We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is inside Money?

Malcolm Tatum
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Also known as endogenous money, inside money is a term used to identify debt that is considered an asset to the holder while also being a liability to another party, such as the issuer of that debt. This set of circumstances makes it possible use that debt as money, effectively allowing the holder to utilize the debt as a way to be approved for additional credit, since the expectation is that the debt will eventually be paid. The general idea is that money must be put in before it can be taken out and used for specific purposes.

Inside money is a different concept from outside money. Essentially, outside money has to do with the placement of resources into a production system from some type of outside source. Sometimes called exogenous money, this approach then causes the system to react to what is happening in the financial sector of the economy. By contrast, inside money makes it possible for the financial sector to respond to whatever is taking place in the production system.

One of the most common examples of inside money is the deposits that customers make at banks and similar financial institutions like credit unions. Those deposits form the basis for the bank being able to respond to the needs of others in the community who are in need of loans for cars, mortgages, and other loans. The money that is taken in and held in checking accounts, savings accounts, and various types of investment accounts on behalf of those customers makes it possible for the institution to set reasonable limits in the amount of money that can be issued in the form of loans. The expectation is that those loans will be repaid according to terms, allowing the bank to continue providing access by the depositors to their funds while also earning returns based on the interest generated from the loans.

Judicious use of inside money can aid in maintaining a balanced economy. Just as the use of outside money can help provide a degree of balance by allowing the production system to react to what is happening in the financial sector, inside money helps to balance the scales by providing a means for the financial sector to react to events in the production system. When both types of money are functioning in harmony within the wider economy, the end result is stable economic situation that tends to benefit consumers and businesses alike.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.