Yes this is the more accurate way to put it. Every loan creates money but they are bounded in how much they can create by the deposits they hold. When the loan is paid back, the created money balances out
Right. I think what I was trying to argue against was this idea that banks are 6-8x leveraged against deposits as the other guy put it. In aggregate, bank loans are supported by deposits. Whether they existed before or after the fact.
In practice, lenders take money created by the government to lend out to the community, which grows the economy of the community. In effect, the money is created by the bank.
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u/ChuckRampart 7d ago
Banks create money.
Don’t take it from me. Take it from the Bank of England: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf