Loans create deposits, not the other way around.

When a bank makes a million dollar land loan, the mechanics are they create the loan papers, they make a ledger entry that deposits the money in the customers account. The money did not exist before the loan was made. The customer then writes a check to pay for the land.

If the bank requires a minimum of 10% capital as reserves, then the bank needs only set aside 100 thousand dollars of capital to cover the loan amount. But they likely took the land as collateral and the equity in the land value will be enough to cover the 10% capital requirement. Likely the bank required 20 or 39 percent down payment, so they even have some "cushion" should land prices fall that their capital requirements are still met with the collateral.

This million dollars might get deposited back in this very same bank that created it out of nothing, or it might go into another similar bank (and some of that banks loan creation money get deposited in this bank).

The point being, THE MONEY WAS CREATED WHEN THE LOAN WAS MADE,  not the other way around. A bank can be loaning out money hand over fist, and still have way more depostis than they can loan out. BECAUSE WITH EACH NEW LOAN, NEW ADDITIONAL MONEY IS CREATED.

You likely are not going to believe any of this. Like Henry Ford said, it is best people do not understand the banking system or likely there would be a revolution.

John