> While a bank can create a million dollar loan without any reserves at all, they can't clear a $20 check drawn on their bank without at least $20 in their rese

> While a bank can create a million dollar loan without any reserves at all, they can't clear a $20 check drawn on their bank without at least $20 in their reserve account at the end of the business day. That is an important distinction to grasp. When people say that banks can create money from nothing, that means banks can create liabilities from nothing. But that can anyone do. I can write on a piece of paper that beefield pays 100 dollars to anyone holding this paper, and I need no reserves, no money, nothing but a pen and piece of paper to make that. And that is exactly what happens when bank "creates money". Bank says that some future day bank pays account holder money. And exactly as little as I can create the money that I would use to actually pay my liabilities, banks can't create money to pay their liabilities off.