"Before I show why he fails, I want to clarify what it means to say that banks create money “out of nothing” (Schumpeter 1934, p. 73). It definitely does not mean that banks create money via magic. What it means instead is that there is no other account from which a bank loan is financed, whereas there is such an account for a non-bank loan."
So if we take the bank created version of money as correct, or at least approximately correct, then the question is what drives the limits of bank created money especially now that reserve requirements have been set to 0 since 2020. It seems to be:
The willingness of The Fed to approve your balance sheets through their "stress test" procedure.
The willingness of The Fed to invent some bullshit reason to create new reserves for you
Right, it's the operation of law and some cabal of bankers we call the federal reserve board... and if you fuck it up badly enough the fed will just invent reserves to keep the system going (ie. this is exactly what happened between 2008 and 2015 or whatever.
As long as banks have at least one bond with a par value of $1, The Fed can technically agree to buy it for literally any amount it wants poofing into the reserve account...
In reality it tends to be less crazy than that, but it still invents reserves out of nothing in response to credit panics created by banks ability to manufacture funds run amok.
Oh maybe, but he's talking about a thing he calls a "Moore Table" which is a matrix with diagonal and off-diagonal entries... so I think there's just something missing... I don't see the matrix.
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