Luke Williams, another Australian MMT proponent blogs at Shmookey.net/blog and draws my attention to his flow of funds model.
There’s not much on Luke’s blog at the moment but blogging is a slow process when you’re attempting to be factually correct. Check it out at Shmookey.net/blog. Nice to have more locals on the scene.
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what i don’t understand is the, ‘they can’t lend them [excess reserves] to other banks because they also have excess reserves’. if this were true, why can european banks not borrow in the interbank market? also, banks regularly decline to make loans on credit or price decisions ie they decline the loan because it is viewed as too risky or because the return is insufficient.