[Fingolfin]

Your original claim sounded as if JP Morgan makes a loan and gets to keep the original $1.5 billion in deposits. That they make loans without money leaving the bank. That they can make loans, without any deposits. That's not the case.

JP Morgan does get to keep the original 1.65 billion. We both agree that the 1.5 billion JP Morgan created to loan California is brand new money. Once this is established the only possible outcome is that there is now 3.15 billion dollars between the two: 1.5 billion in California's account, and 1.65 billion in reserves in JP Morgan's account.

[Toddsterpatriot]

JP Morgan does get to keep the original 1.65 billion.

You're wrong.

We both agree that the 1.5 billion JP Morgan created to loan California is brand new money.

Based on the original deposit at JP Morgan.

Once this is established the only possible outcome is that there is now 3.15 billion dollars between the two:

There is $3.15 billion. JP Morgan still has $150 million in their account at the Fed as a reserve. The original depositor has an account statement that shows a $1.5 billion balance. The people who received the checks from the state of California have the $1.5 billion that was originally held by JP Morgan.

JP Morgan simply exchanged the cash (or balance at the Fed) of $1.5 billion for an IOU from the State of California. Still only has assets of $1.65 billion total.