Edit: So basically we have two explanations. One goes by actual money loaned out again and again by different people and banks, thus “creating” money. The other one: Banks actually loan out money they dont have and never had by creating the same volume as asset.
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1) Bank makes money by giving out loans with interests
2) They also invest the money that you store in the bank
3) Bank are required to keep a certain amount of cash or assets so to not to OVER lend and have a way to payback those loans if they are not paid.
Banks do not create money. The “Fed” does that in a variety of ways.
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