Definition
Credit is the practice of lending money — or the goods and labour it commands — against a promise of future repayment. It is the financial mechanism by which expected future wealth becomes available in the present.
Harari treats credit not as a technical banking detail but as one of the great inventions of the modern era. Pre-modern economies treated the world's wealth as fixed: one party's gain was another's loss, so lending was viewed with suspicion. Credit only becomes routine once societies start to believe — collectively, contagiously — that the future will be richer than the present.
Why it matters
How it works
A lender hands money to a borrower today; the borrower invests it in something productive (a workshop, a fleet, a startup); the resulting profits are used to repay the loan with interest. The lender, the borrower, and the broader society must all believe the project will succeed — or at least that the average of all such projects will.
This collective belief in growth is self-fulfilling up to a point. When lenders are confident, they lend more, which funds more enterprises, which generate the growth that confirms the original confidence. When confidence cracks — 1929, 2008 — the entire structure of credit retracts and the future, briefly, stops being borrowable.