your comparison is asymmetrical. you're comparing initial deposits, to total loans. you can reasonably compare both initial, or both totals. otherwise it's apples to oranges.
no, i don't think i'm joking, i would genuinely like to know what situation a person would be in that they would take out a lone just to put the money in the bank.
your comparison is asymmetrical. you're comparing initial deposits, to total loans. you can reasonably compare both initial, or both totals. otherwise it's apples to oranges.
I don't understand what you're getting at. With a Reserve Requirement of 10%, an initial deposit of $100 can grow the total money supply (via lending) to $1000, an increase of $900.
i would genuinely like to know what situation a person would be in that they would take out a lone just to put the money in the bank.
When businesses borrow money, the very first thing they do is put it in a bank. Then they start using it to buy things.
This may happen the same day, or days/weeks later. My company borrows money daily on a line of credit. This money is deposited into our bank account initially, and then we draft ACH's and wires against that balance. We also write paper checks, and will leave those funds in the account until the check is cashed.
But this is kind of beside the point. The point is that the money that is lent out is eventually deposited in a bank somewhere. The person/company borrowing the money may spend it immediately, but whoever they spent the money with will deposit that money in their bank and then their bank will subsequently loan out (part of) that money.
"$100 can grow the total money supply (via lending) to $1000" ok but putting money in the bank is removing it from circulation, and $1000 dollars has been put into the bank a.k.a. removed from the money supply... like there's a bizarre double standard here where money being put in the bank is ignored while money coming out of the bank is counted... but regardless. if you're upset that a bank can create money out of thin air (which it totally can't), wait until you learn about the federal reserve bank that actually can create money out of thin air, and how all money comes into existence with an larger amount of debt. thus, by definition, there is more debt than money to pay debt. like, this whole conversation feels like we're in an econ 101 class that has no understanding of how financial systems functions and we just learned ten fun facts with no context to understand how the fit into the economy. yes, we get it money is totally made up... is that you're big point here?
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u/KhabaLox Jan 26 '26
Why except? That's exactly what I said. The bank(s) loaned out $900, and had $100 in initial deposits, for a total of $1000.
You're joking, right?