(1) Spending Comes Before Taxing — But What Role for Bank-Created Money?

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In the comment section to one of Bill Mitchell's many posts, a certain Alex poses a question that has been occupying me for a while:

I can totally see the logic of the public sector creating net financial assets (or destroying them) but having read many of your blog posts now I can’t help wondering “What about bank-created money!?!” If banks are not constrained by reserves then they can create money whenever they wish. Yes once the money is paid back the net is 0 but surely there are drastic implications for unconstrained bank lending? After all, that bank-created money is as good as the government-created money until it is extinguished. The only control the government can have over the amount of bank-created money is by affecting the demand for it by changing interest rates. 

Doesn’t all the aggregate money supply information (like M3) show a constantly increasing money supply in almost every nation? Is this from constant deficit spending? Constant expansion of debt creation by banks? Both? Which one is the greater contributor to the money supply?

Source.

Specifically, my question is: According to MMT, government must spend before it can tax. Not taxes are making it possible for government to spent. It is the other way around, by spending government creates the money, injects into the economy, into people's pockets the money that will be subjected to taxation. Without issuing this money in the first place, people would not have the money to pay taxes. 

I am unclear about the status of banks and bank-created money in this context. According to MMT, banks are privileged (by government consent) to create money out of thin air, sharing this privilege with government. For instance, when a bank finds a creditworthy client, it will be happy to accommodate the client's demand for a loan. By granting the loan, a client deposit is created by the bank, from which account the borrower can withdraw the borrowed money. Usually granting of a loan precedes the appropriate adjustment of reserves held by the bank at the central bank. So banks are creating money at their own discretion and the requisite central bank action follows suit.

My uncertainties are these:

Is credit creation by banks regarded as some sort of delegated government spending (making taxation possible)?

Is the money created by banks ultimately based on government created money (central bank reserves), so that government liabilities are always issued when taxable money is created? 

Put differently, even when reserves (government money) are created after the event, the banks could not create new taxable money unless the government created government money to back it up (for purposes of accounting and to keep the payment system run smoothly).

(For internal purposes, possibly for future reference: here.)

Continued here.