution shifts. [Conclusion: The Dangers of Inflationary Theory]: Reisch concludes by warning that Hahn's theory serves as a plea for inflationary credit policies. He argues that such theories threaten the foundations of the legal and economic order by justifying the expropriation of savers and creditors. While acknowledging Hahn's brilliance, he deems the book dangerous for students and laypeople due to its lack of focus on the risks of inflation.
Bibliographic details for the 1931 publication in Weltwirtschaftliches Archiv and the beginning of Richard Reisch's critical review of L. Albert Hahn's third edition of 'Volkswirtschaftliche Theorie des Bankkredits'. Reisch notes Hahn's significant revisions and his tendency toward provocative, paradoxical formulations regarding the power of credit.
Read full textReisch critiques Hahn's methodological approach, specifically his use of a hypothetical 'cashless economy' to explain modern banking. He argues that Hahn's definition of money holders as 'economic creditors' of future suppliers is a confusing metaphor that fails to distinguish between private and national economic realities, leading to theoretical inconsistencies.
Read full textReisch disputes Hahn's claim that banks create credit 'out of nothing' (ex nihilo). He contrasts Anglo-Saxon and Continental accounting methods, arguing that Hahn's theory ignores the necessity of available means and the obligation of banks to maintain liquidity and fulfill payment promises, which prevents credit from being an infinite resource.
Read full textReisch examines Hahn's views on bank liquidity and the role of the central bank. He critiques Hahn's assertion that liquidity considerations do not limit credit expansion, pointing out that central banks are constrained by currency stability and that commercial banks must adhere to strict ratios between deposits and cash to avoid collapse.
Read full textThe author analyzes Hahn's second section regarding the effects of credit on the production of goods. Reisch critiques Hahn's redefinition of 'capital' as mere purchasing power and his claim that credit can pull goods 'out of nothing.' Reisch maintains that real production depends on existing goods and savings (Böhm-Bawerk's theory), not just credit-driven distribution shifts.
Read full textReisch concludes by warning that Hahn's theory serves as a plea for inflationary credit policies. He argues that such theories threaten the foundations of the legal and economic order by justifying the expropriation of savers and creditors. While acknowledging Hahn's brilliance, he deems the book dangerous for students and laypeople due to its lack of focus on the risks of inflation.
Read full text