> What I'm trying to get across is that nothing has to precede the creation of the IOU, whereas I think you say an initial deposit of government-issued central bank money (known as cash).

I'll start responding to this because I think it's a point where we agree: yes, you can type any number in a computer and call it "money". Yes, I agree nothing has to precede the creation of numbers on a computer. However, in order for those numbers to actually "be money" in a practical sense where someone could exchange them to goods and services, the bank has to actually own some real money. If the bank literally has 0 reserves, then the money that it creates on the computer will not be in practice exchangeable to goods and services.

> > Do you think that a bank which has NO MONEY is able to (in a practical sense) create infinite money out of thin air?

> That's ... exactly how it works. [...] You can then go and send that money (demand deposit) somewhere else to buy a house or whatever (goods and services). Bank A and bank B both have banking licences, which means they mutually trust using each other's customer demand deposit accounts as 'money'.

If bank A tries to send 9999999999999 dollars to bank B, bank B doesn't simply trust that bank A is good for it. The transfer would not actually go through in the real world. Please produce a single example where this has happened: a single example where a bank had 0 reserves, created >9999999999999 USD out of thin air, and then somebody exchanged that money to goods and services. A single example is enough to prove me wrong. What you're claiming to be possible has never actually happened.

> If you would like to turn that demand deposit into hard cash to keep under the mattress, your commercial bank will send your demand deposit to the commercial bank's account with the central bank, and the central bank will truck over some cash in return.

So in this scenario we have a bank that has 0 reserves in the central bank, and the bank then goes to the central bank and says "I would like to withdraw 9999999999999 dollars in cash, please". This scenario is comparable to you opening up a checking account at a (regular) bank with 0 dollars in it and then walking into the bank saying "I would like to withdraw 9999999999999 dollars in cash, please". The bank would tell you "sorry, your account has 0 dollars, which is less than the 9999999999999 you are trying to withdraw, so we can't make the withdrawal". This is exactly what the central bank would respond to a bank that is holding 0 dollars in reserves at the central bank while trying to withdraw an amount greater than 0 dollars. Even if the bank was asking the central bank to produce $5, the central bank would say no, $5 > $0, you can't withdraw money you don't have.

Edit: to add clarity, I'm saying that this specific part of your claims is wrong: "your commercial bank will send your demand deposit to the commercial bank's account with the central bank". To the extent that the commercial bank is able to "create money out of thin air", it isn't the type of money that the central bank would accept as a deposit. You can fact check this.

> Trying to get a loan without intention of paying it back is bank fraud. It happens and occasionally for very large sums [...]

That's completely unrelated to this discussion. Yes, a bank can loan out money (money that it has) to a fraudster who has no intention of paying back the loan. The question we have here is, can a bank that has 0 money, can it magically create 9999999999999 dollars out of thin air and loan it out. That's unrelated to whether the loanee will eventually pay it back or not.

> The contradiction seems fundamental. You're suggesting existing deposits facilitate the creation of loans. The entire BoE article is a repeated attempt at showing how loans create deposits.

You present these things as mutually exclusive - they're not. Existing deposits facilitate the creation of loans, and the creation of loans expands the amount of existing deposits. Both of these things can be true at the same time, and they are true at the same time.