For example, orthodox economics persists in propagating the idea that banks simply act as intermediaries between savers and investors. The video accurately describes how banks create money when they make loans. They mark up the loan recipients account by the amount of the loans and simultaneously create an asset of equal size on their balance sheet. Both the US Federal Reserve and the Bank of England have published guides1 to how this works. Former Fed Chairman Bernanke explained this on national tv in responding to how they had found the money to bail out Wall St after the 2008-9 crash. He said well you just do it via a keyboard.2 Somehow orthodox economists of the Paul Krugman variety cannot be bothered to learn how banking actually works.
- see Nichols, Dorothy, and Anne Marioe Gonczy. “Modern Money Mechanics : A Workbook on Bank Reserves and Deposit Expansion.” Federal Reserve Bank of Chicago, rev.1992 1961.
- here is a snippet from the 60 Minutes interview from October 10, 2009: https://youtu.be/hiCs_YHlKSI