Apart from the main misconception of money creation, that is, the exogenous-endogenous money creation debate, there exist a number of lesser misconceptions, including that banks are 'fully lent' when they have no excess reserves, that money creation begins with a new bank deposit, and that a...

The endogenous-exogenous money debate is a futile one. Exogenous money creation, based on the money multiplier, is not a money creation process. Rather, it is a monetary policy model, but in it money is still created endogenously: bank loans (and foreign asset accumulation by banks) concurrently...

Exogenous money creation does not exist, but did under a past specie-money system. Central bank control of bank reserves and therefore control of bank deposit (money) creation via the money multiplier can exist, but this has nothing to do with the process of money creation. Rather, it is a style...

The state of bank liquidity, measured as the banks' net excess reserves (NER) with the central bank, is a critical element of the successful implementation of monetary policy. Central banks have absolute control over NER and manipulate it to bring about a positive NER (in QE periods) to drive...

It is sometimes stated that government spending leads to money creation, at the same time providing the banks with excess reserves, leading to further money creation. This is so, but the statement ignores the fact that the money stock (and reserves) was depleted when revenue was raised in order...

It persists in part of the literature that there are two monetary policy models: the monetary base-focused model (aka the money multiplier model/strict money-rule model) and the interest rate-focused model. The former only exists in theory because its implementation (for brief periods in a few...

This paper presents a stock-flow consistent model+ of full-reserve banking. It is found that in a steady state, full-reserve banking can accommodate a zero-growth economy and provide both full employment and zero inflation. Furthermore, a money creation experiment is conducted with the model. An...

The economic crisis that began in 2007 and still lingers has invited comparison with the Great Depression of the 1930s. It has also generated renewed interest in Milton Friedman and Anna Schwartz's explanation of the latter as mainly the consequence of the Fed's failure as a lender of last...

Much intellectual energy has been devoted over many decades to the concept of money "demand" and its significance for monetary policy. It is obvious that the non-bank private sector (NBPS) does hold non-interest-bearing money (incongruously called money "demand") for specific purposes (in the...

Monetary literature remains plagued by references to money “supply” at a time when the endogeneity of money is becoming generally accepted. Money endogeneity is not a hypothesis; it is a fact, and one that has existed since a goldsmith-banker wrote out the first receipt (bank note) and...