Counting money is complicated. When I deposit $1000 in the bank, then even if the bank loans out a portion of it, my account still has $1000, and I still act like I have $1000.

Put another way, there are essentially 2 types of money: central bank money and commercial bank money.

When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.

When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing. The recipient of the loan is entitled to redeem that for $1000 of central bank money, but they probably wont, because cash is inconvenient and you can do most things with commercial bank money anyway.

>Counting money is complicated.

Is it?

>When I deposit $1000 in the bank, then even if the bank loans out a portion of it, my account still has $1000, and I still act like I have $1000.

I...think I agree. Check my previous comment. The depositor "Me" has $1000. No negative sign, is there?

Maybe you meant to say something about the bank.

>When you deposit $1000 of real cash into a bank you exchange $1000 of central bank money, for $1000 of commercial bank money.

If you exchange $1000 in "blue" money for "pink" money, you've got $1000 more "pink" money, I guess. But you've got $1000 less "blue" money.

>When the bank loans out $1000 to someone else, they credit that person's account with $1000, creating $1000 of commercial bank money out of nothing.

"SomeoneElse" who got the loan has $1000, right.

It's the bank who doesn't have $1000. The $1000 deposit of "Me" plus the loan to "SomeoneElse" of $1000, means they have a total of $0.

> Is it?

Take a look at https://en.m.wikipedia.org/wiki/Money_supply

You have M0, MB, M1, M2, M3, M4, and MZM.

I suppose the difficulty is more in defing money than counting. Apart from the M0 component (included in all counts) counting should just be a matter of aggragating data from all banks and the fed.

> "SomeoneElse" who got the loan has $1000, right.

Define $. "SomeoneElse" has $1000 of bank money. But the bank still has the $1000 of cash you deposited.

It might be easier to look at this through the definitions:

M0: Total amount of physical money. This is $1000 throughout the story. Only the Treasury is allowed to create M0.

M1: M0 + checking and savings accounts.

M0 is unchanged at $1000. However, there are 2 checking accounts with $1000, so M1 is $3000.

> The money supply didn't change as far as I can see.

Your numbers (1) look like a attempt to assess net assets and liabilities rather than money supply and (2) are wrong even for that.

Money supply (I’ll use M1 here because it's simple, but M2 or M3 wouldn't differ in any way material to the example, since the example consists entirely of cash and demand deposits) is the sum of all cash, demand deposits, travelers checks, and certain other highly liquid deposits in the economy.

At first: You have $1,000 in demand deposits. M1 is $1,000.

After the loan, you still have $1,000 in demand deposits and the loan recipient has $1,000 in cash (or, more likely, a demand deposit, because they probably get and deposit a check.) M1 is $2,000.

I think I agree, if you divide assets into "money" and "other stuff" buckets then when you move something between them, "money" is created.

I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.

But I can't really engage with you about stuff other people wrote and what they might mean. I belatedly realized there were a bunch of people tag-teaming me.

> I think I agree, if you divide assets into "money" and "other stuff" buckets then when you move something between them, "money" is created.

A new loan doesn't move assets between buckets it creates a new asset and a new liability. The asset is money, the liability is not money (nor is it negative money).

> I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.

Money creation is fairly trivial if somewhat counterintuitive, but people talk about it because it is important in its economic effects.

> The sum was $2000 before and $2000 after. Do you have an issue with any of the six numbers above?

Well clearly because that's not what I wrote. You're mixing liabilities with assets and also redefining the money supply to include the bank. Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean.

The money supply is the total cash and bank deposit assets of all individuals and corporations. Central bank money is different and isn't part of it.

>Well clearly because that's not what I wrote. You're mixing liabilities with assets and also redefining the money supply to include the bank

Wait, I thought the entire point is that FooBank is creating money? Do you want to pretend they don't exist?

>Not sure how borrowing $1000 leaves me with "-$1000" in assets or what that's supposed to mean

Ok, fine, you can have the $1000, it's not a loan after all.

Lemme update it:

At first:

   Me: $1000 in deposits
   FooBank: $1000 in assets - $1000 in deposits, total of $0
   You: $0

After your non-loan:

   Me: $1000 in deposits
   FooBank: $1000 in liabilities, no assets
   You: $1000

But! FooBank can never return my deposit at this point.

So the cold hard truth is...

   Me: $0 in deposits
   FooBank: (bust)
   You: $1000

And so in the end, there is the same $1000 that there was in the beginning, no money created.

In sort-of real life, the FDIC would bail me out, I guess, and then I would have $1000, but that certainly would be the opposite of the bank creating it.