[Toddsterpatriot]

This is a contradiction with your admission above that this is brand new money.

Loans create new money. I never denied that.

If the money JP Morgan loaned California is brand new money, then JP Morgan's reserves are unaffected if someone cashes a check on California's 1.5 billion account.

The reserves are unchanged. I never denied that.

Your original claim sounded as if JP Morgan makes a loan and gets to keep the original $1.5 billion in deposits. That they make loans without money leaving the bank. That they can make loans, without any deposits. That's not the case.

Every loan must be funded.

[Fingolfin]

Your original claim sounded as if JP Morgan makes a loan and gets to keep the original $1.5 billion in deposits. That they make loans without money leaving the bank. That they can make loans, without any deposits. That's not the case.

JP Morgan does get to keep the original 1.65 billion. We both agree that the 1.5 billion JP Morgan created to loan California is brand new money. Once this is established the only possible outcome is that there is now 3.15 billion dollars between the two: 1.5 billion in California's account, and 1.65 billion in reserves in JP Morgan's account.