Tuesday, 19 July 2016
Malcolm Sawyer discovers that bank loans create money and repayments destroy it.
Congratulations to Malcolm Sawyer (former professor of economics at Leeds in the UK) for his “discovery” that money is created when a bank grants a loan, and that money is destroyed when a loan is repaid.
That’s the gist of this recent paper of his. The “gist” is of course hidden underneath a pile of the sort of pseudo technical verbiage that academics usually deploy to hide the fact that they aren’t saying much.
The above point about money creation and destruction is second nature to the more clued up supporters of Positive Money and advocates of Modern Monetary Theory.