Is Credit Card Debt an expansion of the Money Supply?

[jt8025]

I have been in the habit lately of using my credit card for my gas since I get 5% cash back on my gas purchases. I pay it off every month but I was wondering if this was a distortion of the money supply because I have the $400 in my bank, $400 on the credit card and the people who sell me gas have $400. Instead of me having $0 in gas money reserves at the end of the month and the gas seller having $400.

I'm not trying to argue about whether I should use a credit card or not in general. I was just wondering if the $20 benefit I get every month is causing inflation no matter how small it is.

Does it matter if the card is with a bank such as a Bank of America Visa versus a non-bank Visa. Is the card with BOA expanding the money supply because they are not loaning me money they have on deposit but getting it from the FED to loan me. Does a non-bank Visa have the power to do the same or do they have to loan me money they have (and not get the FED to print them money).

I'm wondering if I should keep earning my $20 or switch to using my debit card or Federal Reserve Notes in order to not inflate the currency.

Thoughts?

[misterx]

It is until you pay it off. You're not causing inflation. Keep doing what you're doing.

[MRoCkEd]

Think about what you're implying. Can you imagine the impact on global commerce if no credit orders could be made, and cash had to be paid up front?

[brandon]

No. The bank that issued you the credit card pays the people you bought the gas from immediately. Then you pay them back.

If you and your buddy were out at the gun store and he bought you a case of ammo because you told him you would pay him back later, would that be an expansion of the money supply?

[jt8025]

Think about what you're implying. Can you imagine the impact on global commerce if no credit orders could be made, and cash had to be paid up front?

I was suggesting should I use my debit card.

No. The bank that issued you the credit card pays the people you bought the gas from immediately. Then you pay them back.

Are they using "their" money or borrowing money from the FED at 0% and paying the gas merchant then paying the FED back when I pay them. I know this seems silly on a small scale.

If you and your buddy were out at the gun store and he bought you a case of ammo because you told him you would pay him back later, would that be an expansion of the money supply?

Going with your analogy I was asking if what was happening was I ask my buddy to buy me ammo until we get home but he doesn't use "his" money he cranks up his magic printing machine and we use that money (inflation) until I pay him back and he destroys the money (deflation). He was never out of any of money he has earned.

[Liberty74]

Using credit cards does not increase the money supply.

[Danke]

[Gumba of Liberty]

No. The bank that issued you the credit card pays the people you bought the gas from immediately. Then you pay them back.

If you and your buddy were out at the gun store and he bought you a case of ammo because you told him you would pay him back later, would that be an expansion of the money supply?

Whenever a bank makes a loan whether it is a mortgage, student loan or credit card the bank is creating money out of thin air based on fractional reserves of another account. The only way money is creating in the current system is through these loans. So the OP is correct. Using a credit card expands the money supply until you pay your loan back.

[youngbuck]

Whenever a bank makes a loan whether it is a mortgage, student loan or credit card the bank is creating money out of thin air based on fractional reserves of another account. The only way money is creating in the current system is through these loans. So the OP is correct. Using a credit card expands the money supply until you pay your loan back.

So if somebody racks up massive unsecured debt and then declares bankruptcy, the money supply increases.

[heavenlyboy34]

No. The bank that issued you the credit card pays the people you bought the gas from immediately. Then you pay them back.

If you and your buddy were out at the gun store and he bought you a case of ammo because you told him you would pay him back later, would that be an expansion of the money supply?

This^^ The economy would be shit if there were no consumer credit.