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mg1982

Additionally, this $90 deposit can then be treated as 'real' money and loaned out according to the same 10% reserve - $81. In the manner of a babushka doll, this can be deposited and loaned out ($72.90, $65.61, $59.05... etc.) until the amount becomes vanishingly small.

Relevant section from 'Money as Debt': https://youtu.be/jqvKjsIxT_8?t=12m57s

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While this is a textbook example reserve requirements haven't been a significant constraint on bank monetary creation since the 80's. The Bretton Woods system put in place after WWII and Nixon closing the gold window in the 1970's made reserves a less unique.

The creation of non-bank demand deposits like money market funds put the nail in the coffin of using reserve requirements to manage the amount of money in the economy.

Today the biggest constraint to monetary creation is bank capital ratios. Under current rules banks have to have roughly 1 dollar if equity for every 12 dollars of loans and that can vary based on the type of loans the banks make.

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