In 1990 Kydland and Prescott of the Minneapolis Federal Reserve bank, part of the US central bank system, showed that deposits of reserves at central banks rise only after loans are made by commercial banks1. This favoured the unlimited creation theory. In 2014, McLeay and others, of the Bank of England, also claimed the unlimited creation theory is correct2. Now Werner reports an explicit test using the standard secure software of a German regional bank. It shows quite clearly that the granting of a new loan involves the creation of the loaned money out of nothing.
If governments were a bit smarter, they would create their own money and not have to pay any interest to private banks. Abraham Lincoln and some governments during World War I understood this, but that understanding has been suppressed or forgotten. Generally governments have been conned ever since the King of England was conned in 1698 by the founders of the Bank of England into borrowing their paper money instead of printing his own5.
So all the hysterical howling about government deficits it is really part of the campaign to keep governments small and ineffectual, and out of the way of those who want to make a lot of money for themselves.
https://betternature.wordpress.com/2015/12/04/money-out-of-nothing-and-why-it-matters/
