The Fed is the only entity in existence that can _create_ dollars out of thin air.
US Treasury is responsible for the printed paper dollars, but only the Fed can create "digital" ones.
US Treasury is responsible for the printed paper dollars, but only the Fed can create "digital" ones.
Every time a bank makes a loan, the dollars are "created out of thin air", and slowly "destroyed" as the loan is repaid.
GP is using a strict definition (only dollar-denominated liability of the Fed is a "true" dollar), parent is using a looser definition (a dollar-denominated liability of any bank is a dollar).
If you have a fractional reserve (e.g., a bank has $100M cash backing $100M deposits one day, then loans out $30M the next day), with the strict definition you still have $100M dollars ($70M controlled by the bank, $30M that was loaned out and used to purchase stuff). But with the loose definition you have $130M ($30M is still loaned out, depositors are $70M).
Essentially the depositors have made $100M of (debt) investments in the bank, and those investments are now 70% backed by cash and 30% backed by paper (mortgages or other kinds of IOU's from whoever they loaned the $30M to).
In contrast, the Fed can create actual dollars. It can just buy an asset and pay for it with money that it has just created.
https://www.investopedia.com/articles/investing/022416/why-b...
Read the section under the heading: "How Banks Make Loans in the Real World".