[fancifalmanima]

Money creation happens when the money is deposited and loaned again

me -> deposit $100 in bank a -> bank a loans $95 to business -> business deposits $95 in bank b -> bank b loans $90.25

This loop repeats indefinitely until we're talking about fractions of pennies. The reserve ratio (and bank willingness to loan up to that ratio) determines the money multiplication effect. No bank is loaning more than it's actual deposits, it's just the effect of the same dollar getting deposited and loaned multiple times.

[jazzyjackson]

Except it doesn't have to be more than one bank, just different accounts at the same bank. So if a bank creates a loan, which ends up deposited in another account, their deposits have increased from $100 to $195. So the question becomes, where does the money that has increased the banks' reserves come from? It was created when it was loaned.

Maybe we are saying the same thing, I can't tell.