| >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. |
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.