Yes that looks good. I understand the money multiplier was not quite right since banks have obviously decoupled from any reserve requirement even if they had to abide by it at all. I also got the idea that the central bank is funded by IOUs.Lukendog said:Start with http://bilbo.economicoutlook.net/blog/?p=1623 as it specifically addresses your question.
I think there may be something to the distinction between these vertical and horizontal transactions. At the moment they don't seem all that different to me as in both cases money is created with a corresponding debt or IOU and the money and the debt can be extinguished upon repayment. SO I don't see a huge difference there but the author seems to be insisting there is one so I will keep reading and see what I find. It is pretty hard-going stuff.
Thanks, this looks like a lot of fascinating discussion.Lukendog said:If you are interested, under the heading of "Categories" on the right-hand side of any of the the blog pages you will find the "Debriefing 101" link. Go back to the very first article from February 2009 and work your way forward in time.