rationalskepticism.org

Now the Bank of England, in its 320th year, has officially acknowledged that the tosh that is taught to economics students the world over is indeed tosh. Banks don’t relend deposits. Deposits are liabilities that languish on banks’ books, not assets that can be lent out. There is no money multiplier that permits policy makers to determine how much money is to be made available to the economy by dictating reserve requirements. Central banks cannot even reliably stimulate lending for production to promote economic renewal by flooding the system with reserves, since reserves cannot be lent out and deposits created by measures such as quantitative easing may be used to pay off debt rather than to invest in production.

The sneering naysayers who persistently attacked Positive Money over the first two or three years of our campaign can now be roundly trounced by this official corroboration (if, indeed, there are any still remaining to be trounced).