3dom (Ali)

11 years ago the Bank of England admitted the textbooks are wrong about how money is created. The people advising Congress still have not read it. In 2014, the Bank of England published a paper confirming what critics like me had been saying for decades. Banks do not lend out deposits. They create money when they create debt. The loanable funds model that fills every economics textbook is fiction. That matters because the GAO's entire debt warning is built on that fiction. Their framework assumes a government deficit borrows from the private sector and drains money available for investment. Double entry bookkeeping shows the opposite. A deficit creates money in private bank accounts. It adds to the economy, it does not subtract from it. The Bank of England said it. I have been saying it for 20 years. And every government adviser is still using the model that was proven wrong in 2014. For a more comprehensive understanding, refer to the full video presentation given in the comments. #SteveKeen #MoneyCreation #BankOfEngland #Economics #PrivateDebt