That's not how fractional reserve banking works. An individual bank cannot just "invent 1000% of the money it has on deposit," but the banking system as a whol

That's not how fractional reserve banking works. An individual bank cannot just "invent 1000% of the money it has on deposit," but the banking system as a whole can create a multiple of the total amount of money on deposit. No need to try to explain when Wikipedia provides a clear explanation and a table showing how this works and how the Money Multiplier effect is calculated from the Required Reserve Ratio: http://en.wikipedia.org/wiki/Fractional_reserve_banking#Example_of_deposit_multiplication http://en.wikipedia.org/wiki/Fractional_reserve_banking#Exam...