People who have loans do not have “deposits at that same bank.”
If a bank tried to loan out more than it had in deposits, the Loan-to-deposit ratio would go nuts:
https://www.investopedia.com/terms/l/loan-to-deposit-ratio.asp
What happens is that money lent out becomes a deposit at a different bank.
https://www.investopedia.com/terms/m/multipliereffect.asp
The explanation given by Armstrong is distorted and wrong.
People certainly do have loans and deposits at the same bank.
I don't owe money now but at one time I owed a bank $70,000 for a home loan, and at the same time had deposits in various accounts, a vehicle loan, a business loan, and indeed an account for the $70,000 house loan.
You are right about the importance of the loan-deposit ratio...but that doesn't prevent a customer from being both a borrower and a depositor.
Not convinced USA banks are 10% reserves. This is definitely not the law as of law/EO which allow the _fed_ to have any reserve level they want. This was done about eight? years ago.
You really simplified that one.
Maybe you missed this part: “...Suddenly, Quantitative Easing caused another larger expansion increase in reserve deposits. Rather than trying to offset this by selling other assets or making further adjustments to the reserves averaging scheme, the entire scheme was simply suspended in favor of paying interest unconditionally on ALL reserve balances...”
Interestingly, foreign banks like in the EU buy US bonds and park them in US banks to collect interest because collecting the (reserve balance) paltry 1% or so interest rate is better than the zero or minus interest rates available in their home countries.
Later on, banks will park money in the US stock market as a safe haven causing US markets to go even higher.