> I have no idea why you would ignore $8 trillion in interest bearing deposit accounts. To the extent these funds come from other banks, they will show up on th

> I have no idea why you would ignore $8 trillion in interest bearing deposit accounts. To the extent these funds come from other banks, they will show up on the balance sheets of those banks (as loans). What? I'm not ignoring those deposits, just pointing out that those deposits are "created money". They are made by banks, not issued by the Fed. The only restriction on their creation is the Fed interest rate on one side and the reserve requirements on the other. In technical terms, they are part of M2, not M0 or M1 [1]. And banks are definitely allowed create M2, though obviously not M0 and M1. > Maybe try working from the assumption that what I am saying is (more in the direction of) correct. The banking system may be set up to work in favor of the establishment and bankers, but it isn't a giant fantasy. What exactly are you asserting? Nowhere did I state that the banking establishment is some kind of giant fantasy. I just made the fairly uncontroversial assertion that banks are allowed to issue more credit than they have cash on hand. In a sense, when they do so they are "creating" money (though this "created" money is technically referred to as M2). 1. http://en.wikipedia.org/wiki/Money_supply http://en.wikipedia.org/wiki/Money_supply