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

Another way to think of it is that dollars are created when you put the dollars in the bank, and it’s our fault.

Say I have a $100 bill. There is $100 total. End of story. Simple.

Now I go to the bank and I put it in my account. Now I have a bank account that says $100 on the screen, and the bank has $100. I don’t have $100 any more, just a bank account that says I do. The bank has all the money, which is $100.

But if I start counting my bank account as actual money, then I’m double-counting. I count the $100 account as $100 and I also count the bank’s $100 bill as $100, which adds up to $200 in total.