[flyGuyOnTheSly]

The premise of A is incorrect.

(Banks cannot only lend out ONLY every penny they have...)

Banks have (until March 2020) been able to lend out 10x the amount of pennies they have... aka assets listed on their books.

Now they are able to lend out an infinite amount of pennies they have.

Theoretically all money is "loan money". That's how money is primary created through fractional reserve banking, through loans.

I own a house that is worth $1m.

Somebody buys my house with $100k downpayment and $900k in loaned money from a bank in the form of a mortgage.

Now I have $1m, the bank has $1m worth of assets listed on their books, and (until March 2020) the same bank would be able to loan out another $9m in money from the $1m in hard assets they have just added to their books.

[webinvest]

Let’s say there are only two banks in the world for simplicity.

1)You start with boomer’s 1M of savings in BankA

2) The bank lends out 1M of that to Judy who deposits it in bank b.

3) bank b lends out that 1M to James who deposits it into his account in bank A.

4) bank a lends out that 1M to Jesse who buys a house from Karen. Karen deposits the money in her account at bank b.

5) bank B lends that 1M out to Jordan who buys cryptocurrencies. The Cryptocurrency seller Jake deposits the proceeds into bank A.

We now have: Boomer: 1M in bank A(the only “real money)

Judy: 1M bank B

James: 1M in bank A

Karen: 1M in bank B

Jake: 1M in bank A.

4 million dollars has been created from the initial 1M dollars. 5M in bank assets, 4M in bank liabilities. This process goes on and on.

What do you mean by all money is loan money?

[flyGuyOnTheSly]

I mean exactly what you just laid out there. That's how money is created. By loaning it out to others in exchange for hard assets... Or at least that's how it was created prior to the reserve requirement being eliminated.