Credit card could be regarded as a special form or part of the commercial banking system, which could creat money based on high power money.

Credit card is not part of the money. It is a method to defer payment; eventually cardholders need to pay the "balances", which are the part of the money.

You have to remember how the money is defined first. Money measures such as M1, M2, M3, L are all based on the definitions.

what is asset? what is liability?

An asset is something that can be used to generate income, and has its own value.

A liability is a loan must be paid with its interest (if any).

It is debatable whether it will be regarded as a form of money, Currently, economically, it is not a form of money, because credit card can not be used so wide as money itself.

[此贴子已经被作者于2008-2-12 8:17:35编辑过]

Keep silent with this sentence above, would you mind attaching that pages for me, please?

[此贴子已经被作者于2008-2-12 6:55:38编辑过]

What is M1, M2, M3?  

If you are talking about 'money demand', then, you need to type as M_d,1...

If you are talking about 'money supply', then, you need to type as M_s,1...

What is L?

The symbol 'L' can be regarded as labour force, Labour demand, & Labour supply, what do you mean?

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If you mean, these symbols come from other version in some books, That's fine. If it is your own product, I am sure, no one will understand what you are talking about.

[此贴子已经被作者于2008-2-12 7:14:12编辑过]

Of course, you could say credit card is not  part of money, however, the reasons you presents might not be reasonable. 

Money is also a payment method.  Besides, commercial banks create money by loans (to be repayed eventually).

This is regarding 11th floor's comments:

Please check any introductory macro or money and banking textbook's definitions about M1, M2 or M3. You can also check www.bea.gov webiste. I did not invent these symbols.

By the way, money demand can "not" be "measured". We use money supply to represnt money demand assuming an equilibrium exists in the money market. There are hugh research on the estimation of money demand issues in the literature. 

I do not understand why this question "credit card is money?" raised such debates. Can you use your credit card to buy things forever without paying back your liability? Commerical banks that issue credit crads must be idiots.

As you said, M0, M1, M2, …, are all measures of money supply. Would you please tell how M1/M2 is created?

Does M1/M2 emerge without commercial banks' loans? Loans also  are to be repayed in future.

I could agree that credit card is not money, but I could not agree with your reasons.

Dear Waterhouse,

Please read all the following information carefully.

Via checking the Mankiw's testbook ----- (macro-economics, fourth edition), at page 160, Yes, I fully understood what you are talking about. Yeah, you do not invent these words. And they all come from authorized sources. The symbols M1, M2,  M3, L, all stem from the Federal Source, However, did you see the 'assets included' under that table? For example, the symbol M1 -  'currency plus demand deposits, traveler's checks, and other checkable deposits'; the symbol L - 'M3 plus other liquid assets such as saving bonds and short-term Treasury securities'. Do you know what that mean?

OKey,.. Let me tell ya something. Symbols usually come from first letter, for example. aggregate demand(AD), gross domestic production(GDP). Unless the article defined these symbol meanings from some authorized sources, we can regard them as that meaning temperately. Otherwise, perhaps not...(As I stongly suggested)

If you have Mankiw english book, (macro-economics, fourth edition), turn to page 40, Here, 'L' stands for Labour. Undoubtedly, It is easy to be confused, if symbols (or be more specific to say, abbreviations) just occur suddenly. Furthermore, I knew 'L' could represent liquidity as well. So, are you catching what I mean?

                                                          Regards,

                                                          叮叮当当

[此贴子已经被作者于2008-2-13 12:24:36编辑过]

If you had known a "LM-curve", you could have known what "L" represents.

This question you talked about is trivial

I am glad to see there are so many different voices about this question "whether credit card is money"? But I also feel a little bit disappointed when someone tried to arugue with me about what "definition" is.

Without definition, you can say anything that has value is "money". You can turn a house into money by selling it. You can sell your kidney and get money. The definiton and thus  the measurement of money was created for its role in affecting economic variables such as price/inflation. Depends on what schools (Keynes, Classical,Real Business Cycle, etc) you believe, money can affect economic activities in the short run and/or in the long run. If your argument is focusd on whether the asset side or liability side is more important, this is another different issue. Please read Bernanke's AER paper (88' or 89')for reference.

