No, the balance in the bank is not the loan. You need some understanding of double-entry bookkeeping to understand fractional reserve banking. The loan(promissory note), is on the banks balance sheet as an asset. Your balance which you can withdraw as cash is on the banks balance sheet as a liability.<p>What is the bank risking when it creates the money and uses the anachronistically titled &quot;loan&quot; contract to distribute it? • They risk only being able to extract so much labor.
• They risk taking on collateral which is a REAL asset that someone worked for, like their home if they&#x27;re unable to generate enough of the assets the banks just write into existence.
• They risk passing the buck up the ladder ultimately to the lender of last result if they&#x27;re &quot;too big to fail&quot; which just creates more money to deal with the problem.<p>Banks are not lending out other people&#x27;s money, everyone tacitly knows this, if they were how come when you go to the bank they never say, sorry its out on loan at the moment? This was the case at historically and banks are still riding on the fact that people haven&#x27;t gotten wise to the way it&#x27;s worked for centuries now.<p>There is no lending taking place when bank loans are made.