How an Economy Grows and Why It Crashes

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This emergency loan would not have been possible if Able 
had already given away his savings through unproductive 
consumer loans.
In fact, savings can mean the difference between the life 
and death of society.
W
hen confronted with the possibility of economic 
contraction, politicians and bankers frequently dis-
cuss the need to “expand credit” by increasing the amount 
of money available to be lent. But can this be done on 
command? In the case of our fi shing friends, how can Able 
legitimately lend out more fi sh than he has saved? The 
island’s total supply of credit is limited by its total supply 
of saved fi sh.