Zero Hedge — Which Came First: Loans Or Deposits? An Unexpected Answer From JPMorgan’s Balance Sheet

Summary:
We will update this analysis tomorrow once we have the full bank data, however the take home message for now is that the next time someone says that under fractional reserve banking deposits are always a consequence of loan creation - one of the core pillar of such idiotic theories as MMT - just show them the chart above."Loans create deposits," doesn't specify a quantifier. ZH assumes this says that all loans create all deposits, whereas it is plain that the MMT assertion is that all bank loans create some bank deposits." For example, MMT asserts that government spending creates bank deposits independently of bank lending. So the total of bank loans will not necessarily be the total of bank deposits in a period.ZH has the MMT position wrong.Zero HedgeWhich Came First: Loans Or Deposits?

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