I apologize if I misunderstand your claim (or if you are not actually supporting this claim), "that banks give out let's say ~ten times as much as they actually have". I've heard others make the claim that banks loan out more than they have in deposits, and I'm responding to that claim.
This is not true. As far as I can tell, this misconception stems from the correct notion that banking (fractional reserve banking) expands the money supply. This is sometimes extrapolated to "banks create money" and then to "banks loan out more money than they have".
Banks do not "give out" "~ten times" their deposits. They give out (for sufficiently large banks) 90% of their deposits [1] in exchange for obligations to repay. The money supply expansion that results from this (Alan deposits $100, bank loans $90 of Alan's money to Bob who gives it to Charlie who deposits it in a bank, which loans out $81 of Charlie's money to Dan, etc.) is the ten time expansion that you're probably alluding to; but the bank can't know that Charlie's money is money that it lent to Bob.
The banks are not doing anything wrong here; there's a larger argument about the societal benefits of banking, and whether banks should be restricted in how they give out their money, but starting with distorted facts makes these discussions very confusing.
This is not true. As far as I can tell, this misconception stems from the correct notion that banking (fractional reserve banking) expands the money supply. This is sometimes extrapolated to "banks create money" and then to "banks loan out more money than they have".
Banks do not "give out" "~ten times" their deposits. They give out (for sufficiently large banks) 90% of their deposits [1] in exchange for obligations to repay. The money supply expansion that results from this (Alan deposits $100, bank loans $90 of Alan's money to Bob who gives it to Charlie who deposits it in a bank, which loans out $81 of Charlie's money to Dan, etc.) is the ten time expansion that you're probably alluding to; but the bank can't know that Charlie's money is money that it lent to Bob.
The banks are not doing anything wrong here; there's a larger argument about the societal benefits of banking, and whether banks should be restricted in how they give out their money, but starting with distorted facts makes these discussions very confusing.
[1] http://www.federalreserve.gov/monetarypolicy/reservereq.htm