Since money, exclusively in this model and primarily in the real world, is the sum of the Banking Sector’s Liabilities and Equity, any action which increases Bank Liabilities and Equity creates money. Since every transaction is recorded twice, operations which increase the money supply must therefore occur on both the Assets and the Liabilities/Equity sides of the banking sector’s ledger. Operations which occur exclusively on either the Assets side, or the Liabilities/Equity side, shift money between accounts and do not create money.
The poster is deriving MMT theory based on double entry accounting being accurate.
Double entry accounting is not accurate. At any given time, a large chunk of liabilities wander off into shadow banking and to not appear on the regulated balance sheet for some timer.
It is exactly the uncertainty between assets and liabilities that the currency banker manages. It is not a given, it one assumes the two are always in match then one causes cycles and government devaluation eventually. The Bank of England model assumes there is an exact deposit to match the new loan. There is not. What is happening in that model is that a loan automatically causes the bank to move the borrower up to the top of the queue for deposits. That shifting of the queue by fiat results in accumulating currency risk which eventually gets passed on to government and tax payer. It is one of the greatest blunders in scientific history.
Economists are having a very difficult time right now working the better banking theory. I think they are suffering career stress as a result of a lifetime of blundering. The Naked Capitalism crew are completely clueless and should be ignored on the topic.
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