sorry, I was vastly oversimplifying the mechanism. I was speaking off-hand assuming most on this forum are well read on how these mechanisms work, it certainly

sorry, I was vastly oversimplifying the mechanism. I was speaking off-hand assuming most on this forum are well read on how these mechanisms work, it certainly sounds like you are. To be more precise: The effect of banks, in aggregate, on the money supply results in a multiplier, which today runs at, in average, 26 times deposits. Here are a few overviews: http://en.wikipedia.org/wiki/Fractional-reserve_banking http://en.wikipedia.org/wiki/Fractional-reserve_banking http://en.wikipedia.org/wiki/Reserve_requirements http://en.wikipedia.org/wiki/Reserve_requirements http://economics.about.com/cs/money/a/reserve_ratio.htm http://economics.about.com/cs/money/a/reserve_ratio.htm