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Loans create deposits. Banks are not constrained to make loans based on how much is on deposit.



> Loans create deposits

Initially, yes. But people borrow money in order to spend it, not leave it on deposit.

> not constrained

That's right, just as airlines are not constrained to keep their airplanes flying payloads. But if they don't, they are not making money.

Every time you step in a bank, they try to sell you a loan for a reason.




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