[Fan of Fiat]

The fact that you can come back to the bank the very next day and withdraw your entire $1000.00 means that the bank, based on your deposit, CREATED a NEW deposit, into the checking account of the borrower for $800.00, even though you still maintained total access to your original deposit.

So when the $1000 is withdrawn, where does the bank get the cash? Do they print it?

When $1000 is deposited and the bank goes through this "process" 28 times, how much "money" exists? Is it more than $1000? If so, where did it come from?

[Toddsterpatriot]

So when the $1000 is withdrawn, where does the bank get the cash? Do they print it?

Can't even keep track of your own post?

The fact that you can come back to the bank the very next day and withdraw your entire $1000.00

We can talk about what happens if I withdraw my money, but that wasn't in your example.

When $1000 is deposited and the bank goes through this "process" 28 times, how much "money" exists? Is it more than $1000? If so, where did it come from?

I could explain it to you, but based on your apparent knowledge, you wouldn't understand it.

[Toddsterpatriot]

Sorry Fan, I thought that was him, not you. LOL!

[iconoclast63]

Absolutely the bank creates MORE than your original deposit in new loans. As long as their borrowers deposit the loan checks into checking accounts held at the bank, the bank can continue to create new loans based on those reserves. In one analysis I read, in todays banking system, a bank can needs less than $20 in deposits to create $10,000 in new loans. Not sure about that though.

As far as cash, you must understand that actual paper currency has little to do with the total money supply because the VAST majority of dollars are nothing more than data bits in bank computers. Banks maintain what they think will be sufficient cash to meet the daily requirement of check cashers.