ZZ-IK Req-Public / private lending

External contributor: "Ikonoclast" said on MMT blog run by Bill Mitchell:

Tuesday, November 24, 2015 at 20:04 [link]:

 * While private lending does not increase net assets of the private sector, it clearly increases the volume of high powered money circulating in the economy. If, over an extended period, new lending continues to exceed repayments on existing lending then the volume of high powered money in the economy increases (all other things being equal). So the economy is getting “pump primed” in a sense but it’s kind of odd. It’s almost as if the economy is running on “empty calories”. The private sector has lots of money circulating but it has to net dis-save if the government has to run surpluses (as Howard did) to damp inflation. I am not sure what this would mean but my guess is it causes odd distortions in the economy. Is this one way to get high housing asset inflation with low headline (goods) inflation? (Which I think is unhealthy by the way and a distortion which hurts low income groups.)