[Toddsterpatriot]

Banks can't lend out more than they take in.

On what planet?

Earth. If you open a bank and try to lend $500 with only $100 in deposits, you're going to fail. Possibly end up in jail.

Fractional-reserve banking (or FRB) is the widespread banking practice in which only a fraction of a bank's demand deposits are kept in reserve

Thanks. As your own link shows, "deposits kept in reserve" means money available for loans is less than deposits. Just as I said.

[poinq]

Banks can and do borrow to lend. Its just cheaper to lend using deposits.

[Rusty0604]

In bank accounting, deposits are liabilities and loans are assets. So if a banks deposits equal $500 and they loan on a house valued at $400,they have liabilities at $500, assets at $400 plus $100 in reserves. The loan defaults and the house is devalued to $100. Now they only have assets at $100 (the house) and $100 in reserves. The depositors demand their money back, all $500. How much can they give them? Only $100, and if they manage to sell the house it will cover some of their losses.

So they did loan out more money than they have for demand deposits.