If banks are no longer allowed to create money, where will banks get enough money to make loans under the American Monetary Act?
We devote substantial space to this question because economists so used to confusing credit and money have to get used to the idea of money instead of credit. Usually they want to know how the AMA creates money within the present bank accounting framework. Well it does not! The AMA changes the accounting rules to deal with money not credit. By the way the words credit money and debt money refer to the same thing, money created by bank lending. There will be several substantial sources of money for banks to lend: a) Title III of the Act converts through an accounting procedure, the existing credit the banks have circulated through loans (about $6 to 7 trillion, roughly the existing “money” supply) into US money, no longer bank credit. That process will indebt the banks to the government for the amount converted over and above their capital. At present when bank loans are repaid to the banks by their customers, those credits/debts go out of circulation, out of existence and the credit mo
