“Why would they borrow from the Fed when they already have deposits they can use?”
Because they’ve already loaned it out.
There’s only about $1.4T of actual currency. Very little is in banks; most of what we speak of as “money” is just loans, to wit debt.
On top of all those loans, the Fed writes “$0=($1)+(-$1)” in its ledger and loans the imputed/virtual $1 to the bank to in turn loan to customers, with the Fed and bank splitting the interest paid (and the paid back dollar restoring the $0 balance). The bank needs no assets (beyond marketing & bookkeeping staff) to make a tidy profit.
Where does money end up.....after they lend it out?
On top of all those loans, the Fed writes “$0=($1)+(-$1)” in its ledger and loans the imputed/virtual $1 to the bank to in turn loan to customers,
Banks are currently borrowing $6 million at the Fed discount window. Hardly enough to fund every loan in existence.