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How Do Banks Create Money?

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How Do Banks Create Money?

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Yves here. Richard Murphy has been making short videos that introduce various aspects of MMT. This discussion of how banks create money will be old hat for most readers, but it could help introduce MMT ideas to people in your circle who are not hopelessly resistant. It also introduces double entry bookkeeping as the way to show that MMT holds together. Murphy is on the Mr. Rogers end of the spectrum of economics presenters, which helps.

By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK

Modern monetary theory highlights the important role of the government in creating money when it spends. That process makes sure our money has value. But it’s not alone in creating money: banks can do it too. This video explores the implications of that.

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