All loans, even between private individuals increase the number of assets in the system, because as well as the cash that changes hands, a new IOU has been crea

All loans, even between private individuals increase the number of assets in the system, because as well as the cash that changes hands, a new IOU has been created, and that in itself is an asset. If the IOU is in the form of a number in a bank account, and you include private bank account balances as money (as most people do), then bam! money created. The magic status of banks just comes from counting private bank IOUs in the form of balances as money and not counting IOUs issued by private individuals as money.