Private Banks Creating Money is Really Only a Circulation of
Money  That private banks create money whenever they make a loan
is being pushed by a large number of otherwise sincere monetary
theorists.  Perhaps they can be forgiven for their error. After
all, the measurement of base money circulating around and
around, moving from person to person measures a nation’s GDP and
is called the money supply. But you can follow the money you
spend, watch where it is spent each time, take note that each
time it is spent it increases the GDP, but at all times it is
the same dollar (base money that had been created by the central
bank) circulating.  Private banks can only increase circulation,
they can never create money because they can no longer add a
credit without accounting for a debit as they did for centuries
under the goldsmith theory of banking. Today only the Fed can
credit without debiting and they can only do so under the
authorization of Congress who give them that authorization in
big blocks such as the $2