You're a little off. The bank can in fact loan $1 billion and only keep $100 million around on hand afterward. And the $1 billion of the loan is, in fact, new m

You're a little off. The bank can in fact loan $1 billion and only keep $100 million around on hand afterward. And the $1 billion of the loan is, in fact, new money in the economy that didn't exist before. But the bank still needs to have the $1.1 billion on hand first, so that it can have that $100 million after the billion-dollar check goes out.