Client A = 100 dollars client B = 0 dollars Bank passive = 100 dollars bank actives = 100 client b makes a loan of 70 dollars client A = 100 dollars client B = 70 dollars Bank passives = 170 bank actives = 170 Now client C needs a 100 dollars loan. 100 < 170.

Bank actives 270 bank passives 270 …

"And it is for this reason that although banks don’t need your money, they do want your money. As noted above, banks lend first and look for reserves later, but they do look for the reserves."

https://www.investopedia.com/articles/investing/022416/why-b...

In the simple savings-and-loan case, banks loan from their deposits. So technically it is the bank's available capital, but the capital belongs to someone else. If the bank has $1 million in deposits, it might decide it can safely loan out $100k, which in some sense increases the money supply.

No, banks are allowed to loan more money than they have in reserves (they are allowed to have a fraction of a loan in their reserves = fractional reserve banking).

As a result, money is created through each loan.

https://en.wikipedia.org/wiki/Money_multiplier