this post was submitted on 02 Dec 2024
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Not correct. Your liabilities need to be sufficiently smaller than your assets. Capital reserves don't need to be in cash.
200 dollars went in. 180 dollars came out. 20 dollars stay in the bank. No dollars have been created.
Look up solvency frameworks
Money hasn't been printed, but for the bookkeeping, 3 individuals who have contributed a total of 200 dollars, have in their accounts 380 dollars.
When a bank loans your money out, as we are well aware, they don't change the account in your balance. In order to do that, the dollar being loaned must be duplicated somehow. This is normal to how fractional banking works, and guidelines and requirements for how much specific money you need to maintain doesn't change that.
The only way to change it is to switch to full reserve banking.
If a bank is able to loan out your money, without also removing it from your account, it is by nature created, the money is in two places at once.
Person A's account: $100 Person B's account: $100 Person C's account: -$180
This does not add up to $380.