They can loan out 90% of your cash, if that's what you mean. (In the US.)
They give you both security and liquidity as well as payment processing options. If you think they're overcharging, you could always buy government/corporate bonds yourself (or through bond funds, maybe.)
This is because from each $1 you deposit, the bank keeps $0.10 in reserve, then loans out $0.90 to a debtor account. Of that, they keep $0.09 as reserves, and lend $0.81 out to another debtor account. Of that, they keep $0.081 as reserves....
Get it now? As long as the same dollar is present in the vault, it qualifies as reserves for $10 in electronic circulation.
If not, I still don't understand why the existence of a money multiplier is a reason for Bank Hate as indicated before. It's a trivial property of any system which permits lending.
The source of the Bank Hate, as you put it, is that the depositors, the source of the reserves, are offered 0.5% interest rates on the savings account, whereas all the loans, totaling nine times the size of the deposit, are earning 4% or more.
You deposit $100, and get $0.50 in interest. The bank loans out $900 and gets at least $36 in interest. Since this would not be legally possible without the actual deposit, one may wonder why the depositors are not offered greater incentives to increase their deposits. And the answer is often, "F U, that's why. Have another $5 fee just for asking, and now we're going to play games with funds availability on your deposited checks and incoming transfers."
Legal or not, it offends the primate sense of fairness. It is very likely that the sense of fairness would be satisfied simply by making the interest rates on savings accounts equal to the interest rate on 30-year mortgages for lowest-risk borrowers. You get $4 for your $100, and the bank still gets at least $36, minus default risk.
They then, when not stopped by regulation, lend to those who cannot afford to pay back, predation. You can claim amorality, I don't buy it.
Therefore the 'multiplier' rewards/encourages bad behaviour in an arational world.
We can't get mad at the multiplier, only at those who are rewarded by it. Fair and moral reward is the only option, even if it means less reward in the short term.
So go use your money elsewhere. If you do business with a group like Vanguard and meet some modest minimums, you can buy and sell bond funds from a variety of asset classes for free, and you can see exactly how much of your returns they take - for instance, VGSH, which charges 0.10% on a 0.70% yield, or VCIT, which charges the same on a 2.28% yield. Of course, you lose your 100% guaranteed return and the use of that money with checks and ATMs and debit cards, but there you go, that's the stuff you didn't want to pay for.
> the 'multiplier' rewards/encourages bad behaviour in an [irrational] world.
You're blaming a measurement for bad behavior. That's all the multiplier is, just a measurement of lending activity. If you find fault with banks being predatory then any ability for any group to lend any money at all under any circumstances presents the same incentives. If you're upset with the existence of a multiplier you basically want to ban lending.
The real funny part, though, is that even when you seem to think that most of any bank's business is predatory and deserving of hate, you have the chutzpah to turn around complain that you're not getting a big enough cut. Do you have real principles or do you just hate banks? Decide, now.
> Fair and moral reward is the only option
In practice, whenever this statement gets turned into Politics it's basically a call for elected politicians (Bernie Sanders and friends) to decide who deserves to get money -- a paean to central planning, never mind the economic stupor and corruption it ultimately engenders. The sad thing is, it doesn't help. Even payday lenders, everyone's favorite punching-bag and icons of Predatory Lending, earn pathetic rates of return, typically in the neighborhood of 3%. And central planning gives you things that contribute substantially to crises, like when the government had FMAE and FMAC buy up millions of subprime loans without question as part of a program to extend more credit to minorities. But no one pays attention to history, so we're doomed to repeat it.
But I don't hate the banks. I just think they're full of amoral profit-maximizers that will consistently place their own welfare above those of their "customers". If you lower your expectations a bit, you can do business with any bank quite comfortably. It's almost like dealing with Comcast, or AT&T. Expect the worst from them at the outset, and you can only be pleasantly surprised if they do better.
They limit what you can do with your own money.
The reason for getting deposits is so that they can loan 10x or 100x (or whatever your country allows) on the deposit and earn interest/fees.
That doesn't benefit me, only them.
The reason I use a bank is so that I can have "security" and "ease" in transfer/payment. They make a lot more off of me than the utility I describe above.