A diagram to link Credit creation with a Balancing system

I was thinking how I could link Professor Werner’s proof of Credit Creation Theory and advocacy of decentralised not for profit banking to a diagram which i could use the get the idea across the my A level and Pre-university groups and came up with this based on Kate’s balancing system diagram and wondered what other people thought and if i could even add more to it?

Sorry about the handwriting probably need to use some software to neaten it up!!

Talking of balancing systems, here is how I choose to model our macroeconomics:


By: David Harold Chester MSc. Private research


The commonly used method for representing macroeconomics as a social system is by assuming the existence of a number of agencies (or entities) and of their various connecting links. In practice this is achieved and illustrated by the use of a block-and-flow diagram. For the case being considered in this paper, the whole social system of a country is deliberately included in its most complete, comprehensive yet simplest possible form (according to the scientific principle known as Occam’s Razor.) By making suitable assumptions, it is found that only 6 entities with 19 connecting links are required (actually 16 are used, 3 being duplicated).

This diagram for representing our social system is one of a number of different possible modelling techniques. An alternative way for its expression is by mechanical means, using a number of balancing-beams, weights and strings, with pulley-wheels. This kind of model is especially attractive for purposes of teaching, because of its visual and practical nature, with the ability to adjust it by hand. The use of this mechanical model brings into focus the need for definitions of the various entities within the system and their many functions, which is an attention-grabbing and attractive way of introducing the subject to new students.

The rest of it can be seen in the complete working paper on the internet when you try SSRN 2600103 and the above title.