Those liabilities don’t need to be honored, that’s why central banks exist and why they create money. The Fed can produce as many reserves as it wants, at any t

Those liabilities don’t need to be honored, that’s why central banks exist and why they create money. The Fed can produce as many reserves as it wants, at any time, out of thin air. And it does! Lending comes first, and reserves are simply created by the Fed until banks have enough. That’s literally their job, and it’s how the money supply grows. By the very nature of fractional reserve lending, banks cannot honor their contracts, requiring money printing to prevent bankruptcy.