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...

Founded on the money multiplier, the imminent demise of which is not overstated, there exists a profound misconception: that money creation begins with a new deposit. In many cases the source of the new deposit is not specified, and somehow the recipient bank acquires reserves. In other cases...

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...

There is an immense body of literature on the relationship of money and output, with result-integrity depending on the aggregates used. This paper proposes an alternative two-step approach, based on the reality that: (1) money creation is just the outcome of new bank loans extended, and (2) the...

Many scholars have fought valiantly to change perceptions on the process of money creation. However, misconceptions remain in place some quarters. In order to demonstrate empirically that a new bank loan creates a new bank deposit (without the bank having to recruit a new deposit), the author...

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...

There is a profound misconception amongst certain commentators on money and banking: that quantitative easing creates new money. The misconception is either: (1) that new money is injected into the economy; (2) newly created excess reserves can be used by the banks to make new loans. Neither of...

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...

After the discovery by the goldsmith-bankers that loans could be made by the issue of the newly accepted means of payments, receipts/bank notes, there was an inevitable next step: deposit money. Bank notes are deposits, but in a different form. Bank deposits are also accounting entries, but they...

It is a well-establish opinion that money creation has its genesis in the loan activities of the goldsmith-bankers in seventeenth-century London. This is accurate for bank note money, which had its origin in the receipts for precious metal deposits issued by the goldsmith-bankers. However, money...