Shadow,

The RBA does not borrow money to lend it. It lends the money first (increasing the M1 money supply). Then to limit the inflationary impact of printing money, it sells bonds. And (perhaps more importantly, as it happens passively) it pays banks an overnight interest rate on reserves. IOW there are procedures in place to ensure that printing money does not result in excess money in the economy.

Moving the pegs of fixed currencies is highly inflationary, as it's done in large increments, and the process doesn't happen very quickly.

"Private sector debt is not the only source of money supply growth which can grow without public or private sector debt growing."
Please explain:
• how you think it can do that?
• how else do you think it can happen?

Aidan,

Now I believe you are just making it up as you go along. The RBA does nothing of the sort.

As for money supply growth in the private sector, I suggest you read and try and digest the link that you provided from the bank of England, as I don't have the time nor word space to do the task.

Shadow,

"Now I believe you are just making it up as you go along. The RBA does nothing of the sort."
The RBA claims otherwise:
http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html

"As for money supply growth in the private sector, I suggest you read and try and digest the link that you provided from the bank of England, as I don't have the time nor word space to do the task."
That accounts for M2, M3 snd M4 money supply growth, but doesn't affect M1.

Aidan,

I would strongly suggest that you read the links you post. The last one does not support your position at all.

That the RBA acts as an overnight clearing house for the banks in no way indicates that it is "printing" money to do so.

Shadow,

I told you the RBA sold bonds and paid an overnight interest rate on reserves. You said it did nothing of the sort. I supplied a link to a page where the RBA admits it does that. How can that not support my argument at all?

There is no way the private sector can increase M1 money supply. If you think you can find a counterexample, post it (or a link) and I'll explain why it is incorrect.

You have absolutely no evidence at all to support your claim that the RBA can't lend money without borrowing it first. What will it take for you to admit you're wrong?

Aidan,

That's not what you said:

"The RBA does not borrow money to lend it. It lends the money first (INCREASING THE M1 MONEY SUPPLY). Then to limit the inflationary impact of PRINTING money,"

The words in capitals are what I have issue with and which are not supported by your link.