OK except banks don't ONLY loan on Cash Deposits they also loan on bank assets further Depositors can also complicate the issue by using these REVALUED assets as collateral for loans thus inflating the amount the are allowed to lend. (If I take as collateral a REVALUED asset that is worth 100 but actually is worth only 10 dollars then presto 90 Bucks was created out of thin air and its all Okey Dokey with the FED)
"By the way, if a bank securitizes and sells a loan, it doesn't have to hold a reserve against it, so it has nothing to do with FRB."
hahahahah OK who buys the new higher valued asset? (Answer Another Bank)
And Now that Bank who purchased that repackaged asset CAN LEND MORE MONEY based on an asset that had its underlying value changed yet nothing really happened except they put a new coat of paint on that lemon of a car.
Banks need cash to lend cash. If a bank has a $100 bond and no cash, they can't lend out $90. And they certainly can't pretend the bond is worth more, based on the formula you provided and loan more than $90.
Depositors can also complicate the issue by using these REVALUED assets as collateral for loans
A depositor cannot use any of the bank's assets as collateral for anything.
(If I take as collateral a REVALUED asset that is worth 100 but actually is worth only 10 dollars then presto 90 Bucks was created out of thin air and its all Okey Dokey with the FED)
You are incorrect. I can value my $10 bond at $1,000,000 and the money supply stays exactly the same.