[gizmo686]

Counting money is complicated. When I deposit $1000 in the bank, then even if the bank loans out a portion of it, my account still has $1000, and I still act like I have $1000.

Put another way, there are essentially 2 types of money: central bank money and commercial bank money.

When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.

When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing. The recipient of the loan is entitled to redeem that for $1000 of central bank money, but they probably wont, because cash is inconvenient and you can do most things with commercial bank money anyway.

[perl4ever]

>Counting money is complicated.

Is it?

>When I deposit $1000 in the bank, then even if the bank loans out a portion of it, my account still has $1000, and I still act like I have $1000.

I...think I agree. Check my previous comment. The depositor "Me" has $1000. No negative sign, is there?

Maybe you meant to say something about the bank.

>When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.

If you exchange $1000 in "blue" money for "pink" money, you've got $1000 more "pink" money, I guess. But you've got $1000 less "blue" money.

>When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing.

"SomeoneElse" who got the loan has $1000, right.

It's the bank who doesn't have $1000. The $1000 deposit of "Me" plus the loan to "SomeoneElse" of $1000, means they have a total of $0.

[gizmo686]

> Is it?

Take a look at https://en.m.wikipedia.org/wiki/Money_supply

You have M0, MB, M1, M2, M3, M4, and MZM.

I suppose the difficulty is more in defing money than counting. Apart from the M0 component (included in all counts) counting should just be a matter of aggragating data from all banks and the fed.

> "SomeoneElse" who got the loan has $1000, right.

Define $. "SomeoneElse" has $1000 of bank money. But the bank still has the $1000 of cash you deposited.

It might be easier to look at this through the definitions:

M0: Total amount of physical money. This is $1000 throughout the story. Only the Treasury is allowed to create M0.

M1: M0 + checking and savings accounts.

M0 is unchanged at $1000. However, there are 2 checking accounts with $1000, so M1 is $3000.