Mission Statement

This blog's goal is to provide simple banking examples as a aid to learning aspects of our modern monetary system. The concepts here are mostly associated with the Monetary Realism school of thought. Good sources of information about Monetary Realism are monetaryrealism.com and pragcap.com. I've found that learning through examples is a great help to me personally. Just creating the examples is a learning experience. I hope that others can benefit from them as well of course! Please feel free to email me with suggestions or comments or make comments on the blog.

The following are examples of the kinds of statements that inspired this blog:

1. "Banks are not reserve constrained in their lending, they're capital constrained."
2. "Banks don't lend out reserves."
3. "Loans create deposits."
4. "Deposits funds loans."
5. "Quantitative Easing is not money printing, it's an asset swap."
6. "Capital is equity plus certain liabilities."
7. "Equity is always a liability."
8. "Banks create money."
9. "Outside money facilitates inside money."
10. "The US government does not have a solvency problem."
11. "Reserves are used by banks to clear payments and meet reserve requirements."
12. "The money multiplier is a myth."

To the laymen (like me!) these statements can appear very confusing. Sometimes there are subtleties or assumptions implicit in the statements which a layman might not catch. Even when some considerable number of words are written in response to questions or in articles concerning these statements, they can often still seem very abstract and mysterious. This blog was specifically meant to help explain some of these concepts with concrete examples.

Enjoy!