Meaning: The quote "Modern money is almost altogether credit money" by John Robinson, a prominent British politician, encapsulates a fundamental aspect of modern monetary systems. In order to understand this quote, it is essential to delve into the concept of credit money and its role in the contemporary financial landscape.

In the traditional sense, money was primarily represented by physical currency, such as coins and banknotes, which were backed by precious metals like gold or silver. However, with the evolution of financial systems and the expansion of economic activities, the reliance on physical currency has diminished significantly. Instead, credit money has emerged as a dominant form of currency in modern economies.

Credit money refers to the money that exists in the form of bank deposits and other financial instruments that represent a promise to pay. Unlike physical currency, credit money is not backed by a commodity like gold; rather, it is based on the trust and confidence in the issuing authority, typically central banks and commercial banks. This trust enables credit money to function as a medium of exchange, unit of account, and store of value within the economy.

The transition towards credit money as the primary form of currency can be attributed to several factors, including the advancement of financial technologies, the proliferation of electronic payment systems, and the expansion of credit and lending activities. In today's digital era, a significant portion of financial transactions occurs through electronic means, such as online banking, wire transfers, and digital payments, all of which are facilitated by credit money.

Furthermore, the expansion of credit and lending activities has led to the creation of a substantial amount of credit money within the financial system. When individuals and businesses borrow money from banks, they are essentially creating new money in the form of bank deposits, which circulate within the economy as credit money. This process, known as fractional reserve banking, contributes to the proliferation of credit money and its integral role in the modern monetary system.

It is important to note that while credit money has become the predominant form of currency, physical currency still retains its significance as a tangible representation of value. However, the overall money supply in the economy is largely composed of credit money, reflecting the interconnectedness of financial institutions, monetary policy, and economic activities.

In conclusion, John Robinson's quote succinctly captures the essence of modern money as credit money, highlighting the pivotal role of credit-based financial instruments in today's monetary systems. The evolution from traditional physical currency to credit money signifies a paradigm shift in the way monetary transactions are conducted and underscores the importance of trust, confidence, and financial intermediation in shaping the modern financial landscape. As economies continue to evolve, the concept of credit money will remain a cornerstone of monetary theory and practice, influencing the dynamics of global finance and economic interactions.

If you want to delve deeper into the topic of modern money and credit money, there are numerous scholarly articles, books, and research papers available that provide comprehensive insights into the intricacies of monetary systems and the role of credit money in contemporary economies.