That monetary reform debate

I have been debating money creation for a few years now. I find that the most adamant opponents of any suggestion that banks create money through issuing loans are accountants and bankers. This is true both within the Green Party and in the real world too.

There is a distinct tendency for them to be pretty ad hominem in the debate, pouring scorn on the idea that money is not created by the Central Bank, and implying that since accountants are happy with the way things are, there is no debate to be had, and that anyone who disagrees needs to read economics.

This is like a doctor telling a patient who asks for a second opinion that the patient needs to study medicine first. This is not the case. It is possible for a patient to get accurate knowledge of his own case without studying the whole of medicine.

The problem with reading an economics textbook is - which one? Classical? Neo-classical? Marxian? Austrian? Chicago? Keynesian? Post Keynesian?

There are so many schools of economics that it is clear that it is not an objective science. It cannot be, since human judgements and human actions are an integral part of the field.

The key argument of the defenders of the status quo seems to be that money is created by the Money Multiplier, and so everything is OK.

This is a non-argument. The money multiplier simply states that if £100 is deposited in a bank with a Fractional Reserve (or equivalent) of 20%, £814 can be lent out. The 100 has turned into 814. £714 of money in circulation has been created by bank deposits and loans.

So the core argument of the accountants is the same as the core argument of the monetary reformers. Money is created in the process of banks making loans.

The second argument is that the money is created by the Central Banks. It is true that the central banks authorise the creation of money by the banks, allowing them to do so by setting reserve requirements and capital adequacy, but I challenge any accountant to identify the cash flows that indicate Bank of England ends each the day by creating the amount of money that banks have loaned out that day.