> Banks do not lend out deposits in any possible interpretation of those words, and they do not require deposits prior to making loans. This is apparent because

> Banks do not lend out deposits in any possible interpretation of those words, and they do not require deposits prior to making loans. This is apparent because banks create deposits in the act of giving a loan. I know that the Fed is allowed to create money out of thin air, and I do understand that fractional reserve banking allows banks to pyramid loans. But ostensibly I can't start a bank today, deposit no money into it and tomorrow make a loan for $10mm. The money has to come from somewhere does it not? Or are you saying that's exactly how a bank works?