People not getting the significance of Hawtrey's quote should try and grasp the fact that previously NON-existent CASH is CREATED by the central bank whenever a loan is initially made. This is the essence of fiat currencies and precisely why every single one of them has ultimately returned to its inherent value, zero. The primary advantage of such a "flexible currency," one not directly tied to bullion, can be found in a quote by the founder of the Bank of England, William Paterson: "The bank hath benefit of interest on all moneys which it creates out of nothing." The power that comes with the ability to create money sweeps away constitutions, democracies, and public legislative powers.