Should credit cards be counted in the money supply?

Answer 1

The question is imprecise. So in order to answer it I must make an assumption. I assume that what it really means is "Should credit card lines of credit be counted in the money supply". The simple answer is no. Money is defined as the commonly accepted medium of exchange. The accepted medium of exchange in the US are cash dollars and checking account dollars. No-one accepts a line of credit as a medium of exchange in transactions. If, however, someone makes a payment using his credit card then actual money is credited to the sellers checking account. The money supply increases after the payment has been made. The bank issuing the credit card essentially makes a loan to the person using the credit card and actual money is credited to the seller's account. But even then, it is not the credit card balance in itself that adds to the money supply, but the money appearing on the seller's checking account. Only in that sense can one make a connection between the existence of credit cards and the money supply. More details on how to define the money supply can be found here: http://nimamahdjour.blogspot.com/2008/03/money-supply-watch.html