Is money mostly created (out of nothing) by banks making loans?
The monetary base (MB) contains what might be called &quot;public money creation&quot;, Notes and coins in circulation (outside Federal Reserve Banks and the vaults of depository institutions), Notes and coins in bank vaults (vault cash), and Federal Reserve Bank credit (required reserves and excess reserves not physically present in banks). The broadest available government measured US monetary measure is M2, which does not contain all the elements of MB, but still is an approximation of the total of private and public money creation, which includes currency, plus time, savings, and demand deposit accounts. So, what is MB/M2? What fraction of money is created by the government of the total?

FRED: (Monetary Base; Total)/(M2 Money Stock*1000)
The answer is less than half. Crudely, money is mostly privately created in the US. The &quot;out of nothing&quot; aspect of your question is more complex. In my personal view, and I guess that's only an opinion, is that because banks are government regulated and insured institutions, forced to back each loan with reserves, and regulated to have capital for each of those loans, they cannot really be said to make this private money out of nothing.