> even though your bank makes loans, the money in your deposit is still there and available whenever you want This is definitely not true. If everyone asks for

> even though your bank makes loans, the money in your deposit is still there and available whenever you want This is definitely not true. If everyone asks for their money at once, the money won't be there because most of it has been loaned out. That's a bank run. > How does a wildly varying money multiplier fit in with your story? Over three decades, it looks pretty stable to me. The multiplier also varies based on the amount people want to hold in cash (I'm getting this from Krugman's book), because that's how money leaks out of the deposit->loan cycle. That could easily vary a non-trivial amount over 30 years. The most recent period where the multiplier is less than one I will grant is weird. The Fed has started paying interest on reserves, and banks are more wary post-recession, so they've started accumulating a huge amount of excess reserves: https://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS. > there a countries where the reserve requirement is zero Obviously, the ratio that matters is not the legal minimum reserve requirement, but the actual effective reserve ratio. A bank has to keep a certain amount of reserves to keep their business running. The legal requirement is just to make sure that the amount they keep on hand is prudent. There's also the aforementioned leakage of money out of the deposit->loan cycle via currency held by the public, which can reduce the money multiplier further. The rest of your post gives some good reasons that the real world doesn't work quite like the mainstream theory. It sounds like you're explaining an endogenous money theory; do you have any suggested references for further reading?