The very essence of what this blog is all about has been spelled out and confirmed in an article by the Bank of England:

“Commercial banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. For this reason, some economists have referred to bank deposits as ‘fountain pen money’, created at the stroke of bankers’ pens when they approve loans.”

Read that again, especially this part: “When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do…