These temporary deficiencies are restored through open market purchases of bonds. The bonds in question in the U.S. are govt bonds. But in England the B of E purchased on the discount market and was in eff ect engaged in commercial operations. The effect was the same. The cash shortage can and has been remedied by the purchase of private sector debt in other contexts and as such represents not the government's creation of a demand for money but the demand for money pure and simple, as it emanates from both the private sector and the government.
Merchants are capable of transacting with one another simply by making book entries.
If the book entry is concretized as a document it becomes a bill of exchange and can be traded with other merchants. Those checks are not backed by anything other than the fact that you have been rated by the credit card company. Moreover, this was not limited to business-business relations. But the interst never was collected. It simply meant that the people doing the work received their scant tools, supplies, and food, and never saw a dime of cash.