>>510124690
Banks do not lend out money they already had, banks create new money by lending. They add a deposit liability to the borrower’s account, and the borrower then spends that deposit as if it was money. Banks don’t send reserves to each other for every transaction, they batch-process most transactions at the end of the day, only sending what they owe in net. Most of the dollars that are spent in our economy are units of bank credit, a liability of some private bank or credit union, and credit is only created during lending— bank adds +1 to assets (loan contract) and +1 to liabilities (deposit), borrower adds +1 to assets (deposit) and +1 to liabilities (loan contract) —both balance sheets balance, the new money (deposit) is spendable, and no government entity or Federal Reserve Bank was involved.