> The money supply didn't change as far as I can see.
Your numbers (1) look like a attempt to assess net assets and liabilities rather than money supply and (2) are wrong even for that.
Money supply (I’ll use M1 here because it's simple, but M2 or M3 wouldn't differ in any way material to the example, since the example consists entirely of cash and demand deposits) is the sum of all cash, demand deposits, travelers checks, and certain other highly liquid deposits in the economy.
At first: You have $1,000 in demand deposits. M1 is $1,000.
After the loan, you still have $1,000 in demand deposits and the loan recipient has $1,000 in cash (or, more likely, a demand deposit, because they probably get and deposit a check.) M1 is $2,000.
I think I agree, if you divide assets into "money" and "other stuff" buckets then when you move something between them, "money" is created.
I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.
But I can't really engage with you about stuff other people wrote and what they might mean. I belatedly realized there were a bunch of people tag-teaming me.
> I think I agree, if you divide assets into "money" and "other stuff" buckets then when you move something between them, "money" is created.
A new loan doesn't move assets between buckets it creates a new asset and a new liability. The asset is money, the liability is not money (nor is it negative money).
> I don't think people intend to say this and only this, when they talk about creating money. Because it's trivial.
Money creation is fairly trivial if somewhat counterintuitive, but people talk about it because it is important in its economic effects.
Your numbers (1) look like a attempt to assess net assets and liabilities rather than money supply and (2) are wrong even for that.
Money supply (I’ll use M1 here because it's simple, but M2 or M3 wouldn't differ in any way material to the example, since the example consists entirely of cash and demand deposits) is the sum of all cash, demand deposits, travelers checks, and certain other highly liquid deposits in the economy.
At first: You have $1,000 in demand deposits. M1 is $1,000.
After the loan, you still have $1,000 in demand deposits and the loan recipient has $1,000 in cash (or, more likely, a demand deposit, because they probably get and deposit a check.) M1 is $2,000.