So even though the amount of currency looks like it has increased, it hasn’t really… unless I’m misunderstanding still. But my impression is this is pretty much what happened yesterday with SVB.
It's very hard for people to accept this because of how most people basically trade 1/3 of their lives to get some. It just doesn't "feel right"
Currency is just a physical representation of that unit.
Perhaps because of the insurance from central banks this problem is avoided.
If the bank is giving cash to the withdrawer, that would come out of their capital reserve I guess. If they didn't have that, they FDIC insurance would kick in.
You can say the loan is a number in a database, but once it’s withdrawn from the bank the bank can’t just go into the database and undo the loan.
Your example doesn't make much since because any bank has many good loans and a capital reserve to deal with the few bad loans.
Economists actually refer to the USD in your account as bank money because it did not come from the government. You could just as easily think of that money in your account as a bank issued stablecoin pegged to the dollar that's convertible to dollars.
Maybe that’s already implied in your description but they don’t need to borrow from anyone if they had enough reserves to start with.
Yes. Money isn't 'real' in the sense people typically mean. It's an accounting unit, so it's exactly as real as a liter or a kilometer.