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by spiralx 1658 days ago
> The sum was $2000 before and $2000 after. Do you have an issue with any of the six numbers above?

Well clearly because that's not what I wrote. You're mixing liabilities with assets and also redefining the money supply to include the bank. Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean.

The money supply is the total cash and bank deposit assets of all individuals and corporations. Central bank money is different and isn't part of it.
1 comments
perl4ever 1658 days ago
>Well clearly because that's not what I wrote. You're mixing liabilities with assets and also redefining the money supply to include the bank

Wait, I thought the entire point is that FooBank is creating money? Do you want to pretend they don't exist?

>Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean

Ok, fine, you can have the $1000, it's not a loan after all.

Lemme update it:

At first:

   Me: $1000 in deposits
   FooBank: $1000 in assets - $1000 in deposits, total of $0
   You: $0
After your non-loan:

   Me: $1000 in deposits
   FooBank: $1000 in liabilities, no assets
   You: $1000
But! FooBank can never return my deposit at this point.

So the cold hard truth is...

   Me: $0 in deposits
   FooBank: (bust)
   You: $1000
And so in the end, there is the same $1000 that there was in the beginning, no money created.

In sort-of real life, the FDIC would bail me out, I guess, and then I would have $1000, but that certainly would be the opposite of the bank creating it.

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