Suppose JP does indeed buys stuff with and only with its reserves. Now JP starts new initiative under the slogan 'Buy the US', with the intention of buying all the building in the US, one after the other.
The first building the one next to JP, and JP pays it from its reserves. According to the article, no change in JP sheets results from the deal. So JP goes on with its buying spree, and now JP owns every building in Manhattan, then NYC, NY, then comes Vermont and so fourth.
Well, there is a problem with that initiative. At some point JP have no more reserves, the accounting are not conforming to banking standards and requirement and it is no longer a bank. Therefore, I will argue, something must change in JP sheets with every building or coffee machine it purchases, and the article is missing it.
Compare with a loan. When loaning, the bank has a liability (balance in the receiver's account). That's the created money. It's balanced by the promise of payment later, plus interest.
It's not really that different to suggest that to buy a coffee machine, they're creating money as a liability (money in the coffee company's account) backed by the value of the coffee machine as a an asset.
So yes, something does change on the sheets[1] - JP now has another liability, and another asset. The limiting factor is that banks are required to have more assets than liabilities (capital) by proportion, because capital is what really gets used to pay for things like account withdrawals. The proportion JP actually has reduces as each purchase is made, which is why JP can't hold an unlimited number of coffee machines/buildings.[2]
[1] The article does actually mention this, buried in a sentence about a full analysis of JP's balance sheets.
[2] Without that requirement, if the accounts were all at JP, it could buy as many coffee machines/buildings as it wanted, but would collapse if/when the money created was withdrawn. Also see 2008.
but why do that when congress will create a specific mechanism of infinite money creation for you?
* an asset for the account holder, i.e JPM, and
* a liability for the bamk, i.e. JPM,
so one can cancel them out.
As a matter of fact banks have accounts for themselves, to facilitate administration and accounting for departments/branches/etc, but these accounts have, from an accounting point ov view, essentially no effect.
Banks as businesses have all kinds of expenses. Coffee machines, employee salaries, etc. I can't imagine the money for those expenses come from reserves (the money that customers deposited) or newly created money. The banks expenditures must come from their revenues, just like any other business, right?
The bank gives someone a loan, which is indeed new money. The person pays that loan back with interest. That interest goes into the bank's bank account, so to speak. Those are revenues. Similarly, a customer overdrafts their account has has to pay a fee. That fee is also revenues.
If the bank wants to buy a coffee machine, it is deducting the cost of that coffee machine from the account where it keeps its revenues. That's not new money, is it? And, like any other business, whatever money is left in that account after expenditures are the bank's profits.
I could very well be wrong on this one, but it just makes a lot more sense than what this blog post is saying.