How a commercial bank creates money when it makes a loan.

Question

I don’t get it. I don’t get it. I don’t get it. I don’t get it.

When a bank makes a $1,000 loan, that creates $1,000 in the recipient’s account, but I don’t get how the loan, the absence of money, is an asset on the lending bank’s books. If it’s because the money will be paid back, then isn’t it’s value based on a corresponding debit of the recipients account thus nullifying the created money?

Edit: I am not asking how banks make a profit. I get that. I am asking how NEW DOLLARS are created. There are more dollars in existence now than there were say 100 years ago. I want to understand how they came to be. The answer I’ve found so far is that NEW DOLLARS are created when a commercial bank makes a loan.

Second Edit: For those saying commercial loans don’t create new dollars, apparently they do, but I don’t get it. For reference:

https://positivemoney.org/how-money-works/proof-that-banks-create-money/

In: 23

Answer 1

If you loan your car to a friend, it’s still your car. If your friend starts paying you in installments for your car, it’s still partially your car until he’s paid all the agreed payments. So, you maintain ownership of that asset and slowly replace the vehicle with cash. But essentially, you retain the same level of assets the entire time.