Bank B $1m deposit
[$100k required reserves + $900k excess reserves]
to
Bank B $1m deposit with 900k loan (90%)
[$100k required reserves + zero excess reserves]
and it's still there at the end. It doesn't have excess reserves, it cannot make new loans if it cannot get more money.
To be clear, my original comment was: "The money created doesn’t necessarily go back to the bank. When you take a loan you use the money for something, not to keep it in an account at that bank. It will typically end in another bank."
The bank =/= A bank
One bank =/= The banking system
[Of course when another bank gets more reserves it increases their capacity to extend new loans. The question was whether a bank with $1m in deposits can lend $9m, not whether the whole banking system could.]
It went from
to and it's still there at the end. It doesn't have excess reserves, it cannot make new loans if it cannot get more money.To be clear, my original comment was: "The money created doesn’t necessarily go back to the bank. When you take a loan you use the money for something, not to keep it in an account at that bank. It will typically end in another bank."
The bank =/= A bank
One bank =/= The banking system
[Of course when another bank gets more reserves it increases their capacity to extend new loans. The question was whether a bank with $1m in deposits can lend $9m, not whether the whole banking system could.]