Renowned economist Richard Werner says popular textbooks miscast banks as mere middlemen and ignore their central "power to create money," an omission he claims distorts debates over credit just as the U.S. economy slows and the Federal Reserve weighs rate cuts.
What Happened: "Banks are special. They have a unique power that no other player in the economy has and that is the power to create money," Werner told Tucker Carlson on an episode of his show that aired last week. He said most economists still teach the "financial-intermediary" model in which banks simply recycle deposits, "but that's wrong."
