Banks create an asset in their balance, but they create a liability at the same time. Only governments spending create net financial assets in the economy (that is not the same that real assets, of course).
I'm going to read these too. I think nakedcapitalism is such a great blog.
I agree one is created as debt which will be destroyed ultimately on repayment. However this is the nub - they create 100 and demand back 110 at a later date, therefore more must be lent in the interim to avoid a deflationary collapse.
From my point of view, cryptocurrencies are financial assets but not money. They are not an IOU (https://en.wikipedia.org/wiki/IOU).
Government money is a IOU because you are promised that it (and only it) will be accepted as a payment by the state.
Anyway, state money can never be totally replaced at least that the government accept payment taxes in the new currency. And why people would start using other currency if they have to get the official currency for taxes payment?
Banks create an asset in their balance, but they create a liability at the same time. Only governments spending create net financial assets in the economy (that is not the same that real assets, of course).
https://fernandonogueiracosta.files.wordpress.com/2011/08/cu...
(If it's too long, see 'vertical transactions')