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Fractional reserve banking. You're assuming a 1:1 ratio of debt to assets. That's not the case at all. A bank can have $1 mil on hand and lend out $10 mil plus, as long as they have a high enough percentage available for withdrawals.
Banks have an infinite money cheat code. In a way. If person gets a loan from a bank, $10 million, which requires the bank to have $1 million on hand. That person then uses the $10 million to pay people. If those people then go... put their money in the bank... The bank now has the same $11 million on hand they started with, a guy who owes them $10 million plus interest, and could now theoretically loan out another $9 million to another person. At that point they'd have $2 million on hand, 2 guys who owe them $19 million. Still within their 10% cash reserves. But wait... one more thing. I was assuming a 10% reserve as a rule. But in same cases they don't even require banks to keep any specific percentage on hand. So the debt to assets ratio could become even more insane.
Negative at a 10:1 ratio, maybe even more.
https://en.wikipedia.org/wiki/Fractional-reserve_banking
yeah but they have to pay back the $10M eventually, at least formally, so they have that as debt (or liability, or whatever they call it) at the same time. thus the sum is zero, where they were before.
In this example the bank started with $1 million total. Loaned out $10 million. If the guy paid back $10 mil, the bank would have 10x their starting money.