Who would take out a loan and then deposit the money?
Even in that highly implausible scenario nothing is being "created." They are making the money through their accounts receivable... Which is exactly what I had said.
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when you get a loan from a bank, they immediately deposit it into your account AND loan out that massive amount they're allowed to now due to fractional reserve holdings.
By the time you can take out that $100 loan from your account, the bank has already duplicated the money so to speak. That's why there's a 'processing time' on loans- so they can make more money off the new capital assets they've created.
How is turning $100 into nearly $1000 through doing literally nothing not creating money?
also I hope by 'highly implausible scenario' you mean 'how it actually works'
It gets a whole lot more complicated (and more money from nothing) when you consider that the person receiving the money gets involved.
we may not have the same bank, but all banks work on the same principle, and the money loaned out by bank A to person A will eventually make its way into another bank, who will loan out the money again.
so, if I take a $100 and put it in my account, not only will the bank loan $90 to one of it's own customers, the $90 (which the bank will immediately loan $81 out against and whatnot) loan that was created will get put into another persons account, so the $90 deposit will get another $81 loaned out against it. This makes two loans for every actual loan made, increasing that amount to about $2000 off a single $100 deposit.
they are making this currency out of thin air- it did not exist in the first place for them to actually loan out, it's paid out of the banks reserves if someone decides to turn it into cash. This is an incredibly rare scenario though- the money borrowed is always for something, so will make it's way back into the system without ever actually having existed. As the made up loans get paid back, the bank continues to loan out more and more money as the new AR payments allow them to do so based on the fractional reserve system, at a rate of about 20:1, despite them "having to have a 10% reserve fund."
lets assume this is a series of low interest business loans at 8% yearly for 1 year
that $100 deposit generates for the bank in the first year (assuming NO repayment vs the loans);
$1900 in fractional reserve principle amounts
$152 in loan interest
If the any of amount of the loans are repaid, they generate even more money at a huge rate that's literally created from no where. They are not loaning out money that exists, it only exists once someone removes it from the bank and requests cash.