How does this work out on a balance sheet?

In a guest post at Moneyness, Mike Sproul writes:

The bank's IOU will circulate more easily than your IOU, so we commonly talk as if the bank has created money. This is not quite right because the bank is not short in dollars on net. The bank went short in dollars as it issued its IOU, but it took an offsetting long position in dollars when it accepted your IOU. The bank is therefore neutral in dollars, while the borrower is short in dollars. This is why it makes sense to say that borrowers are the original issuers of money, while the banks only help out by putting their name on the money.

I thought Mike's conclusion -- that borrowers are the original issuers of money -- was pretty interesting. But I don't think in terms of balance sheets. So I ask: What say ye?


In follow-up comments, JP Koning asks

Why is the borrower short in dollars on net? A borrower goes short in dollars as it issues its IOU to the bank, but takes an offsetting long position in dollars when it accepts the bank's IOU.

Koning's question: I go to the bank and borrow a million dollars. The bank has my IOU, so I'm short a million bucks. But the bank puts a million in my checking account, so I'm also long a million bucks. Netting it out, I'm just even: not long, not short.

But of course, I borrowed the million because I plan to spend it. And when I spend it I won't have the million anymore. I'll have a really, really nice computer setup instead. So then I'll be short in dollars, and long in hardware. Mike Sproul's answer:

The borrower only holds the bank's IOU momentarily. Once the borrower buys a house, the borrower is short in dollars and long in houses.

Koning:

What if the borrower buys a dollar-denominated bond instead of a house?

My head starts to hurt. But there's only one more part to the exchange of comments, and Sproul is pretty funny in the end.

Not the funny part:

The origination process is simultaneous in the same way that minting coins is. The "originator" brings an ounce of silver to the mint, and the mint stamps it into a $ coin. Both had a hand in the process, but the originator provided the silver, while the mint only put his name on it.

I'm tempted to say the borrower (or the guy with the bag of silver) is the "issuer" and the bank does the "monetizing" -- which is just about where Mike Sproul started: "borrowers are the original issuers of money, while the banks only help out by putting their name on the money."

Sproul's conclusion is that it's not lending that creates money, but borrowing and lending together. I can live with that.