I think part of the problem to understanding is that you’re assuming that banks are places that store money. They aren’t really, they are places that hold vario

I think part of the problem to understanding is that you’re assuming that banks are places that store money. They aren’t really, they are places that hold various types of assets and manage IOUs between themselves and other parties (other Banks, the Government/Fed, and customers etc.) in either direction. Banks don’t really store money, you give them money and they give you bank credit, and then later on you exchange that credit back for money or transfer credit to someone at another bank and the two banks settle that with some asset (could be reserves etc.). I think this is the main confusion, of course the physical cash the bank gives you for a withdraw might have been given to the bank during a deposit transaction, but in terms of the transactions on the balance sheet it did not come from there.