Definition:
Seignorage (a.k.a. seigniorage) is the amount of real purchasing power that a banker can extract from the public by printing money and creating credit lines, before being rightly hanged.
- Marco Saba, December 23, 2013 (centenary of the creation of the Federal Reserve System)
Explanation: When a banker prints money or create credit lines, it is in essence creating purchasing power since it receives goods and services in exchange for the money. It gains further if issuing new money reduces (through inflation) the value of old money by reducing the liability that the old money represents. These gains to a money-issuing banker are called "seignorage" revenues.
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