[Toddsterpatriot]

No, a $1 billion deposit means they can loan out $900 billion.

Excellent! So how does the state benefit by putting $1 billion in the bank and only getting to use $900 million?

It is straight out of the Fed's own documents

And yet, still wrong.

Where did the $900 come from then?

From your deposit.

It sure wasn't my deposits, as they are still at the bank.

Your deposit is still at the bank, your statement says $1000 yet the cash in my hand says $900. See how the money supply grew?

What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts.

They make credits to the borrowers account? Kinda like they credited your account when you made the deposit. LOL!

You might want to look into what makes up the various parts of M1. You might learn something.

[Fingolfin]

Excellent! So how does the state benefit by putting $1 billion in the bank and only getting to use $900 million?

Because it would be an ongoing process. The state bank could build up capital by acting as a depository for state tax revenues, just like the Bank of North Dakota does.

And yet, still wrong.

I highly doubt an official document put out by the Federal Reserve could be wrong about something so basic.

Your deposit is still at the bank, your statement says $1000 yet the cash in my hand says $900. See how the money supply grew?

Exactly. I don't understand why you object to my assertion that your loan proceeds did not come from my deposit. They might have served as the basis for the loan, but they are still safely at the bank. Besides, your loan proceeds would not be paid out in the form of cash, they would be paid out by a check, i.e. bank credit, i.e. not my cash. You are confusing the issue by talking about cash when loans are paid out with electronic credits in the real world.