No, only $100,000. That is the amount of currency increase in circulation. And as the principal portion is paid off it goes out of circulation. Here is a refresher course if you need it, LOL. How money is created in the modern economy - Bank of England I suspect that many that actually work in the banking industry do not understand how money is created. It is not something they need to know to do their day to day operations. I was a bank board member for six years and did not know it. John An excerpt: This article explains how the majority of money in the modern economy is created by commercial banks making loans. • Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.
Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.
Edited by John Burns 10/21/2016 12:56
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Lending expansion and bank reserves dropping?
