>$400k and also -$400k is created ex-nihilo by the bank, balancing to $0. Yes, over the term of a 10, 20, or 30 year loan. However, the immediate effect is suc

>$400k and also -$400k is created ex-nihilo by the bank, balancing to $0. Yes, over the term of a 10, 20, or 30 year loan. However, the immediate effect is such that the money supply is increased, $400k is created. The destruction of the money is gradual as the loan is repaid. The reality of the situation is not that far off from what you're describing here.