There is a theory that the increase of monetary units, as in the case of a split or new coin, creates credit. This is an error that is presumably a consequence of assuming that credit expansion driven by state monetary expansion is a market force. This assumption fails to consider that market money cannot produce seigniorage.

Seigniorage is a tax. The created monetary units do not represent new capital but instead the dilution of existing units by the state, transferring ownership of the capital that they represent to the sovereign. As this capital is put to use in the subsidy of lending by the state banking cartel, as discounted money and insurance, the cost of capital to the bank's customers is reduced.

This so-called credit expansion is not simply the result of fractional banking as a market force. It is the consequence of the state favoring debtors at the expense of savers. In a free market of banking, banks are simply investment funds. Investors on average obtain a market return on capital and suffer the risk of doing so. In state banking risk, and therefore capital, are rearranged according to political objectives.

Market credit expansion is an increase in the lending of capital, as opposed to its hoarding. Increased rates of lending are a consequence of reduced time preference, and reduce the cost of capital. It is impossible to show that creation of a split or new coin (or anything else) reduces time preference. As such it is an error to assume that these creations either increase the availability of capital or reduce its cost.