[hn_throwaway_99]

Suggestion: if you're trying to make a point, state it. Linking to 40 page article about the theory behind monetary creation in the modern world is not exactly a good way to make your argument against the statement that "banks take deposits and make loans".

I honestly don't know how one can argue against that, it is simply true to anyone who has used a bank. I did not make any larger statement about the mechanics of modern-day money creation.

[c7b]

It's in the abstract already: money creation is a result of bank's loan creation - the two are connected. Banks don't take deposits that they then lend out, they instead create those deposits ex nihilo when they make a loan.

[hn_throwaway_99]

The difference is still useless pedantry for the purposes of a discussion about bank runs.

If a bank makes a lot loans, and those loans go bad, and then depositors are fearful for their money and make a run on the bank, it is the depositors who are still shit out of luck unless their deposits are insured. You can argue all you want that the traditional model of fractional reserve banking isn't how today's money creation works, but at the end of the day there is a direct line between the quality of a bank's assets (its loans) and the ability for it to service its liabilities (its deposits).

[criddell]

“Banks take deposits and make loans” in the context of this thread seems to imply that the money loaned by a bank belongs to depositors.