Economics - Money and Banking - Banking system and credit creation - The Magic of Banking

A surprising demonstration. 'Imagine: You deposit $1000 in a bank. The bank keeps 10% (reserve ratio) and lends $900 to Alice. Alice deposits her $900 in her bank. Her bank keeps 10% ($90) and lends $810 to Bob...' Step 1: Your $1000 deposit. Step 2: Bank lends $900. Step 3: $900 deposited, bank len