[missedthecue]

This is a common misunderstanding of banking. They don't invent money.

The money supply "increases" when banks lend because of the double entry accounting system. They give you a loan, you can deposit the money in a bank account, and they have more deposits to loan out. It's literally just lending the same dollar twice, not inventing or creating money. (Well... somewhat less than $2 because of reserve requirements).

That's not inventing money.

[nyokodo]

> That's not inventing money.

Since the same money can be spent by the borrower and the saver separately and go off into circulation separately then it is creating new money.

[psychphysic]

It's worth checking out the link I provided to the Bank of England's document on modern banking and "loans make deposits", as opposed to your outdated view that "deposits make loans".

Fractional reserve banking is not how modern banking works. Banks must maintain a liquidity but otherwise the loans are money they made up, they simply tell the central bank they made a loan.

[missedthecue]

Money is fungible. Functionally, the result is the same. A bank cannot lend out more than the amount of assets (deposits) that it has on the books.

[psychphysic]

That's categorically untrue. But understanding why would require reading the article I linked earlier.