Like a lot of people I've been using Soundflower and Soundflowerbed forever to capture system audio on my Mac. But it's not something I do very often so I didn't notice when some system update at some point broke it.
The original developer, Cycling74, handed it off to "Rogue Amoeba" which stopped developing the free, open-source "Soundflowerbed" app in favor of the proprietary pay "Loopback" app. The free, open-source "Soundflower" driver (aka kernel extension) has continued being developed by Matt Ingalls.
Depending on what version of the Mac operating system you're using you might be able to still use the last release of Soundflowerbed (1.6.7) with the Soundflower 2.0b drivers. But don't count on it.
The new, preferred method is to use the built-in "Audio MIDI Setup" utility (it's in your Applications/Utilities folder).
1. Click the [+] and create a "Multi-Output Audio Device"
2. Check the boxes for "Built-In Output" and "Soundflower (2ch)"
3. Set the Multi-Output Audio Device for your Sound Output (you can do this either in the MIDI utility or in the regular System Settings --> Sound --> Output control panel).
4. Set the "Soundflower (2ch)" as your Sound Input device.
Seems simple enough right? Except no audio app would actually record the sound I was hearing!
I also tried creating a "Aggregate Device" in the MIDI Utility. Unlike a "Multi-Output" you can select an "Aggregate Device" as an audio input source, so I created one of those with "Built-in Output" and "Soundflower (2ch)" checked. Then selected it as the input source in my audio recorder and...nothing. Didn't work.
After installing, uninstalling, reconfiguring, and trying everything in every troubleshooter or tutorial I could find online, fighting with this damn problem ALL DAY LONG then I stumbled onto this post: http://www.mac-forums.com/music-audio-and-podcasting/340016-solved-tricky-soundflower-giving-audio-quicktime.html
What the author of that says is they discovered that even though the Master and individual channel volumes in "Soundflower (2ch)" in the MIDI utility said they were turned up, they actually weren't! The solution was to slide them down to nothing and then slide them back to the volume you wanted.
Somewhere behind the scenes this must write new values into a configuration file that, despite the appearance of the sliders in the Utility, were apparently actually set to nothing.
Once I slid them down and back up I was able to record system audio, while also monitoring what I was recording, just like I always have before.
You can still adjust the INPUT volume in the System Preferences --> Sound --> Input but when you select either a Multi-Output Audio Device or an Aggregate Device you lose the ability to adjust the sound OUTPUT with your volume keys or the menubar slider. The MIDI Utility becomes the only place you can adjust the sound output.
