Quantity Theory of Credit
a.k.a. QTC
An economic theory that says bank lending, and what it's used for, drives growth and inflation more than the money supply itself.
The quantity theory of credit, associated with economist Richard Werner, argues that the key thing is not how much money exists but how much new credit banks create and where it goes. Loans for building factories and businesses tend to boost real growth. Loans for buying existing assets, like houses or shares, tend to inflate asset prices. Loans for consumption tend to push up consumer prices.
It is an alternative to the classic quantity theory of money and helps explain why huge QE programmes did not always produce the consumer inflation people expected.
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