Comment by JumpCrisscross

> Making a loan/offering credit isn't automatically money creation

The Fed can limitlessly increase monetary base (MB) to increase M1. Non-bank lenders create M4 which turns into M2 through the money markets which turns into M1 through the banks. More convoluted and more limited, by design. But the net effect is the same–more M1.

More broadly: when you open a bar tab, you're literally creating money, even if it never hits M1.

Credit is always money creation. When it's done at scale it's almost always creating M1.