82 THE GENERAL THEORY OF EMPLOYMENT BK. II

parts with an asset of that value which he previouslyhad. In the first alternative there is a correspondingnew investment: in the second alternative someoneelse must be dis-saving an equal sum. For his lossof wealth must be due to his consumption exceedinghis income, and not to a loss on capital account througha change in the value of a capital-asset, since it is nota case of his suffering a loss of value which his assetformerly had; he is duly receiving the current valueof his asset and yet is not retaining this value in wealthof any form, i.e. he must be spending it on currentconsumption in excess of current income. Moreover,if it is the banking system which parts with an asset,someone must be parting with cash. It follows thatthe aggregate saving of the first individual and ofothers taken together must necessarily be equal to theamount of current new investment.

The notion that the creation of credit by the bank-ing system allows investment to take place to which“no genuine saving” corresponds can only be theresult of isolating one of the consequences of the in-creased bank-credit to the exclusion of the others. Ifthe grant of a bank credit to an entrepreneur additionalto the credits already existing allows him to make anaddition to current investment which would not haveoccurred otherwise, incomes will necessarily be in-creased and at a rate which will normally exceed therate of increased investment. Moreover, except inconditions of full employment, there will be an increaseof real income as well as of money-income. Thepublic will exercise “a free choice” as to the proportionin which they divide their increase of income betweensaving and spending; and it is impossible that theintention of the entrepreneur who has borrowed inorder to increase investment can become effective(except in substitution for investment by other entre-preneurs which would have occurred otherwise) at afaster rate than the public decide to increase their