> When someone deposits $1m at a bank, the bank doesn't have $1m more assets, it has $1m more liabilities. Not quite. It actually has both. Yes, it owes $1m t

> When someone deposits $1m at a bank, the bank doesn't have $1m more assets, it has $1m more liabilities. Not quite. It actually has both. Yes, it owes $1m to the depositor, but it also has $1m in cash now, at least for a while. Until it does something with it, like loaning it out or investing it in some debt instrument. The cash is an asset, as is the loan or debt instrument it exchanges the cash for.