Banks as intermediaries versus banks as loan originators

I model the Neoclassical “Loanable Funds” model in my system dynamics program Minsky, and it’s easy to see why they ignore banks, debt and money in their macroeconomics. If they were right about banks merely being intermediaries, then private debt wouldn’t matter to the macroeconomy.

However, it takes about 30 seconds to go from this fictional model of the world, to the real world in which banks are loan originators, and not merely interemediaries between savers and borrowers. In this (real!) world, the level of bank lending has a direct impact on both the amount of money in the economy, and the level of economic activity.