I am going to shut up here and let you youngsters continue your debate.

Have a happy Chinaese new year to everyone.

Chao!

I am really too sad, you know, I try to understand what you are talking about, but I felt too disappointed..

My own opinion has already given, here you can see it again.(As I highlighted in Blue before) 

It is debatable whether it will be regarded as a form of money, Currently, economically, it is not a form of money, because credit card can not be used so wide as money itself.

Those symbols with definations are my mistakes, Because I am trying to tell you, and am wanting you to understand, symbols such as  'M', 'L', can't use randomly. If you study abroad, you will meet lots of troubles due to uncaring. Just a warm tip, but... Maybe I need to be cold here.

Anyway, It's all right. You have your choice.

my english is poor,so i express with chinese

个人认为，信用卡是和货币一样，都是一种支付方式。不是金钱。

在经济成熟市场，以个人诚信为基础所实行的一种代币支付，没有相应的市场及技术支持，信用卡就毫无用处。

说穿了只有黄金才是金钱，是硬通货。要不为啥各国都囤积黄金，没见哪个国家囤积信用卡来着。（这个对个人也一样）

（流通中的）纸币是以国家信用发行的基础货币。

信用卡透支是商业银行扩张商业信用的功能，是创造货币的方式。本质上就是商业银行通过贷款行为增加货币供给。

“信用卡”算不算“货币”，实际上完全取决于对信用卡及货币的定义。

（把“信用卡”理解成一种符号，还是一种功能，还是就是一张塑料片而已。不过，有一点可以强调：与“借记卡”(debit card)不同，信用卡(credit card)实际上是一种“贷记卡”。借记卡不能透支，没有商业信用扩张功能，也就不能创造货币。但借记卡又算不算“货币”呢？说它算与不算，又是如何理解“借记卡”这三个字呢？）

The 23th floor's explanation is wonderful.

Let me add a simple comment here:

According to money's "定义", the following three charasteristics must be met (altogether) in order to be a money
(1) Unit of account

(2) Medium of exchange

(3) Store of value

Without the definition, the debate will go on forever (chicken first or egg first?)

contradiction

I got that, thanks.

----- There are two kinds of cards, debit card & credit cards.

In your picture, I saw, debit card is a part of money supply, but credit cards isn't.

Nice explanation!!! Really lovin...

Sorry for the rough enquiry. You don't care, do you?

However, I wanna add something ...

Since I have already discussed with my teacher...(befor your thread),So,this sentence in blue is OK. It is debatable whether it will be regarded as a form of money, Currently, economically, it is not a form of money, because credit card can not be used so wide as money itself. Don't doubt that!

However, I made a fatal mistake, yeah, I know now. That sentense in blue is more likely to discuss the character of debit card. Have you seen the first and second line on your picture? That is the author's premise.

Yeah, maybe, in US society, debit card is more popular than money itself, but it is not the majority of the world... For example, if we go to the farm market, we will switch to use money rather than debit card... So, relative to that sentense in blue, you will certainly know what I wanna  point out the key..

[此贴子已经被作者于2008-2-17 15:18:10编辑过]

Easy to confuse with this sentense on your picture: neither debit cards nor credit cards will affect measures of money supply, whilst money supply is the value of financial assets.(asset: a loan that can be used to generate income) ---- ‘dingdindangdang’ needs help.

p.s: To cityustd,( personal suggestion) sungmoo's answer is also good, and these can be regarded as reference as well.

[此贴子已经被作者于2008-2-17 15:39:01编辑过]

In my opinion, credit card balance is not measured as money supply just because of the money supply measurement(statistical) method.

Credit card can create money by loans, however, the newly created moneny is measured as the balance of sellers' deposit, rather than the credit card balance (avoiding repetitive measurement).

In other words, that credit card (balance) is not money doesn't mean that credit card (system) never creates money.

The debit card (balance) is measured as money supply, however, the debit card  (system) doesn't create money.