...without even factoring in fractional reserve banking...
Thank you! An easy way to explain the fractional reserve part in your example would be to have the borrower deposit the $100 back into the bank (which almost everybody does in some fashion, at least temporarily), and then the bank can loan out that $100 again. Explain how doing that is such a ridiculously potent "money multiplier" that there are rules governing what fraction of money is allowed to be loaned out compared to actual money.
Thank you! An easy way to explain the fractional reserve part in your example would be to have the borrower deposit the $100 back into the bank (which almost everybody does in some fashion, at least temporarily), and then the bank can loan out that $100 again. Explain how doing that is such a ridiculously potent "money multiplier" that there are rules governing what fraction of money is allowed to be loaned out compared to actual money.