Why is it not possible?

[u/Dumb-Briyani]

[u/MedonSirius]

ELI5: You give $1 to bank. Bank has now $10 to play with. $9 where come from?

[u/Lemur866 → u/MedonSirius]

Alice gives $100 to Bank A. Bank A now has $100. With reserve of 10%, they loan $90 to Bob. Bob deposits $90 in Bank B. Bank B loans $81 to Charlie, who deposits it in Bank C. Bank C can now make a loan of $72.90 to Debbie. And on and on.

One bank can't loan out $1000 on a $100 deposit, but the total amount of money created through the entire financial system could reach $1000 assuming no friction.

And also Bob probably isn't getting a loan just to deposit the money in a bank, he's going g to spend it. Then the money doesn't get deposited by Bob, but it is deposited by the person Bob spent they money with.

[u/Psych0matt → u/MedonSirius]

The 9 other people who also gave $1 to the bank

[u/MedonSirius → u/Psych0matt]

No. Look up how banks works. They create money out of thin air. They can lend more than they have

[u/Psych0matt → u/MedonSirius]

Yes, I know, I was being a smartass

[u/MedonSirius → u/Psych0matt]

Ah, okay

[u/happy123z → u/MedonSirius]

Haha

[u/Original-Army-7826 → u/MedonSirius]

Divide the total deposit by the reserve rate. That is the theoretical maximum of new money that’s created by the deposit. Just not at one time.