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<p>[QUOTE=&quot;InfleXion, post: 1314115, member: 29012&quot;]I think we need to make one change here. If the bank loans out $900 of the $1000, and the person taking that loan deposits the $900, then they can only loan out 90% of that $900 which is $810. They can&#039;t loan out $900 of the original $1000 a second time.</p><p><br /></p><p>So the balance sheet would go $1000, $1900, $2710, $3439, etc., but the subsequent loans themselves have to get incrementally smaller ($900, $810, $729, etc.) in relation to the original loan.</p><p><br /></p><p>The main difference being that the size of the subsequent loans plus the originating loan will eventually plateau as 90% begins getting applied to an infitesimally small number, as opposed to the size of each new loan continuing to grow beyond the original loan, but it does still have an exponential effect on the overall money supply.[/QUOTE]</p><p><br /></p>

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