[Garth Tater]

Here Todd, a little research for into the money multiplier effect brought about by home mortgages.

What is the 'Multiplier Effect'

The multiplier effect is the expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves. In other words, it is the money used to create more money and is calculated by dividing total bank deposits by the reserve requirement.

Please make note of the phrase "it is the money used to create more money." This is the money that is created "out of thin air."

[Toddsterpatriot]

What is the 'Multiplier Effect'

Thanks for the link

The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves.

You may notice that none of the links agrees with your claim that they hold a percentage of loans as a reserve.

They all seem to agree with my claim that they hold a percentage of deposits as a reserve.

[Toddsterpatriot]

To calculate the effect of the multiplier effect on the money supply, start with the amount banks initially take in through deposits, and divide this by the reserve ratio. If, for example, the reserve requirement is 20%, for every $100 a customer deposits into a bank, $20 must be kept in reserve. However, the remaining $80 can be loaned out to other bank customers.

Thanks again for the link.

The $80 loan is fully funded by the $100 deposit.

Now if you find a decent source that shows the $100 deposit funds a $1000 loan, I'd love to see it.

Good night.