Re:Money creation in the modern economy (2014) [pdf]
by ubercow13 on Friday September 10, 2021 @08:49AM
(#28480770)
Yes then I think we’re in agreement and just talking around in circles! It seems the second statement is most meaningful in relation to how banks actually operate (based on my understanding of the paper). The example where 9m loans are made and none transferred out, and the example where 900k loans are made and 100% are transferred out are both extremes.
Ok, then this is NOT how it works -> "if a bank has $1 million in deposits the bank can make $10 million in loans"
I can agree with either of the following formulations:
"if a bank has $1 million in deposits the bank can make $10 million in loans as long as the loans remain as deposits in the bank"
"if a bank has $1 million in deposits the bank can make loans for any amount that it wants as long is it can comply with the reserve requirements"