I’m mainly arguing against the idea that banks take in money as deposits and lend out that same money as loans. In modern economies, this is not actually how it works (Though it used to be true! Just not anymore.)
“Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits”
I highly recommend reading the whole paper from The Bank of England, it shows that much of what is taught in outdated macro textbooks is wrong.
“Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits”
I highly recommend reading the whole paper from The Bank of England, it shows that much of what is taught in outdated macro textbooks is wrong.
[0] https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...