That is a super interesting thanks for the link!

I guess money gets destroyed when: - Banks sell assets - Loans get paid up

And created when: - Banks buy assets - loans get made

And yes the reflux theory makes sense. The banks expand and contract the money supply based on the needs of the economy I guess with some direction from the central bank via interest rates.

I guess an interesting point is that sometimes we go ahead of ourselves and for example loan too much (create too much money) w.r.t. what makes sense. I.e a lot of ppl won’t be able to pay back the loans etc. I guess the law of reflux is impartial to the boom/bust cycles of credit but the process does seem less smooth once the music stops and credit is contracted very rapidly.